ANNUAL REPORT AND ACCOUNTS 2010 - Banif

CORPORATE BODIES

CORPORATE BODIESOFFICERS OF THE GENERAL MEETING OF SHAREHOLDERSChairman:Secretary:Luís Manuel Campos e CunhaPedro Schiappa Pietra Ferreira CabralBOARD OF DIRECTORSChairman:Vice-Chairmen:Directors:Joaquim Filipe Marques dos SantosArtur Manuel da Silva FernandesNuno José Roquette TeixeiraJosé Paulo Baptista FontesRaul Manuel Nunes da Costa Simões MarquesMaria da Conceição Rodrigues LealCarlos Eduardo Pais Jorgevasco Clara Pinto FerreiraAlexandre Jaime Boa-Nova e Moreira dos SantosJoão Manuel Mora de Ibérico NogueiraCarlos Alberto Ballesteros Amaral FirmeEXECUTIVE COMMITTEECEO:Vice-CEO:Members:Artur Manuel da Silva FernandesRaul Manuel Nunes da Costa Simões MarquesMaria da Conceição Rodrigues LealCarlos Eduardo Pais Jorgevasco Clara Pinto FerreiraAlexandre Jaime Boa-Nova e Moreira dos SantosCarlos Alberto Ballesteros Amaral FirmeAUDIT BOARDChairman:Members:Substitute Member:Fernando Mário Teixeira de AlmeidaJosé Luís Pereira de MacedoRui Manuel Braga de AlmeidaSérgio António de Rosário de Vaz MonteiroSTATUTORY AUDITORErnst & Young Audit & Associados – Sociedade de Revisores Oficiais de Contas, S.A.,represented by João Carlos Miguel Alves (Certified Auditor No. 896)._5Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

ADVISORY BOARDAntónio do Pranto Nogueira LeitePedro Miguel Duarte Rebelo de SousaJoão Vieira de AlmeidaFernando José Inverno da PiedadeJorge Armindo de Carvalho TeixeiraJosé Almeida GuerraAntónio Luís de Andrade MagalhãesAntónio Fernando Caldeira de Paula SantosJorge Manuel de Oliveira GodinhoNuno Manuel Branco Ribeiro da SilvaJosé Romão Leite BrazMaria Teresa Henriques da Silva Moura Roque dal FabbroPaulo Cezar Rodrigues Pinho da SilvaAntónio Manuel Pereira BernardoREMUNERATIONS COMMITTEEJosé Marques de Almeida (representing Rentipar – S.G.P.S., S.A.)Fernando José Inverno da Piedade (representing Fundação Horácio Roque)Vítor Hugo Simmons (representing Renticapital – S.G.P.S., S.A.)COMPANY SECRETARYÂngela Maria Simões Cardoso Seabra LourençoDeputy: Tiago dos Santos Matias_6Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Statement bythe Chairmanof the Boardof Directorsand the CHIEFEXECUTIVE OFFICER

In 2010, we were deeply grieved by the death of Comendador Horácio Roque, founder ofthe Banif Group. As 2010 was our most successful year ever, we would like to dedicateit to his memory, which we cherish with great affection and deep respect.The business environment in Portugal was not easy, particularly for investmentbanking, as the positive effects of a timid economic revival were reduced to practicallynothing by the devastating crisis of confidence that shook the economies in peripheralEuropean countries. What affected us most was a sharp rise in credit spreads imposedon the Portuguese debt and unprecedented illiquidity in the banking system.Even so, it was possible to increase banking income in the investment banking sectorwhile also substantially reducing operating costs, which resulted in a consolidatednet profit in Portugal of 8.2 million euros, which was 4.5 million higher than last year,and a return on equity of 12.2%.These results were based on the intrinsic strength of a business model in whichspecialisation is combined with diversification and on the excellent performance of ateam of employees who focus on ongoing personal and corporate improvement andare determined to come out on top.Indeed, as the Asset Management, Treasury & Markets, Trading & Sales and Advisory& Banking Services departments are positively interrelated, the truth is that thiscorrelation has been sufficiently imperfect for a decrease in activity on one businessfront to be offset by a positive series in another.From a geographical point of view, we can expect the performance of the renewedBanif Banco de Investimento (Brasil) to offset any effects of another recessionin Portugal or the prevalence of a fundamentally illiquid financial system in 2011,through the sale of 70% of Banif Corretora de Valores e Câmbio to Grupo Caixa Geralde Depósitos.We are looking at 2011 with caution. The signs, such as the cost of the Portuguesedebt, unemployment and investment indicators, the economic agents’ confidencebarometer and the social and political climate, are not reassuring. However, we arestill highly confident in the strength of our brand, the solidity of our financial group,the quality of our professionals and our ability to exceed expectations.Signed by:Chairman of the Board of DirectorsJoaquim Marques dos SantosChief Executive OfficerArtur Silva Fernandes_9Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Annual reportand financialstatements

1. EconomicSituation

1.1 – INTERNATIONAL ECONOMYIn 2010, the world economy continued the recovery that had begun in the first halfof 2009, after a severe global recession in 2008 and 2009. According to the IMF 1 , theworld economy grew approximately 5% in 2010 as it recovered from a global recessioncharacterised by a fall in the growth of product in real terms in 2009 (-0.6%). Thecurrent revival phase has progressed at two speeds, with more moderate growthin the advanced economies, although it was better than expected, and high level ofunemployment, while business activity in the emerging markets remains robust andthere are some signs of inflation, which is apparently a symptom of overheating.Overall performance was led by the emerging and developing economies, which areexpected to have grown 7.1% as a whole. Particular attention goes to the Chinese, Indianand Brazilian economies, which grew 10.3%, 9.7% and 7.5%, respectively. The recoveryalso extended to the industrialised economies although at a slower growth rate ofaround 3%. The United States economy grew 2.8% and Japan’s 4.3%, the highest ratesince 1990. The Euro Area (EA) countries’ economy grew by 1.8%. Of these countries,the German economy’s performance stood out with a growth of 3.6% and it acted as adriving force for the Euro Area.There was also different growth where prices were concerned. The still sluggisheconomic capacity and well founded expectations of inflation contributed to moderategrowth of around 1.5% in consumer prices in the developed economies. In the emergingand developing economies, the strong growth and rise in food prices that persistedthroughout the year began to impact on consumer prices, which rose 6.3%.2010 also witnessed the recovery of world trade and the quantities of goods and servicestraded rose around 12% in 2010 after a severe contraction of 10.7% in 2009. Commodityprices also recovered considerably. Oil prices grew by an average of 27.8% in 2010 andnon-oil commodities 23%, as opposed to drops of 36.3% and 18.7% respectively in 2009.WORLD GROWTH IN GDP1086420-2-42006 2007 2008 20092010World Economy Advanced Economies Emerging and Developing EconomiesSource: World Economic Outlook, IMF1 IMF, World Economic Outlook Update, January 2011_12Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

1.2 – DEVELOPMENT OF THE MAIN ECONOMIESThe recovery in the United States economy that began in mid-2009 grew stronger in2010, even though the unemployment rate remained high. The latest data point to realgrowth of 2.8% in 2010, after a 2.6% reduction in 2009.The initial recovery phase in the second half of 2009 and first half of 2010 was duelargely to the stabilisation of the financial system, the expansionist effects of monetaryand tax policies and a considerable increase in production as companies began to stockup their inventory.The sustainability of the recovery began to be jeopardised in mid-2010, as many of theseeffects gradually disappeared and budget and banking problems in Europe affectedthe financial markets. However, the recovery of economic activity stabilised in thethird quarter of 2010, supported on one hand by an increase in household spending,corporate investment, public expenditure and a substantial contribution from theaccumulation of stocks, which contributed to more than half the growth in GDP thatquarter. Growth was negatively affected by net foreign demand and the weaknessof home investment after the expiry of public programmes to support the sector.Accordingly, the construction sector is still weak as a result of too many repossessedhomes and negative fundamentals for commercial property.The labour market recovered moderately. After the almost nine million jobs in theprivate sector destroyed during the recession in 2008 and 2009, only just over a millionwere created in 2010, which is hardly sufficient to accommodate the new arrivals inthe labour market and therefore unable to fill the gap in the economy. The gap made itpossible to contain pressure on prices and inflation was between 1.1% and 1.2% afterJune 2010. Excluding the volatile food and energy components, inflation was0.7%, after recovering from its lowest ever in October.In this context, the Federal Reserve, with interest rates between 0 and 0.25% sinceDecember 2008, has had to resort to alternative monetary policy measures usinglong-term debt security purchase programmes on the market (normally known asquantitative easing) in the last two years. In November, the Fed announced its secondprogramme, which consists of buying up to 600 billion dollars in public debt over eightmonths.Asia entered the global crisis in good shape and continued to head growth in therecovery phase largely due to resilient domestic demand, which offset the negativeimpact of the crisis on foreign demand. Industrial production and retail sales werestrong in China and India and the robust activity in these countries had a favourableimpact on the rest of Asia. Indeed, the strong, sustained growth in China in recentyears has helped to support world trade and benefited exporters of commodities (suchas Australia, New Zealand and Indonesia) and capital goods (such as Germany, Japan,South Korea and Singapore). Unlike previous recoveries, domestic demand was boostedby the return of private capital flows which allowed these economies to access foreignfinancing. Over the short term, there are still significant differences in these countries’economic performance, due to the extent of stimuli and domestic demand, economicand financial conditions and underlying risks.Real GDP in China is expected to have grown 10.3% in 2010, with retail sales andindustrial production confirming that domestic demand was able to expand beyond_13Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

government incentives. However, in the second half of the year there was a substantialdeceleration against the growth in the first half. This deceleration is expected tocontinue in 2011, due to stricter limits on credit growth, cooling measures for theproperty market and the scheduled withdrawal of tax incentives during the year.Macroeconomic performance in India has been lively and industrial production reachedits highest in two years. The economy is expected to have grown 9.7% in 2010 thanksmainly to domestic demand, with high corporate profits and favourable foreign financeconditions boosting investment, though the contribution from net exports will mostlikely be negative in 2011, as high growth in investment will encourage imports. However,the high growth rate of domestic activity, reflected by a fast rise in inflation (13.2% in2010), resulted in the central bank raising the reference rate by 125 base points.In Japan, the recovery led by exports that began in the second quarter of 2009 grewstronger throughout 2010 thanks to a better than expected revival in the advancedeconomies and an increase in demand for capital goods on the part of China. Theeconomy showed its highest annual growth rate since the early 1990s and real GDP rose4.3% in 2010. However, the appreciation of the yen (especially at times of high volatilityand greater aversion to risk when the yen acts as a currency of refuge) may impactexports. This, associated with the withdrawal of tax incentives and the weakness ofthe labour market, will probably limit short-term economic growth.The main challenges for Asia are the rebalancing of growth engines with greaterincentives for dependence on domestic sources as opposed to foreign demand. Thisrebalancing is critical in China because of a more important role played by householdspending in domestic growth. Progressive appreciation of the renminbi, thanks to highaccumulation of foreign currency reserves in recent years, will contribute to this.Latin America is emerging from the financial crisis faster than expected, reflectingsolid macroeconomic foundations, adequate support from monetary and budgetarypolicies, favourable foreign financing conditions and high revenue from commodities.The surpluses resulting from commodity exports fuelled growth in domestic incomeand this, together with favourable financing conditions, supported domestic demand.For many of these countries, the potentially negative effect of lower demand forimports on the part of developed economies may not be too great, given their lowerdependence on foreign trade and greater reliance on the export of commodities, forwhich foreign demand should remain robust. Growth in the region is expected to be5.9% in 2010.After a brief interregnum at the acutest times of the global crisis in 2008, the five maineconomies in Latin America are experiencing recovery in capital influx. High influxes ofcapital have mixed effects, since on one hand they have been a source of cheap, widelyavailable financing for expanding domestic demand but on the other hand they haveincreased concerns about overheating, foreign competitiveness (given the substantialappreciation of their currencies), growing sterilisation costs (given the significantdifferences in interest rates against foreign rates) and the creation of speculativebubbles in the financial markets.The Brazilian economy is expected to have grown 7.5% in 2010, the highest growthin recent decades. This was based substantially on domestic demand, particularlyhousehold spending and investment. Nonetheless, this internal dynamic caused aconsiderable increase in imports, which more than offset the rise in exports, as they_14Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

enefited from the high demand for commodities, but were adversely affected bythe appreciation of the Brazilian real. Indeed the appreciation of the real, spurredby a substantial influx of capital (reserves totalled 294 billion dollars in December –equivalent to more than a year of imports) favoured imports and affected exports andthe current balance deficit was 48 billion dollars at the end of 2010 (3.8% of GDP). Inorder to counter this effect, the government decided to increase the tax on financialoperations, intended to tax short-term capital entering the Brazilian economy, from 2%to 6% in the second half of the year. Inflation reached a five-year maximum of 5.91% inDecember, spurred considerably by an increase in food costs and commodity prices in acontext of rising pressure from domestic demand fuelled by growth in credit.In Europe, the economic recovery has been hard, particularly because of the sovereigndebt crisis. Economic activity has been expanding unevenly, at a moderate pace sincemid-2009 after falling for some five quarters running. The Euro Area is thought to havegrown 1.8% in 2010, while the developing economies in Central and Eastern Europe grewaround 4.2%. Even within the EA countries there are marked differences in economicperformance, mainly due to the balance conditions of the public and private sectorsand the possibility of using tax policy to shore up the recovery.Activity in Germany was more dynamic than expected in 2010 after a period of moderateadjustment and growth in the period before the crisis and a sharp fall in 2009. Realgrowth was 3.6% and was largely due to domestic demand, with a strong increase ininvestment. At the same time, foreign demand also made a positive contribution togrowth and exports and imports rose 8.2% and 7%, respectively, in the second quarter.The main quantitative indicators on orders and industrial production showed signs ofbeing highly dynamic, mainly for semi-finished products, investment goods and lastingconsumer goods. Qualitative indicators, such as entrepreneur and consumer confidence,reached their highest in two decades in terms of evaluation of the current situationand future expectations. Nonetheless, household spending was still weak and retailsales grew 0.6% up to October, aided by the favourable performance of employment,after job creation measures taken by the German government. The unemploymentrate went from a high of 7.7% in June 2009 to around 7.5% at the end of 2010.BUSINESS CONFIDENCE INDICATORS IN GERMANY706050403020100Dec-05 Jul-06 Feb-07 Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10ISM MANUFACTURING GERMANYISM SERVICES GERMANYSOURCE: BLOOMBERG_15Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

In 2010 economic activity in France recovered from the serious recession in 2009,going from a 2.5% fall in product to 1.6% growth. This recovery was due in part todomestic demand, especially variation in stocks but also household spending and GFCF.In contrast, net exports made a negative contribution, though the delayed effects ofdepreciation of the euro may help to stimulate exports.The economic revival only began in the United Kingdom in the last quarter of 2009 andwas moderate. Domestic demand, including variation in stocks, was responsible for therecovery, as net exports made a negative contribution to economic growth. Householdspending contributed more in the last quarter of the year as consumers bought earlybecause of an announced increase in VAT in January 2011.However, the current economic recovery has been threatened by the sovereign debtcrisis affecting peripheral EU countries, particularly Greece, Ireland, Portugal andSpain. This crisis directly impacted these countries in two ways: (i) by early removal andreversal of budget and tax incentive measures implemented to boost domestic demandin their economies following the response to the international financial crisis and (ii)due to difficulties in obtaining financing on the part of governments and the bankingsector, which affected confidence and the stability of the financial system and imposesa substantial financial cost on domestic economic agents.The crisis began in late 2009, when the new Greek government republished figureson its budgetary situation showing a much higher than expected deficit, which grewwith each revision and resulted in general distrust on the part of the financial marketsas to the real situation of the country’s public accounts. At the same time, the ratingagencies lowered its credit ratings several times in a row and placed it at a speculativelevel. This further reduced investor confidence and broadened the gap between publicdebt interest rates of the EA countries against Germany to maximum levels since thebeginning of the Economic and Monetary Union. In early May, these gaps reached 962base points (bp) for Greece and over 300 bp for Portugal and Ireland.In this context, the authorities announced a number of measures, including budgetaryconsolidation plans by the governments of the countries most affected and on 2 Maya joint European Union and IMF bailout plan for Greece to the amount of 110 billioneuros. However, the situation continued to deteriorate for the more vulnerablecountries and the markets considered that the measures were insufficient. This ledto an unprecedented response by the authorities on 9 and 10 May, when they setup a European stabilisation fund to solve the funding problems of the countries withdifficulties in this area and to break the negative feedback loop between EA sovereigncountries’ financing and their banking systems. The fund totals 750 billion eurosand includes a contribution from the IMF (up to 250 billion euros). The EU set up theEuropean Financial Stability Facility (EFSF), which contributed 440 billion euros to thefund, financed by a bond issue. The European Financial Stability Mechanism (EFSM), anexisting mechanism, also contributed 60 billion euros to the fund. In September, thethree main rating agencies gave the EFSF the highest possible rating.Nonetheless, the turmoil continued and the spreads of the Irish debt against Germanyhad reached over 600 points by November. In response to pressure from the financialmarkets on the financial stability of the EA, the Eurogroup and Ecofin decidedunanimously on 28 November to grant Ireland financial aid, following a request for helpfrom the Irish authorities on 21 November._16Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

The aid package will cover budgetary funding needs of up to 50 billion euros and thebanking system’s needs up to 35 billion euros, 22.5 billion of which come from the IMFand EFSM and 17.7 billion from the EFSF. The EU’s contribution also includes bilateralloans from Denmark, Sweden and the United Kingdom totalling 4.8 billion. The financingratio between the EU and IMF is 2:1. Also on 28 November, the EA countries decidedto implement a permanent financial stability mechanism to replace the EFSF when itexpires in June 2013.At the same time, the ECB announced a series of measures to restore liquidity tothe different market segments and mitigate potential systemic risks. They includedthe Securities Market Programme (SMP), which consisted of the sterilised purchaseof public and private debt securities in the Euro Area. Other steps consisted ofrecovering suspended measures, including expanding long-term refinance operations,reintroducing fixed-rate auctions with total satisfaction of demand and the reestablishmentof the line of exchange swaps with the Fed to provide funds in dollarsto EA counterparties.Furthermore, the Committee of European Banking Supervisors conducted stress testson 92 banks in the EA in September. The Basel Committee announced the reform ofBasel III, which raises financial institutions’ capital requirements, in order to step up thefinancial system’s resistance to shock and restore the balances of financial institutionsand investors’ confidence. The reform includes the implementation of two capitalbuffers, one for preservation to first absorb losses from adverse shocks and the other,cyclical, for each country to protect their banking systems from periods of excessivegrowth in credit. There is also a non-risk adjusted leverage ratio and institutions ofsystemic importance will be subject to additional rules. The Basel Committee has set agradual transition for the new rules up to 31 December 2018.1.3 – THE PORTUGUESE ECONOMY1.3.1. – SUPPLY AND DEMANDAccording to Statistics Portugal, the country’s growth was 1.4% in 2010, after a fallof 2.5% in 2009. There was still a negative difference between GDP growth rates inPortugal and the rest of the Euro Area, as was the case throughout the last decadeuntil 2009.This growth was not, however, sufficient to turn the labour market around andunemployment rose one percentage point (p.p.) to 11.1% in the fourth quarter of 2010year on year. The unemployed population increased to 619,000 (9.9% up on 2009)._17Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

UNEMPLOYMENT RATE121086420Dec-00 Feb-02 Apr-03 Jun-04 Aug-05 Oct-06 Nov-07 Jan-09 Mar-10UNEMPLOYMENT RATESOURCE: BLOOMBERGThe strengthening of economic activity in Portugal in 2010 reflected differentdynamics between foreign and domestic demand. On one hand, it is based on highlydynamic exports in a scenario of increasing trade flows worldwide. On the otherhand, in spite of the revival of household spending, which should have grown aboveGDP and the Euro Area average, domestic demand is expected to have grown onlymodestly. Investment performed poorly and fell by around 5% in 2010, which was lessthan in 2009.After a decade of very modest growth in economic activity, which was reflected byongoing low growth in potential product, the fall in GDP was smaller in 2009 than inmost of the advanced economies. The factors that may have contributed to a smootherGDP in this period include the resistance of the Portuguese financial system to thedisturbances caused by the global crisis and the fact that the Portuguese economyhas shown no overvaluation in property market prices.Furthermore, household spending in Portugal was more stable than in most of theadvanced economies. In early 2010 it was higher than when the economic crisis occurred.Where the other spending components were concerned, Portugal’s performancewas much the same as in the main economies. However, unlike the other advancedeconomies, there was no significant adjustment in the current account deficit.In this scenario, the Portuguese economy’s performance in the next few years will bestrictly conditioned by measures to consolidate the budget and reduce the indebtednessof the private sector in general and companies in particular. The difference betweendomestic and foreign demand will be accentuated with exports remaining the mostdynamic component of global demand. The main economic indicators support this view,with the marked contrast between growth in turnove in the foreign market and muchlower growth in domestic market turnover. A breakdown of the information in theservices turnover index shows considerable dynamism in services aimed at exports, incontrast to those designed more for domestic demand.Greater vitality in household spending in 2010 should be supported by growth in somecomponents of disposable income with a high marginal propensity for spending, such_18Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

growth in domestic demand, the high uncertainty and risk associated with investmentdecisions and greater restrictions on access to credit.In addition to the specificities that are limiting public and private investment andinvestment in homes, corporate investment also fell in 2010. Over the year, corporateinvestment is expected to have decreased 3%, after around 17% in 2009. Althoughit is lower than the period prior to the financial crisis, there has been a significantimprovement in confidence in the manufacturing industry since the beginning ofthe year, particularly in an appreciation of the order portfolio and an increase in theturnover of the industry, especially in the foreign market. These indications, along withgreater use of production capacity, may represent a scenario of recovery of investmentin Portugal in sectors aimed at foreign markets.However, a deterioration in expectations of growth in demand compared to the situationprior to the financial crisis, together with high levels of indebtedness, may result ina need for adjustments to companies’ balance sheets. These adjustments may notpermit such a dynamic recovery in investment as usual in post-recession periods.The fall in GFCF in 2010 affected all its components except transportation, which shouldshow a significant increase (7.5%). The performance of this component reflects thesubstantial growth in vehicle purchases by car rental companies in the first half ofthe year and a significant increase in sales of light commercial vehicles (for the reasonmentioned above).GFCF in machinery and equipment should have gone down 6.2%, after an 11.3% fall in2009. Finally, GFCF in building and structures is expected to have gone down again in2010 (5.1%), which is consistent with the sector’s confidence indicators and Portuguesecompanies’ cement sales to the domestic market. The performance of GFCF in buildingand structures in 2010 continued to be influenced by households’ home purchases,which fell for the 10th year running.In a scenario of recovering international trade flows and improving growth prospectsin Portugal’s main trading partner countries, exports of goods and services roseconsiderably in 2010. The latest data point to a growth in exports of goods and servicesof around 9% in 2010 after an 11.8% fall in 2009.The increase in exports in 2010 was particularly significant in goods, while servicesgrew more moderately. The most favourable growth in exports was a phenomenoncommon to most of the world’s economies and the differences in performance werepartly due to countries specialising in geographical and sectoral markets with differentgrowth rates.Nominal exports of goods rose 14.7% in the first seven months of 2010 against 2009.This increase occurred in most sectors, though it was more significant in the sectorsthat experienced the greatest falls in 2009. Fuel exports to the United States, forexample, increased considerably as of the beginning of the year after a significantdecrease in 2009. Fuel exports in nominal terms have been growing in importance inPortuguese exports and accounted for 6.6% of the total in the first seven months of2010, as opposed to an average of 3% in 2000-2007. Excluding fuel, nominal growth ingoods exports in this period was 11.6%._20Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

There was a substantial increase in exports of medium-high and medium-low techproducts. Where the former were concerned, exports of vehicles and other transportmaterial were particularly important, especially to the German market, where theyaccelerated significantly in the first seven months of 2010. Regarding the latterproducts, in addition to high fuel exports, there was growth in foreign sales of plasticsand rubber (33.5%), paper and cellulose pulp (32.4%) and common metals (17.8%),whose performance was particularly important in increasing the contribution to totalexports to Spain.The varying degrees of recovery in different sectors of the Portuguese economy wereclear in the qualitative indicators, such as those for confidence in the manufacturingindustry, services and retail trade and for expectations of production and orderportfolios. Although confidence in the services sector rose, it was still much lower thanbefore the crisis (first half of 2008), while that for the manufacturing industry roseclose to this level and that for retail exceeded it. In contrast, the confidence indicator inthe construction sector continued to fall and remained close to its all-time low of 2002.The work productivity figures are the result of typically pro-cyclical changes in theuse of production capacity. In the first quarter of 2010 the sharp downward trendthat began in the first half of 2008 was reversed. Growth in productivity has beensubstantially limited by a fall in employment in the private sector in 2009 and the firsthalf of 2010. There was a considerable increase in productivity in the manufacturingindustry.1.3.2 - PRICESThe inflation rate Portugal, measured by the average variation in the harmonisedconsumer price index was 1.3% in 2010, after falling 0.9% in 2009. The difference ininflation against the Euro Area was slightly negative (-0.3 p.p.), after an all-time low of-1.3 p.p. in 2009.INFLATION IN PORTUGAL AND THE EUROPEAN UNION5,004,003,002,001,000,00-1,00-2,00Jan-02Jul-02Jan-03Jul-03Jan-04Jul-04Jan-06Jul-06Jan-07Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11CPI – EUCPI – PORTUGALSource: INE AND Eurostat_21Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Growth in prices in 2010, after a period of considerable deceleration in Portugal thatbegan at the end of 2008 and lasted throughout the following year and resulted in aaverage annual inflation rate in 2009 for the first time in the last 30 years, reflects animprovement in the external framework of the Portuguese economy with improvinggrowth prospects in the main world economies and a gradual recovery in internationaltrade after the substantial slowdown in 2009. This resulted in an increase in internationalprices of energy and non-energy raw materials. On the other hand, prices of mostservices grew little with a slight fall in unit labour costs. Finally, the impact of the onepercentage point rise in all VAT rates on 1 July 2010 was also substantial.According to Banco de Portugal, unit labour costs in Portugal are expected to havefallen slightly in 2010, reflecting a lower rise in salaries per worker than in 2009 andsignificant growth in productivity in a scenario of recovering economic activity anda new fall in total unemployment. Contrary to the last two years, there should be apositive difference between growth in unit labour costs Portugal and the Euro Area.1.3.3 - the economy’s financING needsIn 2010, the Portuguese economy’s net foreign finance needs as a percentage of GDPcontinued to be high, and were only a little lower than in 2009. This slight improvementin the foreign deficit will result in a new reduction in investment, as the domestic savingrate also fell somewhat. The saving rate and investment rate fell to all-time lows.Net capital transfers (mostly from the European Union) fell again, continuing thedownward trend that began in 1995. A slight reduction in the economy’s net foreignfinance needs (as a percentage of GDP) resulted from a lower public administrationdeficit, while there was an increase in finance needs on the part of the privatesector.The economy’s net foreign finance needs will have gone down slightly in 2010, due toa substantial slowdown in domestic demand. Therefore, these needs in 2010, whichbasically correspond to the joint deficit of the current and capital accounts, shouldcontinue high, with only a slight reduction, as a percentage of GDP, on last year (8.8%of GDP against 9.5% in 2009).1.3.4 - budgetary policyPortugal’s overall public administration deficit in 2010 is expected to be 7.3% of GDP(9.3%, in 2009). However, significant additional measures were necessary to achievethis result and on 29 September there was an announcement that the PT pensionfund would be transferred to Social Security to guarantee the planned reductionin the deficit. This temporary measure affects only the revenue of the current yearand does not alter the structural balance or the assessment of the sustainability ofpublic finances. The projected debt ratio at the end of 2010 included in the Septembernotification is 83.3% of GDP.2010 witnessed considerable instability and variation in public debt markets in theEuro Area. In Portugal, as in some other countries, there was an increase in sovereignrisk as a result of a significant, not fully anticipated deterioration in the deficit anddebt of public administration combined with ongoing structural problems. A downturn_22Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

in this situation at the end of April substantially affected the financing of Portuguesebanks in the international wholesale debt markets and resulted in additional budgetaryconsolidation measures in May, over and above those announced in January in the 2010State Budget and in March in the revised Growth and Stability Programme. Followingthe announcement of these measures, official targets for the deficit in 2010 and 2011were lowered to 7.3 and 4.6 percent of GDP, respectively. The new targets for the deficitin 2012 and 2013 and a revised trajectory for the public debt ratio from 2010 to 2013were announced in the Budgetary Policy Report in early July. This report did not set outany additional measures, though it included projections of the public administrationaccount in relation to GDP for 2010-2013. According to the estimate for 2010, the deficitwill be reduced mainly by increasing the ratio of total revenue in GDP (by 1.8 p.p. ofGDP), as primary expenditure as a percentage of GDP will go down less significantly (0.5p.p. of GDP) and interest costs are expected to rise 0.4 p.p. of GDP.1.4 the financial SYSTEM1.4.1. OVERVIEW2010 witnessed high levels of uncertainty and volatility in the financial markets.Signs of a slowdown in the recovery in the first half of the year in the United Statesand Europe, the austerity measures imposed in Europe and uncertainties as to thefinancing capacities of peripheral EU countries such as Portugal, Spain, Greece, Irelandand Belgium caused further difficulties. There was also a sharp rise in prices of rawmaterials and several sectors reached their highest in the last 10 years.As in 2009, 2010 also saw additional efforts by governments and central banks tostimulate their economies and support their financial markets. At the end of the year,the most direct support took the form of unconventional monetary policy measures toboost public debt markets in the USA and Europe.In the United States, the Federal Reserve’s November announcement of a secondround of quantitative easing generated some uncertainty about expected inflationand appreciation of the dollar. Reference interest rates remained at all-time lows ofbetween zero and 0.25%. The unemployment rate began the year on a downward pathat 9.7% and fell to 9.5% in July, but rose to 9.8% in November.In Europe, the weakened budgetary situation of some European countries raisedconcerns about a possible transfer of the financial crisis to the public sector accounts.During the year there were several reductions in the risks ratings of Ireland, Portugal,Spain and Greece, which pressured countries and companies and sometimes unbearablyaffected their refinancing capacity. The EU countries and International MonetaryFund responded with loans and conditional bailouts and the countries implementedsignificant austerity measures in order to reduce their deficits and mitigate theperception of their sovereign risk. In order to help the Euro Area countries in financialdifficulties, the European Union agreed to set up a 750 billion euro emergency fund.Government austerity programmes to ensure compliance with the Stability Pact and itsgrowth programmes generated greater pessimism as to the short- and medium-termgrowth of the European economy (and its influence on the global economy). The ECBalso played a role, as it slowed down the rise in rates on some European countries’ debtsecurities by buying securities on the secondary market under the SMP programme._23Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

1.4.2. retail and corporate marketAs the effects of the crisis spread, the inability of public policies to support economicactivity and a rise in financing costs led to reinforced policies to attract deposits, saleof non-strategic assets and an increase in highly liquid assets. The dispersed increasein risk premiums and the shortage of finance in the interbank markets conditionedinterest rates on the domestic retail markets and affected the solidity of banks’accounts. This scenario has led to deeper consideration as to the best way and time toadopt the new regulatory framework for banking. The banking business will proceedwith a higher than usual degree of unpredictability in a context of progressively lowerliquidity in the money and credit markets.1.4.3. money MARKETS and FOREIGN exchangeSIn 2010, the exchange markets once again showed high volatility of the dollar. Itsmaximum against the euro was 1.1923 and its minimum was 1.4513 and it ended theyear at 1.3384, down 8.3%. The Fed kept its refi-rate at an all-time low (0-0.25%) and theECB continued the reduction of this rate that it had begun in 2009 to the lowest ever(1%). The euro was particularly affected by the crisis in Europe associated with thesovereign debt markets and lower medium-term economic growth prospects as a resultof austerity policies introduced in the meantime. The yen appreciated considerablyagainst the dollar (12.2%) and reached 81.12 USD/JPY, once again becoming a refugecurrency at times of financial instability.EXCHANGE RATES1009590858075YEN/DOLLAR (EE)DOLLAR/EURO (ED)1.601.401.201.000.800.600.40SOURCE: BLOOMBERGAversion to risk in 2010 put a damper on the usual operation of the interbankmarkets, which had a negative effect on intra-community financial flows. TheEuribor rates rose during the year. The 3-month rate went up 31 bp to 1.01%, the6-month rate 23 bp to 1.227% and the 12-month rate to 26 bp to 1.507%. The centralbanks in the USA and EA maintained their extraordinary liquidity measures._24Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

EURIBOR RATES%1.61.51.41.31.21.11.00.90.80.70.63M 6M 9M 12MMAR-09 JUN-09 SEP-09 DEC-09SOURCE: BLOOMBERG1.4.4. bond marketThe sovereign bond market was the centre of attention, especially in the second half of2010. After the bailout of Greece in May, the contagion spread rapidly to other peripheralEA countries such as Spain, Portugal and Ireland. Ireland ended up also needing aid on28 November. Rates of return on state bonds reached all-time highs and the centralbanks were obliged to calm down the secondary markets.The United States Federal Reserve kept its reference rate at between 0 and 0.25%during the year and announced a second round of quantitative easing (purchasing upto 600 billion dollars in long-term treasury bonds up to the end of the second quarterof 2011) at a rate of around 75 billion dollars a month. The rate of return on US treasurybills fell 54 base points to 3.29% at year-end. The difference between the two- and tenyearrates of return went down 91 base points._25Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

U.S. TREASURY BONDSYIELD (%)4.43.93.42.92.41.9BASE POINTS310.0290.0270.0250.0230.0210.0190.031-Dec 25-Mar 17-Jun 9-Sep 02-Dec10Y US BONDUS 2Y/10Y BOND SPREADSOURCE: BLOOMBERGThe European Central Bank kept its reference rate at its lowest ever, 1%. The ten-yearrate of return of the German debt ended the year at 2.96%, which was 42 base pointslower than in 2009. Unlike the United States, the difference between two- and ten-yearrates of return on German debt fell five base points.GERMAN TREASURY BONDSYIELD (%)4.43.93.42.92.41.9BASE POINTS26024022020018016014012031-Dec 25-Mar 17-Jun 9-Sep 02-Dec10Y US BONDUS 2Y/10Y BOND SPREADSOURCE: BLOOMBERGThe Portuguese public debt was affected by the crisis in Greece and Ireland and thepoor budgetary performance that obliged the government to take additional measuresto meet official targets. The difference between the ten-year rate of return of aPortuguese and a German bond rose 296 base points. The return on a 10-year treasurybond ended 2010 at 6.6%, after reaching a maximum of 7% in November._26Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

GERMAN AND PORTUGUESE TREASURY BONDSYIELD (%)765432BASE POINTS5004503503002502001501005031-Dec 25-Mar 17-Jun 9-Sep 02-Dec1.4.5. EQUITY market10Y GE BOND 10Y PT BOND GE/PT SPREADSOURCE: BLOOMBERGThe main US share indexes appreciated significantly in 2010. The Dow Jones, Nasdaqand S&P showed annual increases of 11%, 17% and 13%, respectively. There was highvolatility and uncertainty as to the sustainability of a potential economic recovery.However, the financial markets benefited from the announcement of profits by mostcompanies and ongoing budgetary and monetary stimulation measures. In thiscontext, President Barack Obama made an important announcement in December andthe Republican leaders in Congress agreed to prolong for another two years the taxcuts introduced during the presidency of George W. Bush. That month, the Dow Jones,Nasdaq and S&P rose 5.2%, 6.2% and 6.5%, respectively.In the Euro Area, most of the European indexes with the exception of Germany fellconsiderably. CAC40, IBEX and Euro Stoxx 50 went down 3%, 17% and 6%, respectively.The stock markets were penalised by fears of the effects of the serious financialand sovereign debt crisis in several European countries, including Portugal, and thepossibility of it spreading to other EU countries. The DAX showed an annual increase of16%. Germany’s GDP grew substantially (3.6%) in 2010, mainly thanks to exports.In Portugal, the PSI20, the national market index, fell 10%. Its performance wascharacterised by high volatility and it had fallen 17% by the end of June. The share pricesof companies in the construction sector were the ones that decreased most, as theywere penalised by the economic conditions and the government’s need to substantiallyreduce investments in public works. Martifer, Mota-Engil and Soares da Costa all wentdown more than 55%. The financial sector also suffered due to strict restrictions onaccess to finance in the financial markets and a probable need to reinforce capitalratios. BCP, BES and BPI fell 31%, 37% and 35%, respectively.Jerónimo Martins was the company with the best performance in 2010 and its shareprice rose 65.5%, benefiting mainly from the good performance of its Polish unit, whichregularly exceeded analysts’ estimates and from an appreciation of the zloty againstthe euro._27Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

EQUITY MARKETS - INDEXES (RELATIVE PERFORMANCE)140130120110100908070S&P500 EUROSTOXX50 PSI20SOURCE: BLOOMBERG_28Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2. Businessactivity ofBanif - Banco deInvestimento andsubsidiariesin 2010

2.1 overviewThe profits of Banif - Banco de Investimento (BBI) progressed extremely well in 2010 sothat:• At individual level, its net profit went from 1.7 million euros to 5.8 million thanks toan increase of almost 5 million euros in banking income that, along with an almost5% reduction in operating costs, made it possible to reduce the cost-to-incomeratio to 53%.• In consolidated terms, net profit was 8.2 million euros, which was 4.5 million, or120% more than in 2009 and raised return on equity to 12.2%. The cost-to-incomeratio fell from 72% to 61% thanks to a combination of higher earnings (+8%) andlower operating costs (-9%).The growth in consolidated banking income was boosted by a 3 million euro increase(+26%) in financial margin and profits from financial operations, while net fees wentdown from 21.8 million to 21.4 million euros. Under operating costs there was a sharpdrop in services and supplies (- 3 million euros) which largely offset much less significantincreases in personnel costs and depreciation.INDIVIDUAL ACCOUNTS 31-12-201031-12-2009 VARIATION (%)Net Assets1,322,666989,00734%Equity60,96862,030-2%Banking Income28,51223,62121%Cash Flow14,4938,66667%Profit or loss for the financial year5,8361,742235%ROA0.5%0.2%—ROE10.6%3.6%—Cost-to-Income53.1%67.2%—Solvency ratio8.9%11.0%—(Thousand euros)CONSOLIDATED ACCOUNTS 31/12/201031/12/2009 VARIATION (%)Net Assets1,339,229986,85036%Equity94,18574,37327%Banking Income35,91633,3128%Cash Flow15,10210,21948%Profit or loss for the financial year8,1823,714120%ROA0.7%0.4%—ROE12.2%6.6%—Cost-to-Income61.4%72.4%—(Thousand euros)_30Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2.2 Advisory Services & Banking2.2.1 Corporate FinanceIn 2010, the effects of the international economic and financial crisis persisted,exacerbated in Portugal and Spain by the sovereign debt crisis in the peripheral marketsof the Euro Area. In particular, the limitations faced by companies and individuals inaccess to bank loans had a decisive effect on mergers and acquisitions in Portugal andSpain.As a result of this adverse scenario, according to Bloomberg, there were 73 mergersand acquisitions transactions in Portugal in 2010, which was 10% fewer in number and14% lower in value than in 2009, when there had already been a considerable reductionin mergers and acquisitions.Even so, the Corporate Finance Department received and was involved in severalfinancial consultancy tasks, including important cross-border operations, the mostnoteworthy of which were:• Financial advisory services to Grupo Altrad in the acquisition of Irbal• Financial advisory services to Companhia de Seguros Açoreana in the acquisitionof Global Seguros and Global Vida• Financial advisory services to Fomentinvest in the acquisition of 30% ofEnersistemas, Energias, S.A. (6MW solar photovoltaic plant)• Financial advisory services to Banif Group in the divestment of 70% ofBANIFInvest in Brazil• Financial advisory services to TIIC – Transport Infrastructure Investment Companyanalysis, evaluation and negotiation of investment opportunities• Financial advisory services to Palamon Capital Partners in the analysis of severalinvestment opportunities• Financial advisory services to Dalkia in the prospection, analysis and evaluation ofinvestment opportunities in the energy sector in Portugal• Financial advisory services to Sapec and Fomentinvest in the analysis,evaluation, structuring and negotiation of investment opportunities in theenvironmental sector• Financial advisory services to ProA Capital in the analysis of investmentopportunities in the health sector• Advisory services in the financial evaluation of STDA – Sociedade Turística doAlentejo, S.G.P.S., S.A._31Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2.2.2 Structured FinanceIn 2010, the trend of 2009 towards greater selectivity and restrictions in loans tocompanies and investment projects continued, along with higher pricing of operationsand increasing liquidity difficulties on the part of Portuguese banks. In this context,most project finance and acquisition finance operations continued to be structuredas club deals including several banks. There were, however, increasing limitations onthe availability of structured credit due to the tough restrictions on liquidity faced byPortuguese banks.Nonetheless, the Structured Finance Department continued to take advantage of thiswindow of opportunity to win over important clients by structuring and setting upsignificant project finance and acquisition finance operations in Portugal and Spain.The following were particularly worthy of note:• Mandated Lead Arranger in the financing of Consis Loures (a consortium led by theMota-Engil and Banco Espírito Santo groups) of the concession for the new LouresHospital• Lead Arranger in the financing of Iberwind II (Magnum Capital Partners) for theacquisition of the largest wind power portfolio in Portugal, 681MW, comprising 33wind farms• Mandated Lead Arranger in the financing of Aenor Pinhal Interior (a consortiumled by the Mota-Engil and Banco Espírito Santo groups) of the Pinhal Interior subconcession• Mandated Lead Arranger in the financing of Infusion and ES Capital for theconstruction and operation of a 23MW wind farm in Cinfães (municipality of Viseu)• Mandated Lead Arranger in the financing of Magnum Capital Partners for theacquisition of Centro Médico Teknon, the largest and most renowned private hospitalin Barcelona• Mandated Lead Arranger in the financing of Escala Vila Franca de Xira (a consortiumled by the José de Mello, Somague and Edifer groups) for the concession for the newVila Franca de Xira Hospital• Mandated Lead Arranger in the financing of Grupo Generg for the construction andoperation of a 6MW photovoltaic plant in Porteirinhos (municipality of Almodôvar).The following were the most important operations in financial advisory services suchas project finance:• Exclusive financial consultant to Rotas do Algarve Litoral (a concession headed byACS/Dragados and Edifer) in monitoring the road sub-concession in coastal Algarve_32Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

• Exclusive financial consultant to SPER (a concession headed by ACS/Dragados andEdifer) in monitoring the road sub-concession in Baixo Alentejo• Financial consultant to Grupo ETE, Edifer and TIIC in the public tender for the Portof Leixões logistics platform concessionFinally, we are proud to announce that Banif - Banco de Investimento received thecoveted Excellence in Structured Finance 2010 Award in the World Finance BankingAwards.2.2.3. CREDITThe performance of the Credit Department, which has significant exposure to realestate credit, was influenced by a shortage of liquidity in the financial markets and asubstantial increase in the cost of funding in 2010.In this context, the main characteristics of the Credit Department in 2010 were:• A sharp reduction in new credit operations, which together with the scheduledrepayments of finance already obtained, resulted in a 19.5% reduction in theportfolio under management, which went from €301 million to €242 million• Restructuring of several operations in the portfolio, which included reinforcingguarantees, reducing credit exposure and defining new repayment periods• Revision and adjustment of the financial margin and other conditions of alloperations under the Credit Department’s management, the direct result of whichwas an increase in the portfolio’s average spread to 3.38%.At the end of 2010, the Credit Department was renamed the Real Estate FinanceDepartment to reflect its greater focus on and specialisation in financial business inthe property sector, especially financial consultancy for clients and investors in thestructuring and raising of capital and debt for real estate undertakings and assistancein the management, restructuring and disinvestment of these projects._33Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2.3 Treasury & Markets2.3.1 capital market• Primary debt marketIn 2010, the capital market - debt area was involved in structuring and placing 10primary market transactions to a total of around 345 million euros.The following transactions were particularly important as part of our policy of attractingresources to Banif – Grupo Financeiro: two issues of fixed rate notes for Banif Bancode Investimento (Brasil) to the amount of around 20.6 million euros, two issues of fixedrate notes for Banif Finance Ltd. to a total of 77.5 million, an issue of senior notesfor Banif – Banco Internacional do Funchal, S.A. as part of its Euro Medium Term NoteProgramme to a value of 150 million euros, a bond issue for Rentipar Seguros, SGPS, S.A.to the amount of 40 million euros and a bond issue for Banif SGPS, S.A. to the amount of50 million euros.As part of the structuring of guaranteed finance for foreign clients, the Bank headedan issue of secured notes using private placement totalling 2.5 US dollars for KamaiInternational with a maturity of four years, guaranteed by a pledge of shares in aBrazilian company in the farming sector. The issue was placed with a single corporateinvestor.Finally, the Bank and Banif – Banco Internacional do Funchal, S.A. headed two commercialpaper issue programmes for Empresa Madeirense de Tabacos, S.A. totalling 2.5 millioneuros each.• Primary equity marketIn the capital market - shares, Banif - Banco de Investimento acted as a financialintermediary in an operation to place 80 million Banif SGPS, S.A. shares as part of itsshare capital increase from 490 million euros to 570 million.2.3.2. FINANCial department2010 witnessed a continuing deterioration in access to foreign sources of liquidity andPortuguese banks’ dependence on the European Central Bank increased. The BBI was noexception and so the activity of the Financial Department focused on three main areas:• Guaranteeing alternative sources of liquidity while reducing dependence on the ECBand monitoring the cost of funding• Helping corporate and private clients to increase resources obtained• Serving its clients in managing and hedging financial risks (exchange, commodityand interest rate)In view of the need to diversify sources of finance, BBI raised its number of carry-overcounterparties by four, which increased its sources of finance besides the ECB andhelped corporate and emerging market self-finance positions in USD._34Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

The BBI’s collaboration with Group companies, in the area of insurance, for example,through the companies Açoreana and Global, increased considerably in 2010, makingit possible to generate and distribute synergies in the money and exchange marketareas.In 2010, BBI raised an additional sum of 100 million euros in resources from institutionaland corporate clients, allowing it to partially finance the 30% growth in assets duringthe year.New products designed to attract resources were released for the institutional andprivate area, including the Evergreen Deposit for institutional clients and a depositindexed to a basket of currencies (AUD, BRL and NOK).BBI also increased its number of FX and derivatives counterparties from three to 10counterparties with signed ISDA and CSA, which made it possible to close hedgingoperations with clients to a notional amount of 1.7 billion euros, including all FX andderivatives operations. The BBI’s capacity to quote and value derivatives was alsoincreased, with a view to hedging the risk for clients, such as interest rate, credit andcommodity derivatives.2.3.3. SECURITIsationIn 2010, Banif - Banco de Investimento (Banif Investimento) structured threesecuritisation operations to a total of around one billion euros.At the end of 2010, the Securitisation Department was responsible for managingapproximately €3.45 billion in 11 operations, around €3.25 billion of which were issuedthrough Gamma – Sociedade de Titularização de Créditos, S.A. (Gamma).Banif Investimento’s strategy in this area had been based on the following aspects:- Structuring of new operations- Issues through Gamma- Management of operations in which the Banif Group is involved.Operations in 2010• June/10 - Banif Investimento organised and led the structuring of an operationto securitise non-performing loans at Banif – Banco Internacional do Funchal, S.A.(Banif). The resulting bond issue totalling €113 million was performed by Gammaand registered and settled through Interbolsa.• July/10 - Atlantes Finance No. 3 was completed. It was a securitisation operationinvolving a consumer credit, motor and leasing portfolio from Banif, Banif Mais, S.Aand Banif Go – Instituição Financeira de Crédito, S.A. Banif Investimento acted asJoint Arranger in this operation, which entailed an issue by Gamma of bonds toa total of approximately €411 million euros. The issue was given an AAA rating byStandard & Poor’s and Moody’s.• November/10 - a securitisation operation entitled Atlantes Mortgage No. 7 wascompleted. It involved securitisation of a portfolio of mortgage loans from Banif.Gamma issued the bonds totalling approximately €460 million and the most seniortranche was given an AAA rating by Standard & Poor’s and Fitch. Banif Investimentoacted as Sole Arranger in this operation._35Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

As at 31 December 2010 Gamma had total net assets of 3.252 billion euros and equityof around 3.8 million. Its net profit was €328,390.INDIVIDUAL ACCOUNTS 31/12/201031/12/2009 VARIATION (%)Net AssetsEquityProfit or loss for the financial year3,251,8743,7963282,458,4472,84818632%33%77%(Thousand euros)2.4. Trading & Sales2.4.1 our own portfolio2010 witnessed ongoing deterioration in the outlook for the peripheral Euro Areaeconomies, with differences in sovereign debt extending to the core countries andintervention by the European Facility and IMF in Greece and Ireland. During the periodthere was a high aversion to risk on the part of investors in sovereign debt and a needfor the affected countries to introduce contractive budgetary policies jeopardisingshort- and medium-term economic performance. In this scenario, BBI chose to maintainits fixed-rate portfolio in view of the general lack of liquidity.2.4.2 secondary bond marketThe Bank extended its fixed income sales, with a total turnover of 1.05 billion euros.It took a stance of provider of liquidity and market maker in Brazilian Eurobonds andquoted 275 different companies on a daily basis for more than 250 active institutionalclients from 35 countries. There was an increase in Asia, with clients in Singapore andHong Kong, and a growing interest in clients from the Middle East in securities fromBrazilian issuers. The segments in which Banif Investimento took the strongest positionas an important participant in the secondary market included corporate and Braziliangovernment bonds, the Pemex curve (Petróleos Mexicanos) and securities denominatedin BRL but settled in EUR and USD, for foreign investors wishing to be exposed to theBrazilian currency without opening a local account.2.4.3. secondary EQUITY market2010 was an adverse year for stock markets in general and the peripheral Euro Areamarkets in particular. The sovereign debt crisis in the Euro Area, which involved areduction in some countries’ risk ratings, intervention by the European Facility andIMF in Greece and Ireland and early removal of budgetary stimulation measures takenafter the financial crisis in 2008 and 2009, affected investors’ confidence and createda climate of aversion to risk. The stock markets that suffered most were those inPortugal, Spain and Greece, three of the countries at the heart of the budgetary crisis.The PSI20 ended the year falling 10.34%, the IBEX35 17.43% and the main Greek index35%. Eurostoxx went down 5.8%. This adverse environment affected performance inequities and had a decisive impact on the feelings of private and institutional investors._36Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Nonetheless, several initiatives were undertaken to consolidate our current client baseand attract new ones. In addition to taking roadshows with companies and analyststo investors, the Bank was also the sole sponsor of Midcap Paris and London, an eventthat brings together institutional investors and medium-sized listed companies.Furthermore, the market acknowledged our research team, which won the prize in thecategory Best Fund Manager / Analyst in the Investor Relations & Governance Awards2010.The bank continued to broker the shares of Banif SGPS pursuant to its liquidityagreement.2.5. Client management2.5.1. Private ClientsIn 2011, the Private Client Department continued to consolidate its work based on astrategy of increasing its client base with new private clients and a plan to stimulaterelations with the former BPP client base following the mandate given to the BanifGroup to manage the FEI Gestão Passiva Fund. Two new private bankers (one in Portoand the other in Lisbon) with know-how and expertise in dealing with these clientswere hired to better serve this segment. We also set up an investment advisory positionto step up value-added business.We introduced a strategy for creating greater value added in relations with our currentclient base through products and services focusing on the single-product segment andwith less portfolio turnover. This made it possible to concentrate this department’sresources on accompanying private high-income clients who are active in investmentand financial intermediation.In the first half of the year, the aim of our commercial strategy was to consolidatethe diversification of sources of PCD earnings, particularly by stepping up the debtcomponent (primary and secondary) in clients’ portfolios and third-party funds.Throughout the year, but especially in the second half, we gave priority to attractingresources to fit our clients’ more conservative profile with a competitive range oftraditional deposits and indexed deposits with guaranteed principal.Thanks to these initiatives, assets under management increased around 13% to233 million euros, the number of clients grew 60% to around 500 and term depositstotalled about 23 million euros, which represents 120% growth. As a result of a poorerperformance in the share segment and clients’ increased aversion to risk, there wasa fall of around 20% in the share component to around 124 million euros. There wasalso a decrease in loans to clients due to the more negative framework in cost offunding (with higher spreads) and more efficient management of amounts availablefor financing (reduction in lines approved)._37Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2.5.2. Corporate ClientsThe mission of the Corporate Client Department is proactive creation of business dealswith companies and public bodies, creating financial solutions from all the productareas of Banif - Banco de Investimento and cementing medium-term relationships oftrust with clients.The result achieved in the current circumstances reflect not only its choice of sectorand close integration with different product areas of Banif - Banco de Investimentobut also joint efforts towards a commercial approach to the corporate segment byinvestment and commercial banks and Companhia de Seguros Açoreana.There was also cross selling with business units aboard, especially the businesscreated by the team for Banif - Banco de Investimento (Brasil) in a number of crossborderoperations with Portuguese and Brazilian companies. We also began acoordinated effort with Bankpime to develop cross-border operations.As a result, it was possible to submit 67 proposals to clients and organise five importantadvisory service, two capital market and three cross-border operations with Brazil. Ourcorporate bankers made important contacts with renowned Portuguese companiesand financial groups, which should make it possible to cement long-term relationshipsover the next few years.2.5.3 SMEsThe SME Department is responsible for financial advisory services and structuringof finance for small and medium-sized companies with the main goal of offeringinvestment banking services suited to their needs and dominant operations set upwith Banif Grupo Financeiro, acting in partnership the Banif – Banco Internacional doFunchal Company Centres.2010 witnessed a continued slowdown in activity, as SMEs were the segment thatsuffered most from the macroeconomic situation in terms of financial advisoryservices.In this context, the SME Department and Corporate Client Department stepped upbusiness contacts in order to extend their client base and potential for financialadvisory mandates. As a result, 16 mandate proposals were submitted and two newfinancial advisory mandates were awarded in the environment and engineering andfacilities sector. Furthermore, the proposals currently being analysed by potentialclients are expected to help consolidate our portfolio of operations.2.6 asset managementAsset management is performed by Banif - Banco de Investimento when managing theportfolios of private and institutional clients, by Banif Gestão de Activos – SociedadeGestora de Fundos de Investimento Mobiliário, S.A. in real-estate and equity investmentfunds and special investment funds and by Banif Açor Pensões – Sociedade Gestorade Fundos de Pensões, S.A. in pension funds. Venture capital and private equity are_38Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

handled by BGA and mainly by Banif Capital, Sociedade de Capital de Risco, S.A.The sector was affected in 2010 by an increase in Portugal’s risk premium followingthe exacerbation of the sovereign crisis in the peripheral Euro Area countries, whichresulted in an increase in savers’ aversion to risk. This trend particularly conditionedmutual fund management (more volatile than portfolio management) and assets undermanagement fell from 17.231 billion euros as at 31 December 2009 to 14.219 billion atthe end of 2010 (source: APFIPP). The segmented affected most were bond, treasuryand money market funds.In this context, asset management strategy for 2010 was based on:• Strengthening our strategic relationship with Banif – Grupo Financeiro andenlarging its base of investors in investment funds and their penetration rate;• Cementing our relationship with institutional investors outside Banif – GrupoFinanceiro, in order to boost their investments in investment funds and integratedportfolio management services• To keep our focus on demand for differentiation and value-added factors for assetmanagement, by reviewing the investment policies of investment funds under ourmanagement, particularly special multi-class asset funds and funds specialising inalternative assets.As at 31 December 2010 asset management at Banif - Banco de Investimento and itssubsidiaries had 3.126 billion euros under management and consultancy for investment.In December 2009, Banif - Banco de Investimento managed 2.388 billion euros in assets.2.6.1 MUTUAL FUNDS AND REAL ESTATE INVESTMENT FUNDSAND SPECIAL INVESTMENT FUNDSAs part of its strategy, the real estate company focused particularly on adapting itsfund portfolio. It set up home rental real-estate funds and enlarged its placing channelsand networks by introducing use of the internet to market investment funds with itsBanif@st electronic banking service.In March, there were two increases in capital in real estate funds, Pabyfundo andImóveis Brisa, of 2.2 million and 1 million euros, respectively.In that month, we also formalised the replacement Banif Gestão de Activos as themanagement company of the Luso Carbon Fund and New Energy Fund by MCO2,due to a need identified by Banif Gestão de Activos to separate a highly specialised_39Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

management area focusing on the financial management of this type of fund, whoseinvestment policy is aimed mainly at the selection of environmental and renewableenergy assets and projects. Under a subcontract, Banif Gestão de Activos maintainedadministrative management support services for the funds and Banif - Banco deInvestimento remained the custodian.In May 2010, the company opted for the strategic repositioning of its bond funds andBanif Euro Obrigações Taxa Fixa and Banif Euro Obrigações Taxa variável changed theirnames to Banif Euro Governos and Banif Euro Corporates, respectively.In mid-year, Banif Gestão de Activos was appointed manager of two importantinvestment funds, FICA – Fundo de Investimento para o Cinema e Audiovisual, whosemanagement was transferred on 1 June, and Fundo de Gestão Passiva – FEI, for whichthe transfer of management to Banif Gestão de Activos began at the fund’s investormeeting on 14 June. Banif Gestão de Activos, SGFIM, SA took over its management on23 July. The latter fund was the second largest mutual fund based in Portugal at theend of the year and had assets totalling 560.229 million euros.In order to provide a timely response by investment fund management to thechallenges at the time, mainly in the second half of the year, the company changed theinvestment policy of the Banif Euro Financeiras, Banif Europa de Leste, Banif GestãoActiva, Banif Gestão Patrimonial and Banif América Latina investment funds. This lastcase accompanied a change in investment focus (more than 50% in Brazil) and thefund’s name was changed to Banif Brasil.Where real estate fund management was concerned, in September 2010 the companyincreased the capital of Imóveis Brisa, a closed, private subscription real estateinvestment fund by 1 million euros. It is also currently working on setting up a homerental real-estate fund and a closed public real estate fund.In December, the management company decided to liquidate Banif Euro Governos, an_40Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

open fixed-rate bond investment fund.The assets managed in mutual funds went from 102.8 million euros at the end of 2009to 78.8 million at the end of 2010 (a 23.4% decrease), while real estate funds went downfrom 794 to 709 million euros, less 10.6%. Assets managed in special investment fundsrose from 182 to 610 million euros, i.e. a growth of 235.4 %.The company was able to maintain high market shares in special investment funds andreal estate funds, with, 17.7% and 6.1% respectively at the end of the year.In spite of the unfavourable scenario, earnings rose 39.3% against 2009, which resultedin a rise in the company’s net profit from 1.546 billion euros in 2009 to 2.888 billioneuros in 2010. ROE was about 39.25%.31/12/2010 31/12/2009 VARIATION (%)Net AssetsEquityProfit or loss for the financial year13,24210,2472,88813,9938,7391,546-5%17%87%(Thousand euros)2.6.2. ALTERNATIVe INVESTMENTS and PRIVATE EQUITY - BGAThe management of New Energy Fund and Luso Carbon Fund was transferred to a newcompany, MCO2, 25% of which is owned by Banif - Banco de Investimento, in March 2010,as planned.After the transfer of competences to the new management company, the work of theAlternative Investment and Private Equity Department at Banif Gestão de Activos –Sociedade Gestora de Fundos de Investimento Mobiliário, S.A. (Banif Gestão de Activos)focused essentially on managing three funds, Infra Invest– a special, open investmentfund (Infra Invest), Art Invest – a special closed investment fund (Art Invest) and Fundode Investimento para o Cinema e o Audiovisual (FICA)Given the unique characteristics of each fund, it is not possible to speak of investmentmanagement applicable to all three, as each one requires a different approach. Thefollowing were the most important events in these funds in 2010:Infra InvestThis fund invests directly or indirectly in quoted and unquoted assets, projects orcompanies related to infrastructure.It went into operation in mid-2009 and committed an initial investment of 12 million eurosin the Banif Infrastructure Fund, a venture capital fund. The Banif Infrastructure Fundhas holdings in Zon Madeira, Zon Açores, Via Litoral and Finpro, the fund’s main asset.In 2011, it is expected to be possible to make new investments and the fund will continueto invest in infrastructure funds.Art Invest_41Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

This fund invests directly and indirectly in works of art and went into operation on 30January 2004.On 31 December 2010, its main asset, the Fine Art Fund represented around 49% of itsportfolio, while the remaining capital was invested directly in various works of art byPortuguese and Brazilian artists. The Fine Art Fund began its investment in July 2004and began to distribute earnings in November 2009.In 2010, the fund cut back on transactions while waiting for a confirmation of arevival in the global economy. Although it is in a disinvestment phase, there may bepossibilities of new investments in 2011 and so a number of opportunities have beenanalysed. If the current level of liquidity persists and if some divestments now undernegotiation are made, the fund is expected to distribute part of its liquidity in itsportfolio in 2011.FICAFollowing a public consultation by Instituto do Cinema e do Audio Visual on the transferof the management of Fundo de Investimento para o Cinema e o Audiovisual, whichinvests directly and indirectly in movies and audiovisual and multi-platform works,Banif Gestão de Activos took over its management in mid-2010.The management company’s work in 2010 consisted essentially of restricting andreorganising the fund with a view to ending the impasse that the fund had reachedin terms of financing and optimising operational decision-making processes. The fundalso focused on making up FICA’s tardiness in terms of commitments and currentinvestments.At a structural level, Banif Gestão de Activos, on behalf of FICA, signed an agreement onFundo de Apoio ao Financiamento à Inovação (FINOVA), under which FINOVA acquiredall of FICA’s investment units, around 39.76% of the fund’s equity, held by IAPMEI.Furthermore, it changed the fund’s governance model by transferring decisions bythe investor meeting to an investment committee at Banif Gestão de Activos assistedby an independent advisory board.From an operational point of view, FICA closed contracts worth around 16.3 millioneuros, which represents a recovery of 80% of investments in arrears and freed around4 million euros in funds.2.6.3 Banif Açor Pensões (PENSION FUNDS)The company has undertaken important commercial activity involving contacts withover 200 companies and professional associations. It enlarged its range of retirementproducts and solutions by introducing four new open pension funds for joint marketingfor companies and individuals in partnership with Optimize Investment Partners –SGFIM, S.A., with Optimize – Mediação de Seguros Unipessoal, Lda. and MDS – Corretoresde Seguros, S.A.There were three new collective subscriptions with Banif Mais, S.A., Banco L.J._42Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Carregosa, S.A. and Ribeiro Moreira – Gestão e Serviços, Lda., and the transfer of theGlobal personnel’s pension fund.Assets under management rose from 269 million euros at the end of 2009 to 289 millionat the end of 2010, which was up 7.37%. The company’s net profit was 160,000 euros,as opposed to 132,000 in 2009, an increase of 21.8%.31/12/2010 31/12/2009 VARIATION (%)Net AssetsEquityProfit or loss for the financial year4,3363,9531614,2013,7931323%4%22%(Thousand euros)2.6.4 BANIF - BANCO DE INVESTIMENTO (WEALTHMANAGEMENT)An even more proactive strategy was introduced in wealth management in closecoordination between Banif - Banco de Investimento and Banif Gestão de Activos. Themanagement team was also reinforced in order to cement the quality of portfoliomanagement and level of service provided to clients. The mandate to manage theportfolio of Companhia de Seguros Açoreana changed to investment advisory serviceseffective as of September. We began to provide this service for the portfolios of theinsurance companies Global Vida and Global Seguros.Banif - Banco de Investimento and its subsidiaries had under management and hadbeen commissioned to provide portfolio investment consultancy services totalling 1.205billion euros on 31 December 2010. In 2009, assets managed for third parties totalled943 million euros.2.7 Private EquityBanif Capital – Sociedade de Capital de Risco, S.A. is the main venture capital company atBanif - Banco de Investimento and the basic vehicle for its private equity activity. In 2010Banif - Banco de Investimento increased its holding in Banif Capital to 100% followingthe acquisition of the 20% holding owned by Associação Empresarial Portuguesa (AEP).At the end of 2010, the company was managing three funds: Capven, set up in July 2003and aimed at SMEs, the Infrastructure Fund FCR, a fund designed for the infrastructuresector set up in June 2009 and the Global Private Equity Fund - FCR, a fund of privateequity funds founded in July 2010.In 2010, Banif Capital introduced the Global Private Equity Fund - FCR, a new fund offunds consisting of three international private equity assets that invest essentially inthe European and United States markets. This fund is for unqualified investors, will last10 years and has a subscribed capital of 25 million euros.Also in 2010, Banif Capital continued active monitoring of the Capven and Infrastructure_43Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

FCR funds and its subsidiaries. The following were the most important events:- Completion of the financing of the Infrastructure Fund FCR which included realisingthe remaining capital of the second subscription phase in December 2009 and obtaininga medium-term line of credit from a Portuguese credit institution- Reduction in the Capven fund’s capital of approximately €45,000, as decided at theinvestor meeting in order to return to IAPMEI funds used in the PRIME Programme- Repurchase by the Capven fund of 233,333 shares in the subsidiary Hozar SGPS fromAICEP, thereby re-establishing its initial holding of 23.32%.As part of the internationalisation of Banif Investment Bank, in 2010 Banif Capitalconsolidated its strategy of extending its business activity in international markets.For this purpose a memorandum of understanding was signed with the venturecapital department of Barclays, specifically Barclays Infrastructure Funds (BIF). Theagreement was the result of both parties’ interest in furthering their relationship andexploring cooperation and joint investment opportunities through the infrastructurefunds that they manage.The implementation of this memorandum will make it possible to exploit synergiesbetween the BIF and Banif Capital and jointly take up business opportunities in order tocreate value and, when all is said and done, benefit the investors in the funds managedby both.Negotiations on agreements with two institutions in the area of the environmentand renewable energy are well advanced, with the goal of combining Banif Capital’sinvestment fund management skills with these companies’ technical know-how. Theyare recognised in the market as renowned international players in their sector and theagreements should be implemented in 2011.31/12/2010 31/12/2009 VARIATION (%)Net AssetsEquityProfit or loss for the financial year1,987359841,921275-2763%30%n/a(Thousand euros)2.8 SUSTAINABILITY AND AWARDSIn line with the sustainability strategy of Banif - Grupo Financeiro, Banif - Banco deInvestimento is aware of its responsibility as an active agent in the construction of amore sustainable society in the economic,social and environmental fields.2010 marked the tenth anniversary of Banif - Banco de Investimento and witnessed anumber of initiatives aimed at meeting this commitment.Banif - Banco de Investimento continued to make a substantial contribution to_44Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

enewable energy projects in Portugal in 2010.For example, it structured and set up two project finance schemes to a total of 42.5million euros for the construction and installation of a 6 MW photovoltaic plant inAlmodôvar (Alentejo) and a 23 MW wind farm in Cinfães (Viseu) and participated infinancing Iberwind II (Magnum Capital Partners) for the purchase of the largest windpower portfolio in Portugal, consisting of 33 wind farms totalling 681 MW.Projects in the renewable energy sector have an important social impact as theycreate new jobs and make an annual contribution to municipal revenue. Furthermore,the environmental advantages of these systems, which do not emit greenhouse gases,are well known, as is their contribution to reducing the country’s energy dependency.In terms of climate responsibility, the activity of New Energy Fund - Fundo Especial deInvestimento Fechado and Luso Carbon Fund - Fundo Especial de Investimento Fechadowere particularly important. Banif - Banco de Investimento has a 25% holding in MCO2 -Sociedade Gestora de Fundos de Investimento Mobiliário, SA, which currently managesthese funds, and is the custodian of the New Energy Fund and Luso Carbon Fund.The New Energy Fund was set up at the end of 2007 by Banif - Gestão de Activos and isintended for institutional investors. It invests in the renewable energy market all theway along the value chain, including not only exploration of raw materials but also thedevelopment and use of new technologies.The Luso Carbon Fund’s activity was also important in 2010. It invests in the carbonmarket by acquiring greenhouse gas reduction credits generated under the KyotoProtocol.The Luso Carbon Fund currently has a commitment to more than 10 million tonnes ofcarbon credits from 31 projects, 12 ERPAs in five countries (China, Brazil, India, Thailandand Russia) of nine different types.Also in the field of environmental issues, Banif - Banco de Investimento sponsoredconferences organised by Diário Económico - the Fifth Renewable Energy Conferenceand Biomass: Financing a Clean Energy Source.In-house, we continued to raise awareness of good environmental practices by fosteringreuse and recycling, providing an area on the company portal entitled Articles for aMore Sustainable World and circulating internal communications on the WWF-WorldWildlife Fund hour of the plant initiative.Banif - Banco de Investimento also participated in the mobile phone collection projectorganised by Banif Grupo Financeiro in partnership with AMI, aimed at combating socialexclusion and fostering environmental protection.In terms of corporate social responsibility, Banif - Banco de Investimento donated allits share brokering earnings on 26 February to the victims of the Madeira storm andcollaborated with Banif in publicising the Banif solidarity with the Madeira victimsaccount set up to support this cause.In line with its social responsibility policy, Banif - Banco de Investimento chose AssociaçãoSOL to receive its ongoing support and year after year the ties with this associationhave grown stronger.In 2010 Banif - Banco de Investimento decided to meet one of Associação SOL’s mainneeds and donated a nine-seat minibus. In addition to the minibus, it also gave theassociation essential items donated by its own employees, who got together in thiscommon cause.The key to the new vehicle was presented by Artur Silva Fernandes, Chief Executive_45Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Officer of Banif - Banco de Investimento to Teresa d’Almeida, president of AssociaçãoSol, at ceremony held at the bank’s offices.The ceremony included a tea party for the children and the bank’s employees and washeld on the association’s 18th anniversary.AWARDS AND RECOGNITION IN 2010:Award for Excellence in Structured FinanceThe Bank received the renowned Award for Excellence in Structured Finance 2010 fromWorld Finance Magazine in recognition of its high commitment in this area and itssuccess at national and international level.Teresa Martinho at Banif - Banco de Investimento acknowledged as the Portuguesemarket’s best financial analystThe award was given by Deloitte in partnership with Diário Económico newspaper inan initiative rewarding best practices in Portugal. Ms Martinho, from Banif - Banco deInvestimento, S.A., was voted the best financial analyst in Portugal.Audit follow-up system at Banif Banco de Investimento wins OutSystems Agility_46Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

AwardBanif Investment Bank received an Agility Award from OutSystems in recognition of itsAudit Follow-Up, a system that records the status of all the Bank’s audit processes andallows effective collaboration between all the departments involved.Banif Banco de Investimento receives Award for Excellence at WorkBanif - Banco de Investimento has been given the Award for Excellence at Work in thebanking and financial services sector, medium-sized company category, from Heidrick& Struggles, ISCTE Business School and Económico newspaper.O Banif - Banco de Investimento voted the best bank to work for, in 37th place in theTOP 100 Best Companies to Work for in PortugalThis initiative by EXAME magazine, in partnership with the consultancy companyAccenture, selected Banif Banco de Investimento for its good work environment,involvement in charity campaigns and proposals with innovative ideas, among otherfactors._47Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

3. Business activityof investmentbanking companiesoutside Portugal

3.1 BraZilThanks to its reputation and market positioning, Banif - Banco de Investimento (Brasil)consolidated its participation in the structured operations market and offered notonly debentures and promissory notes but also solutions such as structuring ofreceivables, investment funds and the issue and distribution of property receivablescertificates. The bank was coordinator of the public distribution of the fifth issue ofdebentures of BNDES Participações SA, to a value of 2 billion reais.The M&A and Structured Finance units have worked on a wide base of clients andtargets, particularly those interested in the Portugal - Brasil axis in the mid and uppermidcaps segments. The most important achievements in 2010 were consultancyin an acquisition operation in the business process outsourcing segment, work inbidding processes for Copa 2014 and mandates from Contour Global do Brasil, PREVIand Consórcio HFGG.While Asset Management was undergoing an internal restructuring and cost reductionprocess, Brokerage reached an agreement with Grupo Caixa Geral de Depósitos on theterms and conditions of the sale to the group of 70% of Banif Corretora de Valoresand Câmbio SA (Banif CVC). For merely procedural reasons, the sale did not go throughin 2010.In the retail brokerage business, the most significant fact for Banif CVC was a fallin the amounts traded and orders executed, due to a reduction in the weight ofthe physical person at BM&F / Bovespa. Even so, the operation ended the year withgrowth in income.3.2 SPAINBankpimeIn a particularly difficult year for the financial sector in Spain, Bankpime was noexception.Current business was affected by the intense competition for deposits, which led to adrop of almost 3 million euros in financial headroom. The 12% increase in commissionsas a result of the good performance of funds, with Bankpyme SGIIC being consideredone of the most profitable managers in the last 15 years, was not enough to offset thefall in the interest differential. The effort to reduce costs, particularly the move of thebank’s head office to Calle Pedro i Pons, was also not sufficient to avoid a new fall inoperating profits and operating cash flow.The economic and financial situation in Spain was reflected in an increase in Bankpime’scredit provisions, as in the rest of the financial sector, conditioning profits in theoperating account. In 2010, the Grupo Bankpime recorded a loss of 29,473,000 euros(27.5% for the Banif Group). This was basically due to extraordinary provisions in itscredit portfolio in accordance with new Banco de España requirements._49Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

3.3 The uNITED STATESBanif Securities Inc.2010 brought important, highly positive developments to Banif Securities. Thestrategic decision to transfer the trading and sales infrastructure to the Miami officewas crucial to success in 2010, as was an investment in new employees, experienced,talented professionals who produced significant resultsOperational rationalisation measures, along with employee training to optimise theirefficiency and efficacy and encourage cross selling within the group, contributedconsiderably to enabling Banif Securities to achieve the best result of the last fiveyears.It is also important to note that in 2010 Banif Securities was audited the FINRA, themain regulator of broker-dealers in the United States and received a clean bill of health._50Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

4. Proposal forthe Appropriationof Profits

The Board of Directors proposes to the General Meeting of Shareholders that,pursuant to Article 31(1) of the company’s Articles of Association, Article 376(1)(b)of the Company Code and Article 97 of the General Law on Credit Institutions andFinancial Companies (Decree-Law 298/92 of 31 December), the net profit for 2010 ofEUR 5,835,849.89 (five million eight hundred and thirty-five thousand eight hundredand forty-nine euros and eighty-nine cents) be appropriated as follows:Legal Reserves: EUR 583,584.99 (five hundred and eighty-three thousand five hundredand eight-four euros and ninety-nine centsFree Reserves: EUR 5,252,264.90 (five million two hundred and fifty-two thousand twohundred and sixty-four euros e ninety cents)_52Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

5. Closing Remarks

Sadly, Comendador Horácio da Silva Roque, Chairman of the Board of Directors ofBanif - Banco de Investimento SA, passed away on 19 May 2010, after a long period ofhospitalisation.This was a particularly difficult time for this institution and the Group to which itbelongs (Banif - Grupo Financeiro), and the Board of Directors wishes to express inthis report the sorrow that the death of Mr Silva Roque caused to all the company’semployees and everyone who in one way or another places their appreciation, interestsand expectations with Banif – Grupo Financeiro.At its meeting of 31 May 2010, the Board of Directors decided to convey their sympathyto his family and to reassert its determination to conduct the company’s businessactivity in Banif - Grupo Financeiro with total respect for the values and principles thatSilva Roque always personified in order to perpetuate his “power to believe” throughthis project for the creation of value.In view of Mr Silva Roque’s state of health and hospitalisation which indefinitelyprevented him from performing his duties as Chairman of the Board of Directors, theBoard meeting of 11 March 2010 recognised that the conditions had been met to giveCarlos David Duarte de Almeida, the Vice-Chairman, the legal and regulatory powers ofthe Chairman, for as long as he was kept from his duties.The Bank’s General Meeting of Shareholders on 30 March 2010 elected the statutoryauditor and the members of the Advisory Board of the company for 2010.Pursuant to Article 446 of the Company Code, Ernst & Young Audit e Associados, - SROCS.A was elected as statutory auditor for one year with reference to 2010, representedby João Carlos Miguel Alves, certified auditor.The members of the Advisory Board are as follows:Advisory BoardAntónio do Pranto Nogueira LeitePedro Miguel Duarte Rebelo de SousaJoão Vieira de AlmeidaFernando José Inverno da PiedadeJorge Armindo de Carvalho TeixeiraJosé Almeida GuerraAntónio Luís de Andrade MagalhãesAntónio Fernando Caldeira de Paula SantosJorge Manuel de Oliveira GodinhoNuno Manuel Branco Ribeiro da SilvaJosé Romão Leite BrazMaria Teresa Henriques da Silva Moura Roque dal FabbroPaulo Cezar Rodrigues Pinho da SilvaAntónio Manuel Pereira BernardoThe aforementioned General Meeting of Shareholders of the Bank on 30 March 2010voted to approve a statement on the remuneration policy of the members of thecompany’s Board of Directors and Audit Board, pursuant to Article 2(1) of Law 28/2009of 19 June._54Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

At a meeting on 2 July 2010, in view of the vacancy left on the Bank’s Board ofDirectors following the decease of Mr Silva Roque, the Board decided to approvethe cooption of Joaquim Filipe Marques dos Santos as a member until the end of its2009/2011 term of office.It also decided to approve the appointment of Mr Marques dos Santos as Chairman ofthe company’s Board of Directors until the end of its 2009/2011 term of office.At a meeting on 30 July 2010, the Board of Directors was informed of the resignationof Mr Duarte de Almeida from the position of Vice-Chairman of the Bank’s Board ofDirectors in a letter dated 29 July 2010. Following this resignation, the Board decidedto co-opt Carlos Alberto Rodrigues Ballesteros Amaral Firme as a member of the Boarduntil the end of its 2009/2011 term of office.At the same meeting, the Board was also informed of the resignation tendered byNuno José Roquette Teixeira in a letter dated 29 July 2010, as a member and Vice-ChiefExecutive Officer of the Bank’s Board of Directors.It also decided to approve the appointment of Rodrigues Ballesteros Amaral Firme tothe Executive Committee of the Bank’s Board of Directors and the appointment of RaulManuel Nunes da Costa Simões Marques as Vice-Chief Executive Officer of the Bank’sBoard of Directors.At its meeting of 22 December 2010, the Board of Directors was informed of MauroPereira Bueno Meinbert’s resignation as member of the Board of Directors, as per aletter dated 30 November 2010.In concluding its report on the activities of the financial year 2010, the Board of Directorswould like to express its appreciation of the support and cooperation shown by themembers of the Audit Board, the Statutory Auditor and the supervisory authorities.Lisbon, 28.02.11THE BOARD OF DIRECTORSJoaquim Filipe Marques dos Santos - ChairmanArtur Manuel da Silva Fernandes – Vice-ChairmanNuno José Roquette Teixeira_55Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

José Paulo Baptista FontesRaul Manuel Nunes da Costa Simões MarquesMaria da Conceição Rodrigues LealCarlos Eduardo Pais JorgeVasco Clara Pinto FerreiraAlexandre J. Boa-Nova e Moreira dos SantosJoão Manuel Mora de Ibérico NogueiraCarlos Alberto Ballesteros Amaral Firme_56Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

6. Financialstatements

6.1 INDIVIDUAL financial statements and their notes2010/12/31 2009/12/31BALANCE SHEETNotesVALUE BEFOREPROVISIONS ANDDEPRECIATIONIMPAIRMENTANDDEPRECIATIONNETNETCash and balances at central banks52 218-2 2186 346Due from other banks686 271-86 27141 126Financial assets held for trading7150 699104150 595105 156Other financial assets at fair value through profit or loss8 and 24192 34479192 265219 316Available-for-sale financial assets9278 210107278 10373 388Investments in credit institutions1012 789-12 789225Loans and advances to clients11 and 24478 49311 741466 752425 473Investments held to maturity1260 391-60 39180 399Assets with repurchase agreements1328 387-28 387-Non-current assets held for sale142 657-2 657-Other tangible assets1516 2863 05013 23613 613Intangible assets167 4093 5563 8533 600Investments in subsidiaries, associates and joint ventures179 611-9 6117 523Current tax assets18308-30873Deferred tax assets185 866-5 8662 354Other assets19 and 249 441779 36410 415TOTAL ASSETS1 341 38018 7141 322 666989 007Amounts owed to central banks20287 17893 136Financial liabilities held for trading21118 02761 627Amount owed to other credit institutions22499 295423 280Amount owed to clients23311 887295 456Provisions244 2205 196Current tax liabilities182 646153Deferred tax liabilities1836Other subordinated liabilities2530 03330 029Other Liabilities268 40818 094TOTAL LIABILITIES1 261 697926 977Share Capital2755 00055 000Revaluation reserves27(9 113)(2 216)Other reserves and retained earnings279 2467 504Profit for the period275 8361 742TOTAL EQUITY60 96962 030TOTAL LIABILITIES AND EQUITY1 322 666989 007(THOUSAND EUROS)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED_58Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

INCOME STATEMENT NOTES 10/12/31 09/12/31Interest and similar income2841 25245 592Interest expense and similar charges2827 34234 933NET INTEREST INCOME13 91010 658Income from equity-related instruments292 7261 658Revenues of services and fees3011 55211 701Costs of services and fees30(1 464)(1 247)Income from assets and liabilities valued at fair value through profit or loss31(2 792)(10 771)Income from available-for-sale financial assets311 1491 150Net gains on foreign exchange differences313 46010 441Income from disposal of other assets(5)(30)Other operating income(24)61BANKING INCOME28 51223 621Pesonnel costs32(6 722)(6 932)General administrative costs/overheads33(7 298)(8 023)Depreciation and amortisation15 e 16(1 117)(926)Provisions net of write-backs and reverse entries241 007(1 839)Corrections related to client loans and receivables from other debtors24(6 635)(3 334)Impairment of other financial assets net of reversals and recoveries24(45)39Impairment of other assets net of reversals and recoveries2498(198)PROFIT BEFORE TAX7 8002 408TaxCurrent18(2 992)(184)Deferred181 028(482)PROFIT AFTER TAX5 8361 742Of which: Profit after tax of discontinued operationsNET PROFIT OF PERIOD5 8361 742Number of issued shares11 000 00011 000 000EARNINGS PER SHARE340,530,16(THOUSAND EUROS)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED_59Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

COMPREHENSIVE INCOME STATEMENT NotEs 10/12/31 09/12/31Net profit275 8361 742Fair value gains/(losses) on available-for-sale financial assets,net of tax27(6 897)(148)TOTAL INCOME NET OF TAX(1 061)1 594STATEMENT OF CHANGES IN EQUITYNotEsShareCapitalRevaluationReservesOtherReservesNetProfit ofPeriodTotalEquityBalance at 31/12/20082740 000(2 068)6 2271 27745 436Share capital increase15 00015 000Allocation of net profits ofpreceding periodTransfer to reserves1 277(1 277)Total income(148)1 7421 594Balance at 31.12.20092755 000(2 216)7 5041 74262 030Allocation of net profits ofpreceding periodTransfer to reserves1 742(1 742)Total income(6 897)5 836(1 061)Balance at 31.12.20102755 000(9 113)9 2465 83660 969AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED_60Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

CASH FLOW STATEMENT NOTES 10/12/3109/12/31Operating ActivityOperating Income:Net Profit of Period5 8361 742Provisions of Period5 2185 118Amortisations of Period1 117926Dividends(2 726)(1 658)Interest on other subordinated liabilities579904Other12 1591 73222 1828 764Changes in operating assets and liabilities:Changes in operating assets and liabilities:(Increase)/Decrease of financial assets held for trading4 551(19 979)(Increase)/Decrease of other financial assets at fair value through profit or18 281(76 975)loss(Increase)/Decrease of available-for-sale financial assets(207 110)5 695(Increase)/Decrease of investments in credit institutions(12 558)4 278(Increase)/Decrease of loans and advances to clients(47 891)(82 283)(Increase)/Decrease of investments held to maturity20 3023 714(Increase)/Decrease of assets with repurchase agreements(28 389)56 528(Increase)/Decrease of non-current assets held for sale(2 657)(Increase)/Decrease of other assets(8 170)16 152(Increase)/Decrease of financial liabilities held for trading(4 079)27 057(Increase)/Decrease of amounts owed to other credit institutions75 962(16 592)(Increase)/Decrease of amount owed to clients16 01321 112(Increase)/Decrease of other subordinated liabilities(3)(Increase)/Decrease of other liabilities194 2851 328Income Tax1 22949819 769(59 470)Operating Activity Cash Flow41 952(50 706)INVESTMENT ACTIVITYAcquisition of subsidiaries/associates(2 088)(1 263)Acquisition of tangible assets(414)(1 651)Disposal of tangible assets951Acquisition of intangible assets(580)(1 770)Dividends2 7261 658Investment Activity Cash Flow(357)(2 076)FINANCING ACTIVITYRevenue due to:Share issues15 000Interest payable on subordinated liabilities(579)(904)Financing Activity Cash Flow(579)14 096Total41 017(38 686)CHANGES IN CASH AND CASH EQUIVALENTSCash and cash equivalents at start of period47 47286 157Cash and cash equivalents at end of period88 48947 47141 017(38 686)Balance Sheet value of cash and cash equivalents items, at 31 DecemberCash522Current Accounts in Central Banks52 2166 344Current Accounts in Other Credit Institutions686 27141 126Cheques to be collected88 48947 471_61Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

1. GENERAL INFORMATIONNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Banif – Banco de Investimento, S.A. (the Company) resulted from the split on 15December 2000 of Ascor Dealer – Sociedade Financeira de Corretagem, S.A. In theprocess, Banif Ascor – Sociedade Corretora, S.A., a brokerage house, was also created.Most Banif Group holdings in investment banking-related areas were transferred tothe new bank on that date.Banif – Banco de Investimento, SA shares are wholly owned by Banif Investimentos,SGPS, S.A., a sub-holding of Banif Financial Group (the Group), whose parent companyis Banif SGPS, S.A., which reports consolidated accounts in accordance with theInternational Financial Reporting Standards (IAS/IFRS). Accordingly, the Company isexempt from the requirement to present consolidated financial statements.On 28 February 2011, the company’s Board of Directors reviewed and approved thebalance sheet and income statement as at 31 December 2010 and generally approvedthe Annual Report, which, together with the financial statements, will be submitted tothe AGM on29 March 2011 for approval.2. ADOPTION OF NEW OR REVISED INTERNATIONAL FINANCIALREPORTING STANDARDSIFRS 5 (improvement) - Non-current Assets Held for Sale and Discontinued OperationsThe improvement clarifies that:· when a subsidiary is held for sale, all its assets and liabilities shall be classified as heldfor sale under IFRS 5, even when the entity will retain a non-controlling interest in thesubsidiary after the sale.· required disclosures on non-current assets, groups available for sale or discontinuedoperations are only those set out in IFRS 5.IFRS 2 (amendment and improvement) – Share-based PaymentThe amendment to IFRS 2 clarifies the reporting of situations in which an entity receivesa service or products from its employees or suppliers, but payment will be made byits parent company or another group company. The improvement clarifies that thecontribution of a business to a joint venture and combinations under common controlare not covered by IFRS 2.IAS 1 (improvement) – Presentation of Financial StatementsThe improvement clarifies that the terms of settlement of a liability that may result atany time in settlement by the issue of capital instruments by option of the counterpartydoes not affect the classification of instruments convertible into current and noncurrentin the statement of financial position.As a result of the amendment to IAS 27, it is necessary to include two additional linesin the statement of changes in equity: (i) acquisition of subsidiaries and (ii) acquisitionof non-controlling interest to reflect transactions with owners resulting from changesin ownership of subsidiaries that do not result in loss of control._62Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

IAS 38 (improvement) – Intangible AssetsNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The improvement:• establishes that if an intangible asset acquired as part of a business combination isidentifiable• clarifies that valuation techniques for measuring the fair value of intangible assetsacquired in a business combination are mere examples and do not restrict the methodsthat can be used.IAS 39 (amendment and improvement) – Financial Instruments: Recognition andMeasurement– eligible hedged itemsThis amendment:• clarifies that it is possible to designate a part of the changes in fair value orvariability of cash flows of a financial instrument as a hedged item.• makes clear that inflation is not a separately identifiable risk and cannot bedesignated a hedged risk unless it represents contractually specified cash flowsThe improvement makes the following changes:• Exemption from the standard in contracts involving business combinations onlyapplies to forward contracts between a buyer and a selling shareholder for the purposeof buying or selling one acquired on a future date and not to derivatives contracts inwhich it is still necessary for future actions to occur.• If in hedging of cash flows the hedging of an expected transaction results insubsequent recognition of a financial asset or liability, any gains or losses recognisedin total income shall be reclassified to gains and losses in the same period or periods inwhich the hedged cash flows affect profits or losses.• A prepayment option is considered to be closely related to a host contract when theprice reimburses the borrower in an amount up to the approximate present value ofinterest lost during the remainder of the host contract.IFRIC 18 - Transfers of Assets from ClientsThe aim of this interpretation is to clarify recognition of tangible fixed assets or cashreceived from clients to use to acquire or construct specific assets and is therefore notapplicable.IFRIC 17 – Distributions of Non-cash Assets to OwnersThis interpretation clarifies recognition of the distribution of goods in kind to ownersand lays down that everyone has the same rights.IFRIC 12 – Service Concession AgreementsThis interpretation applies to concession operators and clarifies how to recogniseliabilities taken on and rights received in concession agreements._63Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Other improvements in the IFRSNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The annual IFRS improvement process is designed to solve situations needingimprovement in order to make them generally easier to understand, but are notclassified as priorities. Some improvements have regard to terminology or editorialchanges aimed at consistency between standards and their impact is minimal.Other improvements are likely to result in changes in recognition and measurement. Inaddition to those summarised above, the main improvements that came into effect in2010 were as follows:Improvements from 2009 applicable in 2010• IFRS 8 – Operating Segments: The improvements make clear that assets and liabilitiesby segment only need to be reported when they are included in measures used by theperson who makes operational decisions.• IAS 17 – Leases: The specific provisions on land and buildings are removed, leaving onlythe general provisions.• IAS 18 – Revenue: Guidelines are added for determining whether an entity is acting asa seller or an agent.• IAS 36 – Impairment of Assets: The improvements make clear that, on testingimpairment of goodwill acquired in a business combination, the largest unit allowedfor allocation of goodwill is the operating segment defined in IFRS 8 which, dependingon the circumstances, may be of a lower level than the reportable segment.• IFRIC 9 – Reassessment of Embedded Derivatives: The improvements make clear thatIFRIC 9 does not apply to possible reassessments on date of acquisition of embeddedderivatives in contracts acquired in combinations between entities or businesses undercommon control or in the formation of joint ventures.• IFRIC 16 – Hedges of a Net Investment in a Foreign Operation: The improvements makeclear than qualifying hedging instruments can be held by a group entity provided thatthe designation, documentation and effectiveness requirements in IAS 39 are met.RECENTLY ISSUED STANDARDS AND INTERPRETATIONS THATARE NOT YET IN FORCERThe standards and interpretations issued recently by the IASB that must only beapplied after 1 January 2010 and were not adopted in advance are set out below. Norelevant impacts on the Group’s financial statements are expected from compliancewith these standards and interpretations.a) Endorsed by the EUIFRS 1 (amendment) - Exemptions from disclosure of comparatives required by IFRS7 in first-time adoption of the IFRSThis amendment comes into force in the first financial year starting after 30 June2010 at the latest. It lays down that a first-time adopter does not need to presentcomparatives for the disclosures required by IFRS 7 Financial Instruments: Disclosures._64Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)IFRS 7 (amendment) - Financial Instruments: DisclosuresThis amendment comes into force in the first financial year starting after 30 June2010 at the latest. It lays down that the improvements to this standard do not needto affect financial statements or comparatives of financial statements prior to 31December 2009.IAS 24 (revised) – Related Party TransactionsThis standard comes into force in the first financial year starting after 31 December2010 at the latest. The main changes are as follows:• Change in the definition of related parties so that some entities cease to be consideredrelated, while others are now considered related• Partial exemption from disclosures of transactions with government bodies and thegovernment itself• Explicit obligation to disclose commitments to related parties, including executorcontractsIAS 32 (amendment) – Classification of rights issuesThis amendment comes into force in the first financial year starting after 31 Januaryde 2010 at the latest. It changes the definition of financial liabilities so that issue rights(and certain options and warrants) are classified equity instruments if:• The rights are allocated proportionally to all owners of the same class of the entity’snon-derivative capital instruments.• They are used to acquire a fixed number of the entity’s own capital instruments inreturn for a fixed amount of any currency.IFRIC 14 (amendment) - Advances for minimum funding requirementsThis amendment comes into force in the first financial year starting after 31 December2010 at the latest. It means that an entity must recognise as assets payments madein advance and in each year the analysis of the plan surplus must be made as if therehad been no advance payments.IFRIC 19 – Extinguishing financial liabilities with equity instrumentsThis IFRIC comes into force in the first financial year starting after 30 June 2010 atthe latest. It makes clear that capital instruments issued by a creditor to extinguishfinancial liabilities are considered payments for the purpose of paragraph 41 of IAS 39.b) Not yet endorsed by the EUIFRS 9 – Financial Instruments - introducing new requirements for classifying andmeasuring financial assets.Other amendments to the IFRS – 2010 improvements - The IASB approved 11 amendmentsand six standards._65Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3. BASES FOR PRESENTING ACCOUNTS AND MAIN ACCOUNTINGPRINCIPLES3.1 BASES for presentation of accountsThe Company’s individual financial statements were prepared in accordance with theaccounting principles set out in paragraphs 2 and 3 of Banco de Portugal Notice 1/2005on the Adjusted Accounting Standards (NCA).The NCA are based on the International Financial Reporting Standards (IAS/IFRS), asadopted at any time by European Union regulations, with the exception of the followingareas:- valuation and provisioning of credit granted- employee benefits from a deferral period for impacts of the transition to the IAS/IFRS- elimination of the fair value option for valuing tangible assetsThe International Financial Reporting Standards as approved by the European Unionare different from the full version of the IAS/IFRS as published by the IASB (InternationalAccounting Standards Board), with regard to the elimination of certain restrictionson hedging accounting in IAS 39 - Financial Instruments: Recognition and Valuation.The financial statements were prepared on a historical cost basis, with the exceptionof the re-evaluation of financial instruments. The main accounting principles used arepresented below.3.2 COMPARATIVE INFORMATIONThe Company did not alter its accounting policies and practices and all the amountspresented are therefore comparable with the previous year in all materially relevantaspects.3.3 USe of ESTIMATes in the PREPARAtion of thefinancial statementsPreparation of the financial statements requires that estimates and assumptionsbe made by the Company’s management. These affect the valuation of assets andliabilities, income and expenditure, as well as disclosed contingent liabilities. In makingthese estimates, management exercised its best judgement and used the informationavailable on the date the financial statements were prepared. Consequently, futurevalues might differ from the estimates made.The most significant estimates regard the following:Fair value of financial instrumentsWhen the fair values of financial instruments cannot be determined from (marked tomarket) prices in asset markets, they are determined with valuation techniques thatinclude mathematical models (marked to model). The input data used in these models_66Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)are, wherever possible, market data. When this is not possible, a degree of judgementis required to establish fair values, especially in terms of liquidity, correlation andvolatility.Impairment of capital instrumentsAvailable-for-sale financial assets are considered impaired when a significant andprolonged decline in their fair value, below cost price, becomes apparent or when thereis other objective evidence of impairment. A level of decline considered ‘significantand prolonged’ requires judgement. In this context, the Company determined that adecline of 30% or more in the fair value of a capital instrument for more than one yearis considered significant and prolonged. In addition, other factors are assessed, suchas the volatility of asset prices.3.4 TRANSACTIONS in foreign currencyTransactions in foreign currency are recorded using the exchange rates in force on thedate of the transaction. Monetary assets and liabilities expressed in foreign currencyare converted to euros using the exchange rate on the balance sheet date. Non-monetaryitems carried at fair value are converted using the exchange rate on the last valuationdate. Non-monetary items carried at historical value are converted at their originalexchange rate. Exchange differences in conversion are recognised as gains or lossesin the period in the income statement, with the exception of those arising from nonmonetaryfinancial instruments classified as available for sale, which are recordedagainst a special equity item until the asset is divested.3.5 CAsh and cash EQUIVALENTSFor cash flow statement purposes, cash and cash equivalents include cash on hand,sight deposits at central banks and other domestic and foreign banks, and cheques tobe cashed in other banks, in domestic and foreign currency.3.6 INVESTMENTS in SUBSIDIARIES and associatedcompaniesThe item ‘Investments in subsidiaries and associated companies’ corresponds to thelong-term equity stakes held by the Company in enterprises where it owns or controlsthe majority of voting rights (subsidiaries) or exerts significant influence (associatedcompanies). Significant influence is considered to exist whenever the Company directlyor indirectly holds more than 20% of the voting rights. Investments in subsidiaries andassociated companies are carried at cost less any impairment losses._67Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

3.7 FINANCIAL INSTRUMENTSNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3.7.1 INITIAL RECOGNITION and MEASUREMENTof FINANCial INSTRUMENTSThe purchase and sale of financial assets that require the delivery of assets withinestablished timeframes, according to market regulations or conventions in force, arerecognised on the date of trading, that is to say, on the date of the purchase or saleagreement. Derivative financial instruments are also recognised on the date of trading.Classification of financial instruments on the date of initial recognition depends ontheir features and the purpose for which they were acquired. All financial instrumentsare initially measured at fair value plus costs directly attributed to the purchase orissue, except in the case of assets and liabilities at fair value through profit or loss,where these costs are directly recognised in the Income Statement.3.7.2 SUBSEQUENT MEASUREMENT OF FINANCIALINSTRUMENTSFinancial assets held for tradingFinancial assets and liabilities held for trading are those acquired for the purposeof being sold in the short-term and generating a profit from fluctuations in price ordealer’s margin, including all derivative financial instruments not classified as hedges.After initial recognition, gains and losses generated by the subsequent measurementof fair value are reflected in profit or loss for the year. The positive fair values ofderivatives are recorded under assets and the negative fair values under liabilities.Interest and dividends or charges are recorded in their respective profit and lossaccounts when the right to their payment is established.Financial liabilities from trading also include short sales of securities. These operationsare recorded on the balance sheet at fair value, with subsequent changes in fair valuerecorded in profit or loss for the year under ‘Other financial assets at fair value throughprofit or loss’.Financial assets and liabilities at fair value through profit or lossThese items include financial assets and liabilities irrevocably classified by the Companyon initial recognition at fair value through profit and loss, in accordance with the optionset out in IAS 39 (fair value option), provided that the conditions for their recognitionare met, to wit:i) the designation eliminates or significantly reduces accounting mismatch.ii) the financial assets and liabilities are part of a group of assets or liabilities or boththat is generated and its performance evaluated on the basis of fair value, in accordancewith a duly documented investment and risk management strategy, or iii) the financialinstrument includes one or more embedded derivatives, except when the embeddedderivatives do not significantly change the cash flows inherent in the contract or it is_68Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)clear from a brief or no analysis that the separation of the embedded derivatives is notpossible.After initial recognition, gains and losses generated by the subsequent measurementof the fair value of the financial assets and liabilities are reflected in the IncomeStatement for the year under the item ‘Net gains from financial assets at fair valuethrough profit or loss’.The Company classifies almost all the share portfolio held as part of its bankingactivity, whose management and performance evaluation is based on fair value, in‘Financial assets at fair value through profit or loss’ with the exception of strategicholdings and shares for which it is impossible to obtain reliable valuations.Available-for-sale financial assetsInstruments classified under this item are those that may be sold in response to orin anticipation of liquidity requirements, interest rate, exchange rate or market pricefluctuations, and have not been classified under any other item. Thus, as at 31 December2007 this item essentially includes holdings considered strategic and shares for whichit is impossible to obtain reliable valuations.After initial recognition, these assets are subsequently measured at fair value or, iftheir fair value cannot be reliably calculated, carried at cost. The respective gains andlosses are reflected under the item ‘Revaluation Reserves’ until they are sold (or untilrecognition of losses through impairment), at which point the accumulated value istransferred from profit or loss for the year to ‘Net gains from available-for-sale financialassets’.The interest arising from the financial assets is calculated using the effective ratemethod and is recognised in the Income Statement under the item ‘Interest and similarincome’. The dividends are recognised in the Income Statement when the right to theirpayment is established, under the item ‘Income from equity-related instruments’. Fordebt instruments issued in foreign currency, the exchange rate differences found arerecognised in operating profit or loss under the item ‘Net gains from foreign exchangedifferences’.The available-for-sale financial assets are analysed when there are objectiveimpairment indicators, namely, when there is a significant or prolonged decline infair values, below cost price. A level of decline considered ‘significant or prolonged’requires judgement. In this context, the Company considers that a reduction of 30%or more in the fair value of a capital instrument or a decline for more than one yearcan be considered significant and prolonged.Financial assets held to maturity‘Financial assets held to maturity’ comprise the fixed- or defined-payment and fixedmaturityfinancial investments, for which there is the intention and scope to hold themuntil maturity.After the initial recognition they are measured thereafter at the amortised cost,using the effective interest rate method, less impairment losses. The amortised costis calculated taking into account the premium or discount on the acquisition date_69Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)and other costs directly ascribable to the purchase as part of the effective interestrate. Amortisation is recognised in the Income Statement under the item ‘Interest andsimilar income’.Impairment losses are recognised in profits and losses under the item ‘Impairment ofother financial assets net of reversals and recoveries’.Loans and accounts receivableThey are unlisted financial assets with fixed or determinable payments that were notacquired for sale in the short term (held for trading), or classified on initial recognitionas financial assets at fair value through profit or loss.Following initial recognition, normally at the amount disbursed, including all transactioncosts and commissions charged, except those for the provision of services (if any),these assets are subsequently measured at amortised cost using the effective ratemethod, and subject to testing for impairment.The amortised cost is calculated by taking into account income or expenses directlyascribable to the origin of the asset as part of the effective interest rate. Theamortisation of this income or cost is recognised in the Income Statement underthe heading ‘Interest and similar income’ or ‘Interest expense and similar charges’.Impairment losses are recognised in the Income Statement under the item ‘Impairmenton other assets net of reversals’.Amounts owed to other credit institutions, Amounts owed to clients, Debt securitiesand Other subordinated liabilitiesThe remaining financial liabilities, which essentially include amounts owed to creditinstitutions, deposits from clients, or debt issuances not designated as financialliabilities at fair value through profit or loss, and whose terms of contract result in theobligation of delivery to the owner of funds or financial assets, are initially recognisedat fair value of the consideration received net of any directly associated transactioncosts and subsequently valued at amortised cost using the effective rate method.Amortisation is recognised in the Income Statement under the item ‘Interest expenseand similar charges’.Repos and Reverse ReposRepos are sales of financial assets for which there is a repurchase agreement at afuture date. The proceeds received from the sale (funding) have an underlying interestrate (repo rate). The value of the funding is recorded under the item “Funds from othercredit institutions” at its contracted value, which corresponds to the net considerationreceived, and interest expense is recognised in accordance with the principle of accrualbasedaccounting and recorded under Interest and similar charges. The assets remainin the lender’s custody as a guarantee for the funding.Reverse repos are financial asset purchases, which are associated to a repurchaseagreement at a future date at a fixed price or for a price equal to the purchase priceplus interest linked to the term of the operation and are not recognised in the balancesheet. The purchase value recorded as loans to other financial institutions or clients,_70Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)as appropriate, and the interest receivable are recognised according to the principleof accrual-based accounting and are recorded under ‘Interest expense and similarcharges’.Fair valueThe fair value used in the valuation of financial assets and liabilities held for trading,classified at fair value through profit or loss, and available-for-sale financial assets isdetermined according to the following criteria:- In the case of instruments traded on active markets, fair value is determined on thebasis of the closing price, the price of the last trade or the value of the last known bid;- In the case of assets not traded on active markets, fair value is determined withvaluation techniques that include prices of recent transactions of comparableinstruments and other valuation methods normally used by the market (discountedcash flow, option valuation models, etc).Variable-income assets, such as common shares, and derivative instruments whoseunderlying assets are variable-income assets, and for which it is impossible to obtainreliable valuations, are carried at cost, less any impairment losses.DerivativesIn its current activity, the Company uses certain derivative financial instrumentsboth to satisfy its clients’ needs and to manage its own interest rate risk positionsor other market risks.These instruments involve variable degrees of credit risk (maximum potentialaccounting loss due to possible non-compliance by counterparts with contractualobligations) and market risk (maximum potential loss due to changes in value offinancial instruments as a result of variations in interest rates, exchange rates andlisted prices).The notional amounts of derivative transactions are used to calculate the flows to beexchanged under the contracts, in net terms, and although they constitute the mostcommon measurement of volume used in these markets, they do not correspond toany quantification of the credit or market risk involved. In the case of interest andexchange rate derivatives, credit risk is measured according to the replacement costat current market prices of contracts in which a position of potential gain is held(positive market value) should the counterparty enter into default.Derivatives embedded in other financial instruments are separated from the hostinstrument whenever their risks and characteristics are not closely related to thoseof the host contract and the entire instrument is not carried in the initial recognitionat fair value through profit or loss (fair value option).The results of the subsequent measurement of fair value are recognised in the IncomeStatement for the year at the same time as the results of the measurement at fairvalue of the hedged instrument under ‘Net gains from financial assets at fair valuethrough profit or loss’._71Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3.7.3 DErecognition of financial ASSETS AND LIABILITIESFinancial assetsA financial asset (or when applicable part of a financial asset or part of a group offinancial assets) is derecognised when:1. The rights to receive the asset’s cash flows expire; or2. The rights to receive the cash flows have been transferred or an obligation to pay,without significant delay, all of the cash flows to be received to third parties in thescope of a pass-through agreement; and3. The risks and benefits of the asset have been substantially transferred or the risksand benefits have not been transferred or retained, though control over the asset hasbeen transferred.Financial liabilitiesFinancial liabilities are derecognised when the underlying obligation expires or iscancelled. If a financial liability is replaced by another with the same counterparty onsubstantially different terms from those initially established or the initial terms aresubstantially altered, this replacement or alteration is treated as a derecognition ofthe original liability and recognition of a new one, and any difference between theirvalues is recognised in profit and loss for the year.3.7.4 IMPAIRMENT AND CORRECTIONS of value ASSOCIAtedwith credit to clients and amounts receivable fromother debtorsThe Company tests for impairment of financial assets or groups of financial assets inaccordance with the provisions contained in Banco de Portugal Instruction 7/2005. Afinancial asset is impaired if, and only if, there is evidence that an event or events willhave a measurable impact on the predicted future cash flows from that asset or groupof assets. Losses expected as a result of future events, irrespective of their likelihood,are not recognised. Corrections related to client loans and amounts receivable fromother debtors are determined in accordance with the provisions contained in Banco dePortugal Notice no 3/95, in the wording of Notice no 3/2005.Whenever a decrease in the amount of impairment losses attributable to a certainevent is recorded in a subsequent period, the previously recognised amount is reversedagainst the account for impairment losses. The amount of the reversal is recogniseddirectly in the income statement.3.8 non-current assets HELD FOR SALENon-current assets are classified as held for sale whenever their balance sheet value willbe recovered by sale. This only occurs if the sale is highly likely and the asset is availablefor immediate sale in its present state. The sale must take place within a maximum ofa year after classification under this item. An extension of the period during which thesale must be completed does not rule out an asset (or group for divestment) being_72Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)classified as held for sale if the delay was caused by events or circumstances beyondthe Company’s control and it maintains the commitment to sell the asset.The Company essentially records property received as reimbursement of credit in thisitem.Assets recorded in this category are valued at cost or fair value, whichever is lower,determined on the basis of valuations by independent experts, less costs of sale. Theseassets are not depreciated.If assets classified in this category cease to meet the immediate sale conditions, theyare reclassified under “Investment property”.3.9 Other tangible fixed assetsThe tangible fixed assets item includes property for the Company’s own use, vehiclesand other equipment.Property used by the Company for its operations abroad is classified as own property.These are carried at historical cost, less accumulated depreciation, and revaluedaccording to the legal provisions in force.The remaining tangible fixed assets are carried at cost less accumulated depreciationand impairment losses. Repair, maintenance and other expenses associated with theuse of these assets are recognised as costs as they occur.Tangible assets are depreciated on a straight-line basis, according to their expecteduseful life, which is:BuildingsvehiclesOther equipment[10 – 50] years4 years[2 – 15] yearsA tangible asset is derecognised when sold or when there is no future economicbenefit expected from its use or sale. On the date of derecognition, the gain or losscalculated for the difference between the net sale value and the net accounting valueis recognised in the Income Statement under the heading ‘Other Operating Income’.3.10 INTANGible assetsIntangible assets, essentially computer software, are carried at cost less accumulateddepreciation and impairment losses. The assets are amortised on a straight-line basisover the period of their estimated useful life, which is currently 3 years.Intangible assets may include capitalised internal expenses, namely for in-housesoftware development. To this effect, expenses are only capitalised as of the time thatthe requirements set forth in IAS 38 are met, i.e. the requirements inherent in thedevelopment phase._73Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

3.11 Income taxNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Income tax expense equals the sum of current and deferred income tax.The current portion of the tax is calculated based on the tax rate in force.The Company also records as deferred income tax liabilities or assets those amountsrecognised as tax payable or recoverable in the future that result from temporarytaxable or deductible differences, namely those related to provisions that are temporarilynot deductible for tax purposes, the revaluation of securities and derivatives that arenot taxed until they are sold, the taxation of pension liabilities and other employeebenefits, and capital gains that are not taxable if reinvested.Deferred tax assets and liabilities are calculated and evaluated on an annual basisusing the taxation rates that are expected to be in effect on the date of reversalof temporary differences, which correspond to the rates approved or substantiallyapproved on the date of the balance sheet. Deferred income tax liabilities are alwaysrecorded. Deferred income tax assets are recorded only to the extent that they arelikely to materialise through the existence of future taxable profits.Income taxes are recorded against profit or loss for the year.3.12 PROVISIONS and CONTINGENT LIABILITIESA provision is set up when there is a present (legal or constructive) obligation resultingfrom past events where there is likely to be a future expenditure of resources and itcan be reliably determined. The provision corresponds to the Company’s best estimateof the expenditure required to settle the obligation on the balance sheet date.If the future expenditure is unlikely to materialise, the liability is considered to becontingent. Contingent liabilities have to be disclosed unless there is only a remoteprobability that they will materialise.3.13 RECOGNITION of earnings and COSTSIn general, earnings and costs are recognised on the basis of the period of validity ofoperations in accordance with the accounting principle of accruals and deferrals, i.e.they are recorded as they are generated, irrespective of when they are collected orpaid. Income is recognised when it is probable that economic benefits associated withthe transaction will flow to the Company and the amount of the income can be reliablymeasured.For financial instruments measured at depreciated cost and those classified as“Financial assets available for sale” interest is recognised at the effective rate method,which corresponds to the rate that discounts exactly the future set of cash receiptsor payments up to maturity or up to the next repricing date for the net amountcurrently recorded under financial assets or liabilities. When the effective interest rateis calculated, future cash flows are estimated according to the terms of the contractand any other income or charges directly attributable to it._74Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3.14 RECOGNITION of DIVIDENDSDividends are recognised when their receipt by the Company is virtually certain, inthat they are already duly and formally recognised by the subsidiaries’ competentbodies, pursuant to paragraph 30 of IAS 18, corroborated by paragraph 33 of IAS37 on virtually certain assets, and that there are no provisions going against thisframework in IAS 10 on subsequent events. Also, this treatment is not opposed byBanco de Portugal in accordance with the provisions of Circular 18/2004/DSB.3.15 income and expenses for SERVICES and commissionsThe Company charges commissions to its clients for the provision of a broad range ofservices. These include fees and commissions for ongoing services, for which clients aredebited on a periodic basis, or commissions charged on a one-off basis, for significantstand-alone transactions.Commissions charged for services provided during a certain period are recognisedalong that period. Commissions related to a significant stand-alone transaction arerecognised when the transaction occurs.4. SEGMENTED REPORTINGThe Company’s segmented reporting as at 31.12.10 is by business area. The businessareas include Trading and Sales, Brokerage, Retail Banking, Commercial Banking,Payments and Settlements, Custody, Asset Management and Other (the residual item).The different business processes were divided on the basis of their nature, similarity,organisation and management processes in effect at the Company.The reports used by the management are based essentially on accounting informationand there are no differences between measurements of earnings, losses, assets orliabilities of the profitable segments._75Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Business segments as at 31 December 2010:CATEGORYCOMMERCIALBANKINGRETAIL BANKINGCORPORATEFINANCEBROKERAGECUSTODYASSETMANAGEMENTOTHERTradingsalesTOTALInterest and similar income4 5313722 4200051533 90941 252Interest expense and similar charges2 132(227)(250)(1)0(2 270)(2 046)(24 680)(27 342)NET INTEREST INCOME6 6631452 170(1)0(2 265)(2 031)9 22913 910Income from equity-related instruments(95)00002 64791832 726Revenues of services and fees1 240934 0801 3171181 8611 4091 43411 552Costs of services and fees180(129)(441)0(3)(329)(580)(1 464)Income from assets and liabilities valued at fair(854)418554(14)0886863(4 645)(2 792)value through profit or lossIncome from available-for-sale financial(160)00001641549911 149assetsNet gains on foreign exchange differences700009403 3593 460Income from disposal of other assets0000(5)0000(5)Other operating income420(79)1340(22)0(24)BANKING INCOME6 8616566 5968571523 3841359 87128 512Personnel costs(637)(684)(982)(745)(40)(1 283)(1 153)(1 198)(6 722)GENERAL ADMINISTRATIVE COSTS/OVERHEADS(607)(549)(696)(1 184)(84)(1 366)(788)(2 024)(7 298)Depreciation and amortisation(82)(85)(107)(120)(14)(158)(367)(184)(1 117)Provisions net of write-backs and reverse entries85(91)(407)00101 4191 007Impairment of credit net of reversals and(6 557)(40)(40)00020(6 635)recoveriesImpairment of other financial assets net of70400025(99)(45)reversals and recoveriesImpairment of other assets net of reversals00000009898and recoveriesPROFIT BEFORE TAX(930)(793)4 404(1 192)14580(2 166)7 8837 800Current(155)(132)(734)(198)(2)(97)(361)(1 313)(2 992)Deferred5345252681331244521 028PROFIT AFTER TAX(1 032)(880)3 922(1 322)13516(2 403)7 0225 836AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._76Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Business segments as at 31 December 2009:CATEGORYCOMMERCIALBANKINGRETAIL BANKINGCorporateFinanceBROKERAGECUSTODYASSETMANAGEMENTOTHERTradingsalesTOTALInterest and similar income2,9102601,174-30668141,10445,592Interest expense and similar charges-29-52300-90-259-34,572-34,933NET INTEREST INCOME2,8812541,197-30-24-1786,53210,658Income from equity-related instruments000101,38002771,658Revenues of services and fees2,3331624,4191,492911,4391,00975611,701Costs of services and fees-710-225-4180-15-47-471-1,247Income from assets and liabilities valued1765667-16007-12,194-10,771at fair value through profit or lossIncome from available-for-sale financial00000001,1501,150assetsNet gains on foreign exchange differences000000010,44110,441Income from disposal of other assets000000-300-30Other operating income-26-23-40-1713-65-3525561BANKING INCOME5,1171,1586,0181,0371052,7157256,74623,621Personnel costs-800-618-1,144-952-74-684-1,169-1,491-6,932GENERAL ADMINISTRATIVE COSTS/OVERHEADS-658-543-792-1,154-93-1,294-876-2,614-8,023Depreciation and amortisation-58-63-78-81-11-122-369-145-926Provisions net of write-backs and reverse entries-30029-36500-61556-1,697-1,839Impairment of credit net of reversals and-3,192-84-5300-4-20-3,334recoveriesImpairment of other financial assets net of-8-8500005139reversals and recoveriesImpairment of other assets net of reversals0000000-198-198and recoveriesProfits of associates and Joint Ventures000000000(Equity Method)PROFIT BEFORE TAX101-1293,590-1,149-73550-1,1346522,408Current-68-228735-3572-41-153Prior-Year Corrections-12-47151-715-8-31Deferred-2026-71923015-110227-131-482PROFIT AFTER TAX73-942,596-831-52398-8204721,742_77Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)7. FINANCIAL ASSETS HELD FOR TRADINGThis item consists of:Securities portfolioerivatives with apositive fair valueProvisions (note 24)201035,865114,834---------150,699(104)150,595======200940,63064,527-----------105,157(1)105,156======This item consists of securities and derivatives that are classified, in their entirety, asheld for trading. The negative fair value corresponds to derivatives recorded under‘Financial liabilities held for trading’ (note 21).ITEMCURRENCYNotional2010FAIR VALUE2009FAIR VALUEPOSITIVENEGATIVEPOSITIVENEGATIVECurrency ForwardsEUR329 7239 5959 0465 3895 431Cross Currency Interest Rate SwapsEUR9 6906976951 1841 184Credit Default SwapEUR289 54271 16268 40748 31742 707Equity SwapsEUR209210Interest Rate SwapsEUR387 58133 38030 7938 2027 354Total Return SwapsEUR42 1077301 226662TOTAL114 834109 67164 52757 548AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._79Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Breakdown of the securities portfolio as at 31.12.10:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEET VALUE1 - DEBT INSTRUMENTSIssued by non-residentsOther non-residentsOthersUnsubordinated debtBANIF SABANCO COMERCIAL ACORES 03/31/2011BANCO COMERCIAL ACORES 10/23/2016BANCO COMERCIAL ACORES 09/25/2017BANIF SGPS SABANIF SGPS SAEUREUREUREUREUREUR10 000210 000185 750164 000628 00016 0001.000.990.830.800.960.9633 0071020815513260815Issued by non-residentsForeign sovereign debtFED REPUBLIC OF BRAZIL 11/01EUR250 0001.01274FED REPUBLIC OF BRASIL 03/30USD333 0001.81461FED REPUBLIC OF BRASIL 27USD30 0001.5335FED REPUBLIC OF BRAZIL 01/20USD16 0001.6220BANCO NAC DESENV BNDES 0 06/16/08USD210 0001.09171FED REPUBLIC OF BRAZIL 09/12EUR995 0001.101 119FED REPUBLIC OF BRASIL 02/25USD30 0001.3832FED REPUBLIC OF BRASILUSD407 0001.20372FED REPUBLIC OF BRASILUSD105 0001.1290BANCO NAC DESENV 6 1/2 06/19USD98 0001.1081INTL FINANCE CORPORATION 9 1/4BRL265 0001.03126BANCO NAC DESENV ECON 07/20USD200 0001.02157BANCO NAC DESENV ECON 09/17EUR423 0000.99425CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._80Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEOther non-residentsOthersUnsubordinated debtBRAZIL DEV FUND BNDES 9 5/8 12/11USD21 0001.0717TRADE INVEST LIMITED 4.7 06/18/11EUR742 0000.98727TRADE INVEST LIMITED 0 06/18/11EUR5 750 0000.99230CIA BRAS BEBIDAS 12/11USD398 0001.08322PETROBRAS INT FINANCE 07/02/13USD1 231 0001.161 110BANCO ITAU CAYMAN, SA 08/11USD85 0001.0569PETROBRAS INTL FINANCE 12/18USD273 0001.22249EURO INVEST LIMITED 5 12/29/49USD296 0000.95211VALE OVERSEAS LIMITED 01/34USD1 0001.241VOTORANTIM OVERSEAS 01/14USD189 0001.10161BANCO BRADESCO SA 04/15/14EUR1 730 0001.101 923PETROBRAS INTL FINANCEUSD71 0001.1763BANCO DO BRASIL (CI) 09/14USD33 0001.1830BANCO BRADESCO 8 3/4 10/13USD200 0001.14173PEMEX PROJ FDG MASTER TREUR175 0000.97178TELE N L PARTICIPACOESUSD540 0001.02412CIA BRAS BEBIDAS 09/13USD10 0001.159VOTORANTIM OVERSEAS 06/20USD920 0001.10758PEMEX PROJ FDG MASTER TREUR60 0001.0766UNIBANCO 8.7 07/29/49USD118 0001.0090BRASKEM INTL LTDUSD97 0001.1886FED REPUBLIC OF BRAZILBRL422 0001.16231CENTRAL ELET BRASILEIRAS SAUSD225 0001.17198BANCO DO BRASIL (CAYMAN)USD370 0001.01282NATIONAL STEEL SAUSD390 0001.00303CESP-COMP ENER SAO PAULO 03/11 REGSUSD790 0001.01615BANCO INDUSTR E COMRCLUSD153 0001.01119LPG INTERNATIONAL INC 12/20/2015USD281 0001.11233ENERGIPE Y SAELPA 07/19/13USD5 0001.144CESP-COMP ENER SAO PAULO 08/11/13USD295 0001.13257FED REPUBLIC OF BRAZIL 01/22BRL740 0001.18414BANCO MERCANT DO BRASILUSD20 0001.0316BANCO VOTORANTIM SAUSD100 0001.0278BERTIN LTDA 10/05/16USD150 0001.08124CIA SANEAMENTO BÁSICO 11/16USD950 0001.10792MARFRIG OVERSEAS LTD 11/16/2016USD198 0001.05157VALE OVERSEAS LIMITED 01/23/2017USD135 0001.11115VALE OVERSEAS LIMITED 11/21/36USD254 0001.09208GP INVESTMENTS LTD 12/23/2049USD251 0001.00191COSAN FINANCE LTD 02/01/2017USD45 0001.0737(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._81Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUESUL AMERICA PARTICIPAÇÕES 02/15/12USD132 0001.0469EURO INVEST LIMITED 04/13/2012EUR477 0000.97466BANCO MERCANT DO BRASIL 05/08/2012USD35 0001.0118EMBRAER OVERSEAS LTD 01/17USD790 0001.04630BANCO DO BRASIL (CAYMAN)BRL136 0001.0064EURO INVEST LIMITED 0 10/22/2012EUR1 457 0000.921 348GOL FINANCE 04/03/2017USD8 0001.016BANCO BMG SAUSD25 0001.0119BANCO DAYCOVAL SAUSD560 0001.00434EURO INVEST LIMITED 6 29/12/2011EUR289 0001.00289EURO INVEST LIMITED 5 29/12/2011USD157 0000.99117PEMEX PROJ FDG MASTER TR 03/01/2018USD202 0001.07164PETROBRAS INTL FINANCEUSD1 076 0001.18971CENTRAL ELET BRASILEIRAS SA 07/19USD608 0001.13525CCL FINANCE LTD 9 1/2 08/14USD56 0001.1550VALE OVERSEAS LIMITED 5 5/8 09/19USD48 0001.0739CSN ISLANDS XI CORP 6 7/8 09/19USD103 0001.0885BANCO DO BRASIL (CAYMAN) 10/49USD835 0001.15731ODEBRECHT FINANCE LTD 7 04/21/20USD78 0001.0864GERDAU HOLDINGS INCUSD180 0001.09151BANCO BRADESCO (CAYMAN) 03/15USD100 0001.0277VALE SAEUR50 0001,0152PETROBRAS INTL FINANCE COUSD1 010 0001.04802BANCO DO BRASIL (CAYMAN) 01/15USD800 0001.04634BANCO BRADESCO (CAYMAN) 3 1/8 04/13USD142 0001.02108BANCO FIBRA SAUSD140 0001.00105BANIF BANCO DE INVESTIMENTO BRASILUSD903 0000.99680BANIF BANCO DE INVESTIMENTO BRASILEUR4 977 0000.995 004ODEBRECHT FINANCE LTDUSD50 0001.1744TELEMAR N LESTE SAUSD1 390 0001.161 225FIBRIA OVERSEAS FINANCEUSD60 0001.0548BANCO MERCANT DO BRASIL 9 5/8 07/20USD39 0001.0532CSN RESOURCES SA 6 1/2 07/20USD170 0001.05137JBS FINANCE II LIMITEDUSD10 0001.018PETROLEOS MEXICANOSEUR325 0001.04356BFF INTERNATIONAL LTD 7 1/4 01/20USD85 0001.0468TELEMAR N LESTE SA 5 1/2 10/20USD35 0000.9726BANCO CRUZEIRO DO SUL SA 02/15USD150 0001.00114BR PROPERTIES SA BRPRSA9 12/49-15USD500 0001.00382PETROLEOS MEXICA PEMEX 6 5/8 49-15USD83 0001.0062PETROLEOS MEXICA PEMEX 4 7/8 03/15USD405 0001.06325PETROLEOS MEXICA PEMEX 8 05/03/19USD329 0001.21300BANCO SANTANDER SANBBZ4 1/2 04/15USD50 0001.0239TELEMAR N L TLMP 5 1/8 12/17EUR400 0000.97388(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._82Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE2 - Equity instrumentsIssued by residentsIMPRESA SGPSBPI SGPSBANIF SGPS SAIssued by non-residentsPARMALAT FINANZIARIA SPAEUREUREUREUR10018 62910 00030 0001.401.380.870.00BALANCESHEET VALUE35026903 - Other2 823Issued by residentsCIA SEG ACORES SA 17/12/2017EUR685 0000.80549RENTIPAR FINANCEIRA SGPS SAEUR2 408 0000.942 264RENTIPAR FINANCEIRA SGPS SAEUR11 0000.9410Total35 865In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUEBANCO COMERCIAL ACORES 03/31/2011BANIF SGPS SABANIF SGPS SAFED REPUBLIC OF BRAZIL 11/01BRAZIL DEV FUND BNDES 9 5/8 12/11TRADE INVEST LIMITED 4.7 06/18/11TRADE INVEST LIMITED 0 06/18/11CIA BRAS BEBIDAS 12/11BANCO ITAU CAYMAN, SA 08/11BANCO DO BRASIL (CAYMAN)CESP-COMP ENER SAO PAULO 03/11 REGSBANCO BMG SABANCO DAYCOVAL SAEURO INVEST LIMITED 6 29/12/2011EURO INVEST LIMITED 5 29/12/2011TOTAL11/03/3111/07/1511/07/1511/01/2411/12/1211/06/1811/06/1811/12/1511/08/1511/01/2311/03/0211/05/2311/07/2111/12/2911/12/29208608152741772723032269282615194342891174 226AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._83Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)8. Other financial assets at FAIR VALUE throughprofit or lossAs at 31.12.10 this item includes the following:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments54 051Issued by residentsPortuguese sovereign debtMEDIUM-TERM TREASURY BILLS 5%EUR38 000 0001.0139 320Medium-term treasury bills 5.45EUR00.650O.T. PGB 3.2% 04/15/11EUR3 000 0001.003 059PGB 4 3/8 06/16/14 JUNEUR80 0000.9780Issued by non-residentsForeign sovereign debtOT ANGOLA 15 NOV 2012USD1 050 0001.00789Other non-residentsOthersUnsubordinated debtCLARIS LTD/MILLESIME CDOEUR2 000 0000.691 375DEUTSCHE BANK AG LONDONUSD2 000 0000.841 264EURO INVEST LIMITED 04/13/2012EUR8 356 0000.978 1632 - Equity instruments138 293Issued by residentsGALERIAS NAZONIEUR7500.000BANIF IMOPREDIALEUR1 544 3447.5111 597FUNDO CAPITAL RISCO CAPVENEUR4312 677.111 154BANIF IMOGESTEUR551 31937.9920 944LUSO CARBON FUND-FUNDO ESP FECHADOEUR82 56 498.884 633NEW ENERGY FUNDEUR164 48 848.568 011PORTO NOVO F.I.I.F.EUR20 788103.982 161FLORESTA ATLÂNTICA - SGFII (CL B)EUR40 00051.232 049BANIF FORTUNY - FII FECHADOEUR5009 335.024 668BANIF CAPITAL INFRASTRUCTURE FUNDEUR1 0359 377.369 706BANIF GLOBAL PRIVATE EQUITY F - FCREUR1 000 0001.041 044(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._84Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEIssued by non-residentsSHOTGUN PICTURESEUR10 0000.000BANIF MULTI-FUND GLOBAL REAL ESTATEEUR31 690113.563 599BANIF US REAL ESTATE FUND CLASSUSD157 650119.5314 103GED SUR FCR-CL AEUR10044.554GED SUR FCR-CL BEUR49 90044.552 223FUNDO INV PART AMAZONIA ENERGIABRL95 000 0001.0042 837BANIF INSTITUCIONAL FI MULTIMERCADOBRL4 541 8591.452 971BANIF MAESTRO FIMBRL5 452 2201.333 258BANIF EQUITY HEDGE FIMBRL2 921 1612.533 332TOTAL192 344In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUEO.T. PGB 3.2% 04/15/11TOTAL11/04/15 3 0593 059AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._85Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)9. AVAILABLE-FOR-SALE FINANCIAL ASSETSAs at 31 December 2010 this item includes the following:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments171 174Issued by residentsPortuguese sovereign debtMedium-term treasury bills 5%EUR20 500 0001.0121 212PGB 3,35 10/15/15EUR20 000 0000.8918 023Portuguese treasury bills 4.35 10/16/17EUR5 000 0000.894 496PARPUBLICA 3 1/2 07/13EUR10 000 0000.909 191Treasury bills 4.8 06/15/20EUR17 155 0000.8715 433Issued by non-residentsForeign sovereign debtBANCO NAC DESENV 6 1/2 06/19USD1 000 0001.10826VOTO VOTORANTIM LDA 04/17EUR1 200 0001.001 240Other non-residentsOthersUnsubordinated debtCIMPOR FINANCIAL OPERTNSEUR2 000 0001.002 054CIMPOR FINANCIAL OPERTNSEUR55 0001.0056TELE N L PARTICIPACOESUSD1 774 0001.021 354CAIXA GERAL DEPÓSITOS FINANCEEUR1 150 0000.50574CESP-COMP ENER SAO PAULO 01/15/2015USD1 654 0000.811 004ETAB ECON CASINO GUICH-P 04/04/2013EUR250 0001.08283CAIXA GERAL FINEUR209 0000.50105AQUEDUCT TRADING SERVICES COUSD28 131 4781.0023 371GE CAP EUR FUND 5 1/4 01/31/13EUR3 250 0001.053 583BANK OF AMERICA CORP 7 06/15/16EUR1 000 0001.081 114CITIGROUP INC 7 3/8 06/16/14EUR2 500 0001.112 863LLOYDS BANK TSB BANK PLC 5 3/8EUR2 500 0000.982 493RCI BANQUE SA 4 10/21/11EUR500 0001.02512BANK OF IRELAND 4 5/8 09/14EUR1 000 0000.83842ENEL FINANCE INTL SA 4 09/14/16EUR500 0001.00507ALLIED IRISH BKS PLC 4 1/2 10/01/12EUR500 0000.80406ABERTIS INFRAESTRUCTURAS 10/16EUR500 0000.95478GAS NATURAL CAPITAL 4 3/8 11/16EUR500 0000.94475GOLDMAN SACHS GROUP INC FLOAT 10/19EUR1 000 0000.97982TELEFONICA EMISIONES SAUEUR2 000 0000.981 966MORGAN STANLEY 4 1/2 10/29/14EUR1 000 0001.011 017(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._86Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEANGLO AMERICAN CAPITAL 12/16EUR500 0001.04522NOMURA EUROPE FINANCE NV 12/14EUR500 0001.04523VIVENDI 4 7/8 12/19EUR500 0001.01507DONG ENERGY A/SEUR250 0001.02256EDP FINANCE BV 3 1/4 03/15EUR3 000 0000.922 834GOLDMAN SACHS GROUP INC 03/17EUR2 000 0000.961 996GLENCORE FINANCE EUROPEEUR750 0001.00782RABOBANK NEDERLAND 03/20EUR500 0000.95500ROYAL BANK OF SCOTLAND PLC 03/20EUR1 500 0000.951 486VALE SAEUR1 500 0001.011 571BES INVESTIMENTO BRASIL 5 5/8 03/15USD800 0000.98594MERCK FIN SERVICES GMBHEUR1 000 0001.011 037INTESA SANPAOLO SPAEUR2 000 0000.971 938LAFARGE SA 5 1/2 12/19EUR250 0000.97244NATIONWIDE BLDG SOCIETY 01/15EUR1 000 0000.981 011GAS NATURAL CAPITAL 4 1/8 01/18EUR1 000 0000.90908DAIMLER AG 4 1/8 01/17EUR1 500 0001.031 605VODAFONE GROUP PLC 01/22EUR3 000 0001.013 159BARCLAYS BANK PLC 01/17EUR4 500 0000.994 616ALSTOM 4 1/8 02/17EUR500 0000.99516CASINO GUICHARD 4,379 02/17EUR250 0001.01263TELECOM ITALIA SPA 5 1/4 02/22EUR1 000 0000.961 003INDEPENDENCIA INTERNATIO 12/30/16USD287 1000.0218CAIXA ECO MONTEPIO GERAL 0 12EUR3 000 0000.872 624VEOLIA ENVIRONNEMENTEUR500 0001.08558CITIGROUP INC 7 3/8 09/04/19EUR500 0001.11567CAIXA GERAL DEPOSITOS 12/12/2011EUR300 0000.98306CAIXA GERAL DEPOSITOS 12/12/2011EUR5 000 0000.985 101ATLANTES MORTGAGE PLCEUR8 000 0000.902 369ATLANTES MORTGAGE PLCEUR20 000 0000.905 922AZOR MORTGAGES PLCEUR8 100 0000.931 562ENI SPA 4 06/29/20EUR1 000 0000.98997DEUTSCHE TELEKOM INT FIN 07/13/22EUR2 000 0000.971 973SCHNEIDER ELECTRIC SA 3 5/8 07/20EUR500 0000.97491MORGAN STANLEY 5 3/8 08/10/20EUR500 0000.96489AREVA SA 3 1/2 03/21EUR1 000 0000.92932TELEFONICA EMISIONES SAU 3.661 17EUR500 0000.95482KONINKLIJKE KPN NV 3 3/4 09/21/20EUR500 0000.94477BBVA SENIOR FINANCE SA 2 3/4 09/12EUR2 000 0000.981 977(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._87Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE2 - Equity instruments41 800Issued by residentsFOMENTINVEST SGPSEUR3 076 9241.805 530FLORESTA ATLÂNTICA - SGFII, SAEUR10 12511.88120FOMENTINVEST SGPSEUR385 0001.00385BANIF GESTÃO PATRIMONIALEUR2 715 3103.559 631BANIF GESTÃO ACTIVAEUR651 0903.342 176BANIF EUROPA DE LESTEEUR264 9144.081 082ART INVEST (CP)EUR312 9005,541 733NEW ENERGY FUNDEUR1948 848.56928BANIF FORTUNY - FII FECHADOEUR5009 335.024 668INFRA INVEST - FEI ABERTOEUR60 98092.925 666BANIF INVESTIMENTO CONSERVADOREUR100 0005.10510BANIF INVESTIMENTO MODERADOEUR100 0005.17517BANIF IBERIAEUR595 4865.063 012GED SUR CAPITAL S.A., SGECREUR30 0000.9127PREFF-PAN EUROPEAN REAL STATE FUNDEUR12 75079.661 016AVIVA CENTR EUROPEAN PROPERTY FUNDEUR1 543 0120.781 204JP MORGAN EUROPEAN PROPERTY FUNDEUR155 390.8381PRADERA EUROPEAN RETAIL FUND 2EUR300 0005.421 626FINE ART FUND (CP)USD12 645125.491 188PRAX CAPITAL III, SCA, SICAREUR3 000233.507013 - Other65 129Issued by residentsCP COMBOIOS DE PORTUGAL 4.17 10/19EUR5 000 0000.773 890PARPUBLICA PARPUB5 1/4 09/17EUR2 000 0001.032 077PORTUCEL - EMP CELUL PAPEL 03/10EUR2 000 0001.002 006CAIXA GERAL DEPO 5 1/8 02/14EUR3 250 0000.923 134BANCO BPI SA 3 07/17/12EUR1 000 0000.96970BANCO BPI SA 01/12EUR5 000 0000.944 721BANCO COMERCIAL PORTUGUESEUR950 0000.97956BANCO COMERCIAL PORTUGUESEUR100 0000.97101BANIF BANCO INTERNACIONAL FUNCHALEUR48 186 0000.9647 275Total278 103AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._88Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUECIMPOR FINANCIAL OPERTNSCIMPOR FINANCIAL OPERTNSRCI BANQUE SA 4 10/21/11CAIXA GERAL DEPOSITOS 12/12/2011CAIXA GERAL DEPOSITOS 12/12/2011TOTAL11/05/2711/05/2711/10/2111/12/1211/12/122 054565123065 1018 03010. INVESTMENTS AT CREDIT INSTITUTIONSThis item consists of:Term depositsIn PortugalAbroad201011,4171,372---------12,789=====2009-225---------225=====11. CREDIT EXTENDED TO CLIENTSThe composition of this item is as follows, in accordance with the development of theanalytical situation in the NCA:20102009Domestic LoansCorporateSyndicated loansOther loansCredit on current accountOverdraftsOther creditPrivateOther loansCredit on current accountOverdraftsOther credit45987,050201,4651,8302761,15137,051141,19694288,725154,5364,216141-34,90856957AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._89Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Foreign loansCorporateOther loansCredit on Current AccountCredit and outstandingInterest securities portfolioProvisions (nota 24)NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)24.68932.186------------387.367------------21.175------------408.542------------69.951------------478.493------------(11.741)------------466.752=======The residual period for maturity of clients credit is shown in Note 36.8. 35.4.28.45127.022------------339.954------------22.852------------362.806-----------67.786------------430.592------------(5.118)------------425.473=======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._90Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As at 31 December 2010, the details of our securities portfolio were as follows:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments35 559Issued by non-residentsOther non-residentsOthersUnsubordinated debtGRANITE MORTGAGES PLCEUR1 000 0001.03984MARBLE ARCH RESIDENTIAL SECURISATIOEUR3 000 0001.041 022HARVEST CLO SAEUR1 500 0001.031 499PARAGON MORTGAGES PLCEUR1 500 0001.011 161MARLIN (EMC-II) BVEUR7 000 0001.01520GRANITE MORTGAGES PLCEUR2 000 0001.02744LOCAT SECURITISATION VEHICLE SRLEUR3 000 0001.002 823AVOCA CLO BVEUR1 000 0000.96908HEWETT,S ISLAND CDO, LTDUSD2 000 0000.881 378HEWETT,S ISLAND CDO, LTDUSD2 000 0000.741 214OPERA FINANCE UNI INVEST BVEUR2 500 0001.011 774HARBOURMASTER CLOEUR5 000 0000.554 497AVOCA CLO BVEUR2 500 0000.972 056LAMBDA FINANCE BVEUR2 000 0001.021 906PROVIDE PLCEUR2 500 0001.042 487MAGI FUNDING PLCEUR2 500 0000.932 043ALFA BANKUSD2 000 0001.0072CHEYNE CREDIT OPPORTUNITY CDOEUR2 500 0000.941 658GERMAN RESIDENTIAL ASSETEUR2 000 0001.041 543ALFA DIV PYMT RT 12/15/2011EUR2 500 0001.01481GRESHAM CAPITAL CLO BV 2006-3X CEUR2 000 0000.951 501BLUEBONNET FINANCE PLC 12/20/2016EUR2 000 0000.871 806RESOURCE EUROPE CLO B.V. 05/22/2023EUR2 000 0000.931 4813 - Outros34 392Emitidos por residentesPEBBLE-CONSULTORIAEUR15 250 0001.0014 203BANCO COMERCIAL PORTUGUES 0 11EUR20 000 0001.0020 189TOTAL69 951NATURE AND TYPEMATURITYBALANCE SHEET VALUEALFA BANKALFA DIV PYMT RT 12/15/2011BANCO COMERCIAL PORTUGUES 0 11TOTAL11/03/1511/12/1511/06/277248120 18920 743AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._91Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Due to the exceptional macroeconomic circumstances with effects on liquidity andavailability of current prices on the market, the Group reclassified as at 30 September2008 financial instruments from the category “Available-for-sale financial assets “ to“Other credits and amounts receivable, taking account of the amendment to IAS 39described in Note 2. The securities reclassified under this item are as follows:NAMEQUANTITYBALANCESHEET VALUEMARKET VALUEGRANITE MORTGAGES PLC1 000 0009841 034MARBLE ARCH RESIDENTIAL SECURISATIO3 000 0001 0221 076HARVEST CLO SA1 500 0001 4991 554MARLIN (EMC-II) BV7 000 000520533GRANITE MORTGAGES PLC2 000 000744781HARBOURMASTER CLO5 000 0004 4972 764ALFA BANK2 000 0007275ALFA DIV PYMT RT 12/15/20112 500 000481503Total9 8198 320If these securities had not been reclassified, they would have had a negative impact of7,000 euros on the profit for 2010.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._92Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)12. INVESTMENTS HELD TO MATURITYNATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments44 360Issued by non-residentsForeign sovereign debtNATIONAL BANK OF GREECE SAEUR1 000 0000.75935Issued by other non-residentsOthersUnsubordinated debtBRISA FINANCE BV 09/13EUR2 500 0001.002 435GE CAPITAL EURO FUNDINGEUR4 200 0001.004 204CITIGROUP INC 06/14/12EUR2 537 0000.982 490PORTUGAL TELECOM INT FIN 12EUR2 500 0001.012 492MORGAN STANLEY & CO INTLEUR3 000 0000.972 904CREDIT SUISSE USA INC 04/12/13USD7 500 0000.995 524FRIESLAND BANK FLOAT 04/13EUR2 500 0000.962 439GOLDMAN SACHS GROUP INCEUR1 500 0000.911 436BCP FINANCE BANK LTD 02/03/2011EUR5 000 0000.995 004BES FINANCE LTDEUR5 000 0000.964 989BANCO BMG SAUSD1 000 0001.01742BANCO FIBRA SA 06/06/2011USD800 0001.00594EDP FINANCE BV 5 1/2 02/14EUR1 500 0001.011 681PORTUGAL TEL INT FINEUR3 900 0000.903 921CRITERIA CAIXACORP SAEUR2 500 0000.972 5713 - Other16 031Issued by residentsBANCO TOTTA SA 3 3/4 06/12EUR8 000 0000.978 308BANCO ESPIRITO SANTO 5 5/8 06/14EUR2 400 0000.882 594BANCO COMERCIAL PORTUGUESEUR5 000 0000.975 128Total60 391AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._93Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCESHEET VALUEGE CAPITAL EURO FUNDINGBCP FINANCE BANK LTD 02/03/2011BES FINANCE LTDBANCO BMG SABANCO FIBRA SA 06/06/2011BANCO COMERCIAL PORTUGUES11/05/0411/02/0311/07/1811/05/2311/06/0611/06/174 2045 0044 9897425945 128TOTAL20 659Given the exceptional economic climate in 2008, the Group chose to reclassify some ofthe securities it held in the available-for-sale category, now having the intention andcapacity to hold them until maturity. Accordingly, the securities in the following tablewere transferred to the “held to maturity” portfolio:NAMEQUANTITYBALANCESHEET VALUEMARKET VALUEBRISA FINANCE BV 09/132 500 0002 4352 532CITIGROUP INC 06/14/122 537 0002 4902 494PORTUGAL TELECOM INT FIN 122 500 0002 4922 589MORGAN STANLEY & CO INTL3 000 0002 9032 913CREDIT SUISSE USA INC 04/12/137 500 0005 5245 548FRIESLAND BANK FLOAT 04/132 500 0002 4392 399GOLDMAN SACHS GROUP INC1 500 0001 4361 370BCP FINANCE BANK LTD 02/03/20115 000 0005 0044 956BES FINANCE LTD5 000 0004 9894 812Total29 71229 613If these securities had not been reclassified, they would have had a positive impact of438,000 euros on the profit for 2010.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._94Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)13. ASSETS WITH REPURCHASE AGREEMENTSThis item consists of:Reverse repos201028,387----------28,387======2009------------=====Assets with repo agreements are securities purchased on which there is an agreementto resell them for a pre-established price.14. non-current assets HELD FOR SALEThis item consists of:Property in lieu of payment20102,657----------2,657======2009------------=====In the period in question, acquisitions correspond to the amount recovered by executionor auction of collateral guarantees associated with credit granted, taking the form ofproperty that is available for sale.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._95Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

15. Other tangible assetsNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The movements in the period under review were as follows:ItemBalance at startof yearGrossBalanceAmortisation+ImpairmentChanges in the periodTransfersAmortisationGrossBalanceBalance at year’s endAcquisitionsAmortisation+ImpairmentNetBalanceTangible Fixed AssetsREAL ESTATE12 88168114428513 02596612 059Land2 3552 3552 355Buildings10 295174144( 2 355)1618 0843357 749Work in rented property2 5865071242 5866311 955EQUIPMENT2 9921 5792695053 2612 0841 177Furniture and Office supplies492513865530116414Machinery and tools533612615715120Computer equipment1 3389721052211 4431 193250Interior systems5453426(6)54545396149Transport equipment523166103144626310316Security equipment1892220119Other equipment2333426719TOTAL15 8732 26041379016 2863 05013 236There were no revaluations in previous years or this year and there is no exceptionaldepreciation resulting from tax measures.There are no tangible fixed assets under financial or operational leasing.16. INTANGIBLE ASSETSThe movements in the period under review were as follows:ItemBalance at startof yearGrossBalanceAmortisation+ImpairmentChanges in the periodTransfersAmortisationGrossBalanceBalance at year’s endAcquisitionsAmortisation+ImpairmentNetBalanceIntangible AssetsSoftware3 6323 2291503183274 1013 556545Under construction3 196430(318)3 3083 308TOTAL6 8283 2295813277 4093 5563 853AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._96Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)17. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIESAND JOINT VENTURESThis item consists of:Name% ShareholdingBalance SheetvalueEquity value% ShareholdingBalance SheetvalueEquity value10.12.31 09.12.31Banif Açor Pensões51%1 3103 95351%1 3103 793Banif Gestão de Activos100%2 13710 247100%2 1378 739Banif Capital100%78435980%634275Centro Venture51%38353351%383531Gamma100%250861100%250533MCO225%11312425%113405Ecoprogresso Trading50%15018450%150155BIAM100%249230100%231195Prestações AcessóriasGamma, SA2 9352 315MCO2, SA1 300TOTAL9 6117 523In the period ended on 31 December 2010, the changes in associated companies wereas follows:- Acquisition of 20% holding in Banif Capital, meaning that the Bank now owns 100% ofthe share capital- Accessory payments to Gamma to the amount of 620,000 euros- Accessory payments to MCO2 to the amount of 1.3 million eurosAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._97Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

18. Income taxNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)18.1 deferred tax2009/12/31 CHANGES IN PERIOD2010/12/31ItemNetDeferredTaxINCREASESEQUITYPROFITSRealisations/Reverse EntriesEQUITYPROFITSNetDeferredTax1. Provisions/Impairment not tax deductible1 5401 8978642 573General credit risk9692231341 058Specific credit risk40821055761Provisions for debtors1633017320Provisions for loans with real guarantee1 4341 4342. Evaluations not approved for tax purposes7984 44231 95523 285Derivatives522Portfolio of securities available for sale7994 4421 9553 286Other; Investment securities (former category 25)(6)3(3)3. Book entered tax lossesYear N-14. Other1055Settlement of client fees1055TOTAL2 3484 4421 9001 9558725 863AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._98Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)CURRENT TAXDEFERRED TAXITEMTaxableAmountTaxTaxableAmountTaxTax Costs at standard rateProfit before tax7 8002 067Standard income tax rate25.00%Surcharges on standard tax rate1.50%Normal tax rate26.50%Changes to net worthAdditions113Subtractions287Net worth sub-total(17)(4)Non-Deductible ExpensesNon-Deductible Provisions12 1243 2133 264865Other31383287Non-Deductible Expenses Sub-total12 4373 2963 292872Non-Taxable RevenueIncome TaxNon-Deductible Provisions(8 649)(2 292)(7 159)(1 897)Non-taxable dividends from subsidiaries(2 581)(684)Other(106)(28)(11)(3)Non-Taxable Revenue Sub-total(11 336)(3 004)(7 170)(1 900)Taxable Profit (Tax Loss)Deduction tax losses/allowancesTaxable amount8 885Total Tax2 354Taxable Profit (Tax Loss) Sub-total8 8852 354Corporate income tax settledIncome tax with-held at source and advance tax payments(308)Other direct and indirect taxes applying to income tax119Other adjustments to add to tax519Total payable (receivable)2 684Tax Costs – Actual RateTotal tax burden2 992Deferred tax recognised in period(3 878)(1 028)Actual tax rate25.19%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._99Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

19. OTHER ASSETSThis item consists of:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Sundry debtorsRevenue receivableDeferred expensesExchange operationsStock market trades to be settledOther asset settlement operationsImpairment losses on other assets (note 24)20109241,226569-8215,901------------9,441------------(77)------------9,364=======20094,0801,2504502231814,847-----------11,031------------(616)------------10,415=======20. AMOUNTS OWED TO CENTRAL BANKSThis item consists of:Amounts owed to central banks2010287,178------------287,178=======200993,136-----------93,136=======’Amounts owed to central banks’ corresponds to refinancing operations with theEuropean Central Bank (ECB) for provision of liquidity operations collateralised byeligible assets.21. FINANCIAL LIABILITIES HELD FOR TRADINGThis item consists of:Short salesDerivatives with negativefair value (Note 7)20108,356109,671------------118,027=======20094,07957,548-----------61,627=======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._100Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The short sales, as at 31 December 2010, can be broken down as follows:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments8 356Issued by non-residentsForeign sovereign debtFED REPUBLIC OF BRAZIL 01/41USD-138 0001.00107INTER-AMERICAN DEVEL BK 9 1/2 01/14BRL-180 0001.0492ITAU UNIBANCO HOLDING SA 04/15/20USD-750 0001.03587Other non-residentsOthersUnsubordinated debtMORGAN STANLEY 05/03/2017BRL-380 0000.99172ANHEUSER-BUSCH ABIBB 9 3/4 11/15BRL-270 0001.02126ITAU UNIBANCO/KY ITAU 10 1/2 11/15BRL-253 0001.03118MORGAN ST & CO MS11 1/2 10/22/20BRL-50 0001.0223CSN ISLANDS VIII CORPUSD-18 0001.1616PEMEX PROJ FDG MASTER TRUSD-20 0001.0216BRASKEM SAUSD-51 0001.0239COSIPA COMMERCIAL LTDUSD-575 0001.16500PETROLEO INTL FIN CO 10/06/16USD-1 398 0001.101 166CESP-COMP ENER SAO PAULO 01/15/2015USD-250 0000.81152MINERVA OVERSEAS LTD 02/01/2017USD-94 0001.0476REDE EMPRESAS DE ENERCIA 04/02/2049USD-69 0000.9952BRASKEM FINANCE SAUSD-57 0001.0545LUPATECH FINANCE 9 7/8 07/10/49USD-190 0000.93142VOTORANTIM OVERSEAS 6 5/8 09/19USD-251 0001.04199EMBRAER OVERSEAS LTD 6 3/8 01/20USD-6 0001.065PETROBRAS INTL FINANCE CO 01/40USD-387 0001.05312BES INVESTIMENTO BRASIL 5 5/8 03/15USD-255 0000.98189BANCO VOTORANTIM 7 3/8 01/20USD-565 0001.06462BANCO INDUSTR E COMRCL 01/13USD-900 0001.04721SANTANDER BRASIL 4 1/2 04/15USD-606 0001.03470BANCO ABC-BRASIL SA 7 7/8 04/20USD-110 0001.0588BRASKEM SAUSD-40 0001.0331BANCO BRADESCO (CAYMAN) 5.9 01/21USD-310 0001.00238ODEBRECHT FINANCE LTD 7 1/2 49-15USD-400 0001.01304ITAU UNIBANCO HLDG SA/KY 01/21USD-545 0001.00414SUZANO TRADING BAHIA 5 7/8 01/21USD-460 0000.99345BRASKEM FIN LTD BRASKM7 3/8 12/49USD-460 0001.01353BANCO DO BRASIL 5 3/8 01/21USD-250 0000.98186PETROLEOS MEXICA PEMEX 6 03/05/20USD-105 0001.0785PETROLEOS MEXICA PEMEX 5 1/2 01/21USD-48 0001.0238ODEBRECHT VIII/I ODEBRE6.35 21-20USD-400 0001.05315PEMEX PROJ FDG MASTER TR 08/16EUR-155 0001.10174TOTAL8 356AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._101Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)22. AMOUNTS OWED TO OTHER CREDIT INSTITUTIONSFrom credit institutions in PortugalDepositsLoansFrom foreign credit institutionsDepositsLoansRepos201081,325264,723------------346,048-----------115,3895,05132,807-----------153,247-----------499,295=======2009148,24993,801-----------242,050-----------116,431-64,799-----------181,230-----------423,280=======23. AMOUNT OWED TO CLIENTS AND OTHER LOANSThis item consists of:20102009DepositsSightTerm69,440242,447------------311,887=======74,383221,072-----------295,456=======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._102Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)24. PROVISIONS AND CONTINGENT LIABILITIESMovements in 2010 and 2009 were as follows:ItemBalanceat08/12/31IncreasesUseWritebacksForeignexchangedifferencesBalanceat09/12/31Credit granted1 7854 281(947)(1)5 118Country risk securities109202(237)74Other assets2 779357(2 158)(361)(1)616General credit risk2 6792 969(2 004)(15)3 629Available-for-sale financial assets198(21)177Other provisions6943 290(2 417)1 567Total8 04611 297(2 158)(5 966)(38)11 181ItemBalanceat09/12/31IncreasesUseWritebacksForeignexchangedifferencesBalanceat10/12/31Credit granted5 11819 417(12)(12 782)11 741Country risk securities74209(100)183Other assets616173(475)(237)3077General credit risk3 6292 621(2 286)3 994Available-for-sale financial assets177103(201)28107Other provisions1 5671 318(2 660)1226Total11 18123 841(487)(18 266)5916 32825. OTHER SUBORDINATED LIABILITIESAs at As at 31 December 2010, this item relates to two issuances, which are described below.In 2006, an issuance was made of 15,000 variable rate 2006/2016 subordinated bonds -Obrigações de Caixa Subordinadas do Banif – Banco de Investimento, S.A. - representedby 15,000 notes of EUR 1,000 each. The interest on these bonds is payable six-monthlyat the end of the period on 29 June and 29 December of each year. For the first fiveyears the rate will be equal to the 6-month Euribor rate on the second business dayprior to the beginning of each interest accounting period, plus 0.875%. If the bonds arenot called early, as of the 11th coupon and until maturity, the interest rate will be equalto the 6-month Euribor plus 1.15%. The loan will be repaid at par all at once on 29 June2016, though it may be totally or partially repaid earlier at the Bank’s discretion (calloption), with prior authorisation from Banco de Portugal on maturity of the 10th, 12th,14th, 16th or 18th coupon, with no premium added to the amount repaid. Partial earlyrepayment may only be made for 25% or 50% of the initial issue amount correspondingto a reduction in the nominal value of the bonds.In 2007, 15,000 perpetual subordinated bonds were issued at a value of 1,000 euroseach. The interest on these book-entry bearer bonds will be paid quarterly as of thedate of issue on 28 February, 28 May, 28 August and 28 November of each year (“interestpayment dates). They are subject to optional repayment and the first payment willAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._103Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)be made on 28 August 2007 and the last on the date of maturity or on the date(s) ofearly repayment, if they occur. Interest up to but not including 28 May 2017 (first dateof repayment by issuer’s option) will be calculated on the basis of 3-month Euriborquoted on the second target business day immediately prior to the starting date ofeach interest period plus 1.35% percent a year, as of that date on the basis of 3-monthEuribor plus 2.35% a year (1% step-up). Banif - Banco de Investimento has an option tototally or partially repay the bonds on any interest payment date as of 28 May 2017,inclusive (first date of repayment by issuer’s option), after giving advance notice of atleast 30 days and no more than 60 days to the bondholders (the notice is irrevocable),at par, with accumulated interest (if any) up to the date fixed for repayment. Exerciseof this optional repayment is subject to prior approval from Banco de Portugal.26. Other liabilitiesThis item consists of:Unsettled stock exchange operationsCreditors and other resourcesCosts payableDeferred income receivedOther interim accounts20103,0372,1651,368631,775------------8,408=======200917013,2641,406123,242-----------18,094=======The decrease in the item creditors and other resources is essentially related to thepayment of capital to the amount of 11,875,000 euros by the Company in the BanifCapital Infrastructure Fund.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._104Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

27. EQUITY TRANSACTIONSNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As at 31 December 2010 and 2009, the equity items can be broken down as follows:CapitalReserves and retained earningsSecurity revaluation reservesNet profit for the year201055,0009,246(9,113)5,836------------60,969=======200955,0007,504(2,216)1,742-----------62,030=======The ‘Security revaluation reserves’ item can be broken down as follows:Loans granted and accounts receivableFinancial assets available for saleInvestments held to maturityDeferred taxes201020412,026168(3,285)------------9,113=======20095522,198264(798)-----------2,216=======The total for loans granted and investments held to maturity recorded under equityrefers to potential losses involving financial assets that had previously been recordedas available-for-sale financial assets, whose value would be amortised during theremaining life of the asset using the effective interest rate method.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._105Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)28. INTEREST RECEIVED AND SIMILAR INCOME AND INTERESTPAID AND SIMILAR COSTSThis item consists of:20102009Interest received and similar incomeInterest on cash at credit institutionsInterest on investments in credit institutionsInterest from credit extended to clientsInterest from other credit (securities)Interest on financial assets held for tradingInterest on financial assets at fair value throughprofit and lossInterest from available-for-sale financial assetsInterest from investments held to maturityInterest paid and similar costsInterest on amounts owed to CIsInterest on amounts owned to clients and otherborrowingInterest on liabilities held for tradingInterest on other subordinated liabilities58820014,9023,01411,0142,4237,2271,884------------41,252=======6,77110,3909,569612------------27,342=======3361,01613,4623,57918,8082,0953,5522,744------------45,592=======5,56310,68017,758932------------34,933=======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._106Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)29. INCOME FROM EQUITY INSTRUMENTSThis item consists of:Early dividends from Banif Gestão de Activos,S.A.Other dividends received20102,550176------------2,726=======20091,380278-----------1,658=======30. FEES AND COMMISSION INCOME AND EXPENSEThis item consists of:Commission-based incomeServices for management, custody and deposit ofsecuritiesOther services renderedOperations on securitiesOther commissions receivedCommission-based expenseBanking services from third partiesSecurities tradesOther commissions paid20103,4466,4601,62323----------11,552======2561,15949----------1,464======20092,6877,1941,553267----------11,071======36380678----------1,247======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._107Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)31. GAINS/LOSSES ON FINANCIAL TRANSACTIONSThis item consists of:Profit/loss of assets and liabilities at fair valuethrough profit or lossGains in financial assets at fair value throughprofit and lossSecuritiesDerivativesLosses on financial assets at fair value throughprofit and lossSecuritiesDerivativesProfit/loss of available-for-sale assetsGains on securitiesLosses on securitiesResults of exchange revaluationGains on exchange differencesLosses on exchange differences201011,94353,080(7,340)(60,475)----------(2,792)======2,023(874)----------1,149======11,676(8,216)----------3,460======200910,29237,988(5,626)(53,425)----------(10,771)======2,412(1,262)----------1.150======17,210(6,769)----------10,441======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._108Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

32. PERSONNEL COSTSThis item consists of:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Remuneration of management and supervisorybodiesRemuneration of employees:Monthly remunerationHoliday and Christmas payLunch allowanceOther additional paymentsMandatory social charges:Remuneration-related chargesPension chargesOther social chargesOther personnel costs20101,7281,912888220196----------4,944----------1,41314335----------1,591----------187----------6,722======20091,7292,201773203113----------5,019----------1,31213747----------1,496----------417----------6,932======The Company and its employees contribute to a defined contribution fund managedby Banif Açor Pensões. Contributions from its members entitle them to individuallyacquired rights.33. GENERAL ADMINISTRATIve costsThis item consists of:Specialised servicesRents and leasesCommunicationsMaintenance and repairsAdvertising and publicationsWater, energy and fuelTravel and expense accountsOther services from third parties20103,118951399411,050177592968----------7,298======20093,65594957250682210917988----------8,023======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._109Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

34. EARNINGS PER SHAREBasic earnings per share:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)10/12/31 09/12/31Net profit for periodWeighted average of issued ordinary sharesGains per basic share (expressed as earnings per share)5 835 85011 000 0000.531 741 56211 000 0000.1635. RISKS FROM FINANCIAL INSTRUMENTS35.1. risk management POLICIESAs it is part of Banif Grupo Financeiro, the risk policies followed by Banif - Banco deInvestimento, S.A. (BBI) abide by the guidelines laid down for the Group as a whole, withthe specificities inherent in its activities as an investment banking unit in Portugal,taking account of the control and diversification of risks not only at an individual butalso at consolidated level.The Board of Directors defines the Company’s risk strategy and policies, delegatingeveryday risk management to the Executive Board and the director with responsibilityin this area. In functional terms, BBI’s risk management and monitoring is centralisedin the Risk Reporting Department (DRR), a unit that is independent from the originatingdepartments and enjoys the necessary autonomy. It analyses the different typesof risk: credit, market, liquidity and operational - in a cross-sectoral and integratedmanner. This department reports directly to a member of the Executive Committeeappointed Global Head of Risk Management.Supporting the decisions of the Executive Committee, there are also a number ofspecialised committees that play a decisive role in financial and non-financial riskmanagement and control. They include:• The Credit and Risk Committee, which analyses and decides on operations involvinga credit risk to the bank and defines credit limits, including the counterparty creditrisk. It is presided over by the Vice-Chief Executive Officer and must include a riskmanagement director, a director from the proposing department and the heads (ortheir representatives) of the Risk & Reporting and Legal & Tax Departments.• The Assets and Liabilities Committee (ALCO), which manages the structuralbalance sheet risk, including interest rate, liquidity, exchange and market risk. It ispresided over by the director. This committee includes all the Bank’s executive directorsand the heads (or their representatives) of the Financial, Risk & Reporting, Accountingand Financial Control Departments.• The Markets Committee has consultative duties and proposes to the ExecutiveCommittee the investment strategy for the bank’s own portfolio, monitors itsimplementation and analyses risk factors critical to growth in its value. It is presidedover by the director of Equity and Fixed Income. Its members are the heads (or theirAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._110Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)representatives) of the Equity, Fixed Income, Financial, Risk & Reporting and PrivateClients Departments.• The Credit Recovery Committee, which monitors credit in default (including otheraccounts receivable) and defines operational measures and strategies. It is presidedover by the executive director for risk management and must include the BGA directorof Property Investment and the heads (or their representatives) of the Risk & Reporting,Credit, Legal & Tax, Property Investment, Operations, Accounting and Financial ControlDepartments and client management department.• The Risk Management Committee, whose objective is to ensure that the observed riskprofile is aligned with the risk level defined for the bank, reporting any deviations thatarise; to review in detail the compliance monitoring programme and the risk profile bycategory. It is presided over by the Executive Director tasked with managing the Riskand Reporting Department. The members of this committee are all the Bank’s executivedirectors and the heads (or their representatives) of the Risk & Reporting, Legal & Tax,Compliance, Audit, Operations, Information Systems, Accounting and Financial Control,Organisation & Quality and Resources and Services departments.a) Credit riskCredit risk arises from the probability of loss due to the inability of a counterparty tofulfil their financial commitments to the Company, including possible restrictions ontransferring payments from abroad. In the case of securitised credit, risk arises frompotential changes in the value of instruments due to the degradation of the issuer’scredit quality.At BBI, the credit risk underlying its activity arises essentially from its portfolio of bondsand credit extended and guarantees provided to clients, as an area that complementsother investment banking activities, such as project finance, private banking andcorporate finance, among others.The bank’s policy entails granted collateralised credit and more than 85% of creditsare covered by real guarantees, particularly mortgages and pledges of securities. Allcollateral received is valued at fair value on the basis of its market value, taking accountof the specificities of each type of collateral. In the case of mortgage loans, the Bankuses the consultancy services of the most renowned property appraisal companies.In credits with pledged securities, there is daily monitoring of the market value of thepositions pledged using in-house software that produces the necessary warnings torequest additional margins or to call in the guarantees.All operations are analysed and discussed by the Credit and Risk Committee, whichmeets regularly and has powers of decision for certain degrees of risk. Its decisions arelater submitted to the Executive Committee for approval.Larger operations must be ratified by the Board of Directors. Similarly, the counterpartycredit risk of derivatives operations is analysed by the DRR and discussed and approvedby the Credit and Risk Committee, depending on its delegation of powers.Periodically an overall analysis is conducted of credit to clients with a view to monitoringthe risk of concentration in terms of sectors and major risks and of the quality of ourportfolio and its level of collateralisation. Among other points, the composition of theAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._111Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)portfolio is analysed by type of associated collateral in order to monitor exposure to thenet risk and the average spread with a view of overseeing the risk-return ratio.Regarding monitoring the credit risk of exposures to bank portfolio securities, chartsare drawn up containing a credit quality analysis of the portfolio based on the ratingsfrom the main international agencies, along with in-house monitoring models. Inindividual terms, the Bank does not have historical information or a large enoughcredit portfolio to enable it to conduct an exhaustive study of the frequency of actualdefaults and losses (PD and LGD). The PD and LGD of Banif – Banco Internacional doFunchal, S.A. are applied to only some generally insignificant credit segments. Thecalculation of impairment losses is done individually or casuistically, taking account ofthe specificities of the operation and the best estimate of the recoverable value (creditand guarantees) on the date of evaluation.In the case of securitised credit, including securitisations (ABS, CDO and CLOs) casuisticanalyses are also conducted to assess the existence of impairment, based on marketinformation, including investor reports and in-house models for monitoring the creditrisk of securities.b) Market risksMarket risk arises from the probability of loss due to unfavourable movements in themarket price of instruments in the trading portfolio, including fluctuations in interestand exchange rates, share prices and the price of goods. The main type of market risksto which the Bank is exposed are short-term positions in debt and equity securities,currency, goods and derivatives.At BBI the market risk results essentially from exposure to securities held in thetrading portfolio. The Bank does not have a policy of trading in derivatives. As a rule,the derivatives acquired serve the purpose of hedging positions, mainly in operationsundertaken for clients, through symmetric transactions with other counterpartiesthat annul the market risk between them, and of hedging the Bank’s own portfoliorisks.The bank made great efforts to revise and perfect its ways of measuring and monitoringthe market risk and successfully migrated the Group companies’ trading portfolios toone market risk analysis tool - BarraOne, owned by MSCI Barra, which it has used forsome years.This system makes it possible to analyse the portfolio risk broken down into thedifferent explanatory factors, for example between specific components of the overallor market risk, which is then broken down into different parts. The total risk takes intoaccount the correlation between the assets, both at the top level and at the variousrisk disaggregation levels. BarraOne uses a multi-factor system based on fundamentalsthat include intuitive economic characteristics in choosing issues or factors based onmarket data and risk estimates aimed at forward-looking risk management.The diagram below shows how the risk is broken down and conducts a sensitivityAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._112Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)analysis for each of the items applicable to the portfolio.TOTAL RISKForeignExchange RiskGlobalMarket RiskCorrelationImpactSpecificRiskGlobal Risk(CommonFactors)CorrelationImpactIndustryStyleInterest Rate(Yield Curve)SpreadEmergingMarketsCommoditiesHedge FundsCorrelationImpactThe calculation of the VaR is thus broken down into the following factors:• Exchange risk - the component of VaR attributable to the explicit and implicit currencyrisk, for example through indirect investment. Due to the extreme sensitivity of thisfactor, the model uses only the last 17 weeks of data as a history.• Local market risk – the component of the VaR attributable to the market risk per se,excluding the exchange risk. The risk for each market breaks down into 3 components:global risk, specific risk and correlation.• Global risk - the risk explained by common market factors, including the industry,style, interest rate, spread, emerging market, hedge fund and commodities risks. Itanalyses the risk to the portfolio resulting from exposure to specific factors in eachmarket/model.i) Industry – each asset is classified in the most suitable sector (using the Barramethod), so that the VaR component explained by the sector is calculated.ii) Style – in this item the model captures the risk deriving from the asset having thefollowing: i) a large or a small capitalisation; ii) the expectation of high growth versuslower valuations; long and short-term volatility pattern;iii) Interest rate (yield curve) – includes the risk arising from changes in the yield curveAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._113Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)and twist or butterfly, which corresponds to three risk factors for each market. TheEuro Area model comprises models for the countries in that zone.iv) Spread – it analyses the difference between the swap curve and the public debtcurve and credit events and calculates allocation in terms of risk.v) Emerging markets – this comes from the additional risk due to the issuer being froman emerging country or the asset being issued in an emerging country.vi) Commodities – it obtains risk estimates for commodity futures and spots. The modeluses 26 sub-indexes to analyse the risk from different commodity types, which are lateraggregated into five large groups and integrated into the multi-class model through acovariance matrix. It is not applicable to BBI.vii) Hedge funds – this obtains estimates of the risk for exposure to this type of asset.It is not applicable to BBI.• Specific risk – a risk that is not explained by common factors, i.e. a single riskexclusive to each asset and therefore diversifiable. This model combines the estimatefor the average specific risk level and the specific risk value given the asset’s basiccharacteristics.The VaR is calculated using the parametric model, applied at a 10-day horizon andwith a 99% confidence interval, in line with the recommendations from the New BaselAgreement and the Banco de Portugal (notice 8/20079).c) Exchange rate riskExchange Rate Risk is the risk that the value of financial assets denominated in foreigncurrencies may fluctuate due to changes in the exchange rates.The Bank systematically monitors its overall exposure to exchange rate risk. To thiseffect, a daily calculation is made of its exchange position against the major currencies,primarily covering positions resulting from trading activity in the securities portfolio,as well as variations in the Company’s net (potential or realised) profit as a result ofconverting the balances of each account at the ECB fixing rates.d) Interest rate riskThe interest rate risk consists of the probability of negative impacts on results orcapital due to adverse movements in interest rates, taking account of an institution’sbalance sheet structure. This type of risk is assessed systematically at medium to longterm and covers exposure of the bank portfolio on the basis of repricing periods in linewith the recommendations of the New Basel Agreement and Banco de Portugal (Notice19/2005).The interest rate risk in the trading portfolio should be assessed as part of market risk,focusing on the short term, given that this portfolio is usually managed on a daily basis.The analysis model used by BBI is based on the BarraOne tool and breaks down themarket risk into its different components, including the interest rate risk embedded inthe variation in price (breakdown of the VaR into its different components, includingthe interest rate risk).Exposure monitoring charts are produced regularly showing assets and liabilitiesby maturity in overall terms. A separate analysis is also conducted for the bank andtrading portfolio showing mismatches of periods for re-fixing of the rate of assets andAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._114Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

liabilities and by main currencies.e) Liquidity riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Liquidity risk arises from the probability of losses due to the inability of an institutionto make liquid funds available to fulfil its obligations, under reasonable conditions.At BBI, liquidity levels are adapted on the basis of the amounts and periods of thecommitments made and resources obtained using the identification of gaps. Its policiesregarding obtaining funding, both from clients and on the market, have guaranteedstability of resources based on an integrated Group logic.There is an operating unit within BBI to maximise the management of structuralbalance sheet risks. Its main goal is to set and implement financial policies, particularlyin terms of liquidity and cash management on an individual basis for the bank and tocomplement consolidated management by the Banif Group in this area.f) Operational riskOperational risk arises from the probability of losses due to inadequacy or deficiency ofprocedures, personnel or internal systems, or external events, including legal risks. Thisprobability of loss may result from failures in the analysis, processing or settlement oftransactions, internal and external fraud, activity being affected due to outsourcing,lack of sufficient or qualified human resources or the inadequacy of infrastructures.Banif Grupo Financeiro is aware of the importance of effective monitoring of theoperational risk and about four years ago began a special project in this area. In its initialstage, it involved surveying and recording occurrences likely to cause an operationalrisk in order to monitor and mitigate it. At the Bank and its subsidiaries, this beganin the first quarter of 2008. The DRR is responsible for operational risk management,which entails assessing, monitoring and controlling these risks in order to mitigatethem and draw up information to support decision-making.Operational risk managers (OR Managers) have been appointed for critical areas andthey also record operational risk events or shortcomings in everyday management inspecial software: the SAS OpRisk Monitor. There is currently a group of OR Managerswho collect and record operational risk events so that the Bank has the informationit needs to assess the risk, so that it can later be mitigated. They also meet needs forextra internal control. These managers report events detected in the software in theirarea of influence or another using a special external tool which interfaces betweenthem, the DRR and Corporate Risk Department of the Banif Group. It is possible to obtainstatistics by reporting area, frequency, origin, process, risk source, etc.This is how we will achieve our goal of monitoring and measuring the operationalrisk inherent in our business and detailing occurrences in different processes andintervening areas. This results in an effective, dynamic assessment of current internalcontrol systems.Apart from the legal, statutory and ethical provisions that apply to financialintermediation activities, a concern of the Company’s management has been to prepareand distribute manuals, regulations, circulars and other internal directives which helpAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._115Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)to ensure compliance with the standards applicable to the relevant area of business.This information is duly circulated to all staff and made available for consultation onthe Company’s intranet. In addition to this, the Legal & Compliance and Internal Auditdepartments work to complement and reinforce the measures adopted.There is a routine for monitoring and revising the internal control system, whichfollows regulatory guidelines and our organisational culture. Pursuant to the internalcontrol requirements of Banco de Portugal and the CMVM, we regularly conduct a selfassessmentfor each type of risk in accordance with a matrix provided by Banco dePortugal in its risk assessment model report. Specifically, as part of the reinforcementof our internal control system, an in-house project called Certification of Risks &Controls performs an exercise in which the heads of each unit are invited to conductself-assessments.Internal auditing is responsible for developing mechanisms for assessing the adequacyof internal control and monitoring it. It identifies shortcomings or weak points in thedesign, implementation or use of the internal control system and they are properlyrecorded, documented and reported to appropriate management levels so that theycan be dealt with. An internal tool, Audit Follow Up, was developed for the purpose. TheBoard of Directors and senior managers receive regular reports on the monitoring ofthe internal control system, including identification of shortcomings or weak pointsdetected, assessed individually or together.35.2. CREDIT riskFor the purposes of the analysis of credit risk provided in these notes, the BBI securitiesportfolio and credit extended to clients have been considered. The value of the financialassets held for trading therefore excludes the market value of derivatives.The item Cash at other credit institutions refers essentially to margin calls bycounterparties derivative and repo operations and clearing operations. The itemInvestments at credit institutions consists entirely of deposits at other bankinginstitutions in Banif Grupo Financeiro.Financial assets, by balance sheet item, have the following exposure to the credit riskas at 31 December 2010:Maximum Exposure Collateral Net ExposureFinancial assets held for tradingOther financial assets at fair value through profit or lossAvailable-for-sale financial assetsCredit extended to clientsInvestments held to maturity35 76035 760150 158273 239111 49860 391192 265278 103466 75160 39142 1074 865355 2540TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 047Amounts net of provisions. Amount of collateral considered up to the amount of exposure.As at 31 December 2009 it was as follows:AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._116Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Maximum Exposure Collateral Net ExposureFinancial assets held for trading40 629040 629Other financial assets at fair value through profit or loss219 31544 613174 702Available-for-sale financial assets73 3884 51268 876Credit extended to clients425 473304 029121 444Investments held to maturity80 399080 399TOTAL CREDIT RISK EXPOSURE839 204353 154486 050Amounts net of provisions. Amount of collateral considered up to the amount ofexposure.The item Credit extended to clients includes a portfolio of securities to a value ofalmost €70 million carried at depreciated cost consisting essentially of structuredproducts (ABS, CDO, CLO), classified in IAS terms as Loans & Receivables (LaR). Excludingthese instruments, the amount ofcredit extended net of provisions totalled around€396 million as at 31 December 2010, €355 million of which was collateralised by realguarantees, including mortgages and pledged securities representing a ratio of morethan 85%. More than €100 million in the portfolio at the end of the year referred toproject and acquisition finance operations.In terms of distribution by sector, the public sector component to the amount of €174million as at 31 December 2010 corresponds to the entire public debt or debt guaranteedby a central government, €170 million (or 98%) of which refers to the Portuguesesovereign risk (public debt or debt guaranteed by the Portuguese government).Concentration of credit risk by sector as at 31 December 2010:Maximum Exposure Collateral Net ExposureIndustry6 61406 614Construction41 64739 8681 779Retail sales7540754Services25 772025 772Financial Institutions and Insurers133 7430133 743Public sector174 4030174 403Others620 055332 099287 957Private individuals30 28330 25825TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 046As at 31 December 2009 it was as follows:AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._117Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Maximum Exposure Collateral Net ExposureIndustry5930593Construction37 36337 3630Retail sales6210621Services16 828016 828Financial Institutions and Insurers149 9570149 957Public sector46 253046 253Others558 989287 504271 486Private individuals28 60028 288312TOTAL CREDIT RISK EXPOSURE839 204353 154486 050Amounts net of provisions.Concentration of credit risk by geographical region as at 31 December 2010:Maximum Exposure Collateral Net ExposurePortugal747 798304 524443 274European Union107 33928 94678 393Rest of Europe000North America43 34612 60830 738Latin America116 42247 60368 819Rest of World18 3668 5449 822TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 046Amounts net of provisions.As at 31 December 2009 it was as follows:Maximum Exposure Collateral Net ExposurePortugal556 436265 336291 100European Union121 22123 43297 789Rest of Europe2 44102 441North America47 50914 77032 739Latin America89 47549 61739 858Rest of World22 122022 122TOTAL CREDIT RISK EXPOSURE839 204353 154486 050Amounts net of provisions.The tables below show all financial assets by quality of credit. Their external ratings areAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._118Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The tables below show the calculation of Value-at-Risk (VaR) for the trading securitiesportfolio held by BBI, which, as at 31 December 2010, totalled around €43 million inabsolute values (€35 million in long positions and €8 million in short) consistingessentially of fixed-income securities in which the share competent is negligible.We used the specialised BarraOne software owned by MSCI Barra to calculate thismeasurement of risk. The VaR was calculated over a 10-day horizon with a 99%probability in line with good international practices, particularly the recommendationsin the Basel capital agreement.As at 31 December 2010, the trading portfolio’s VaR was around €586,000 (€743,000in 2009), representing 2% of the portfolio’s net market value. The risk of exposure toshares is completely immaterial at a VaR of €5,000.The overall VaR for BBI’S trading portfolio corresponded to less than 1% of the Bank’sown funds (Tier 1).The breakdown in the VaR by type of security as at 31 December 2010 is as follows:SharesBondsDiversification EffectTotalPortfolioVaR(thousandeuros)5587-6586PortfolioVaR (%)15.92.0n.a.2,0As at 31 December 2009 it was as follows:PortfolioVaR(thousandeuros)PortfolioVaR (%)Source: Barra OneSharesBondsDiversification EffectTotal9742-874317.12.0n.a.2,0AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._120Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The breakdown in the VaR by type of risk as at 31 December 2010 is as follows:Portfoliorisk %Portfoliorisk %PortfoliovariancePortfolio VaR(thousandeuros)Local Market Risk2.4832.2%6.16333Overall Risk (Common factors)2.2426.2%5.01300Industry0.030.0%0.004Style0.010.0%0.002Interest rate (yield curve)1.8217.3%3.30244Spread0.914.3%0.83122Emerging markets1.339.2%1.77178Correlation – Common Factorsn.a.-4.7%-0.89n.a.Specific Risk (Selection)1.076.0%1.15144Foreign Exchange Risk3.9481.4%15.56529Currency/Market Correlationn.a.-13.6%-2.59n.a.TOTAL RISK4.37100.0%19.12586As at 31 December 2009 it was as follows:Portfoliorisk %Portfoliorisk %PortfoliovariancePortfolio VaR(thousandeuros)Local Market Risk3.3659.7%0.11574Overall Risk (Common factors)3.2856.9%0.11560Industry0.040.0%0.006Style0.010.0%0.001Interest rate (yield curve)3.0849.9%0.09525Spread1.8217.5%0.03311Emerging markets0.985.1%0.01168Correlation – Common Factorsn.a.-15.7%-0.03n.a.Specific Risk (Selection)0.732.8%0.01125Foreign Exchange Risk4.3097.6%0.18734Currency/Market Correlationn.a.-57.3%-0.11n.a.TOTAL RISK4.35100.0%0.19743Source: Barra OneAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._121Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

35.4. Rexchange rate riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Exchange position by currency as at 31 December 2010:NeT PositionCurrencyUSDGBPCHFJPYSEKNOKDKKCADZARAUDMOPBRLPLNHUFTRYLong0.00.0134.51.62.171.026.35.80.30.00.09 738.76.00.40.3Short9 178.55.10.00.00.00.00.00.00.00.00.00.00.00.00.0The highest exposures were amounts in BRL and USD, a long position of €9.7 millionand a short position of €9.2 million respectively, while the other currencies wereinsignificant. Our exchange position as at 31 December 2009 in absolute terms wasless than €800,000.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._122Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

35.5. interest rate riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The breakdown of financial assets and liabilities by interest rate re-fixing periodas at 31 December 2010 is as follows:= 5 yearsTOTAL1 year yearssensitiveFinancial assets held for trading1 2691 2694 5905037458 4292 5832 2711 96412 182114 791150 595Other financial assets at fair value through profit or loss1 2641 37512 0120039 32008000138 214192 265Available-for-sale financial assets13 0124 86527 48705 91972 89614 4118 93724 50264 27341 800278 103Cash and Cash Equivalents and Investments at Credit Institutions11 40000000000089 878101 278Loans and Other Receivables110 366198 415124 845019 117000039313 615466 751Investments held to maturity12 95116 0376 4630010 8012 4356 84704 857060 391Other Assets2 63325 7560000000044 89373 282TOTAL ASSETS152 896247 717175 39850325 781131 44619 42918 13526 46681 704443 1911 322 666Deposits of Central Banks122 185165 443000000000287 628Financial liabilities held for trading003900168737921 4085 885109 697118 027Financial liabilities at amortised cost492 51997 02238 42810 9001 7508 78000045 220116 563811 181Deposits of Credit Institutions283 90740 95927 7978 4001 000000042 10795 125499 294Corporate Deposits205 41149 5349 3422 5006308 5530003 11316 743295 826Private Deposits3 2026 5301 288012022700004 69516 061Subordinated Liabilities015 00015 00000000003330 033Other Liabilities000000000014 82714 827TOTAL LIABILITIES614 704277 46653 46710 9001 7508 948737921 40851 105241 1211 261 697Amounts net of provisions.As at 31 December 2009 it was as follows:= 5 yearsTOTAL1 year yearssensitiveFinancial assets held for trading70812 6514 127153002 4891 1412 11684616 18264 581105 156Other financial assets at fair value through profit or loss1 1141 3598 9549 184010 95730 34514 35813 30718 521111 217219 315Available-for-sale financial assets06 81322 386003101061 26606 50236 00473 388Cash and cash equivalents and investments at Credit Institutions000000000047 69747 697Loans and other receivables129 736184 95277 097012 9790000020 709425 473Investments held to maturity12 44052 0284 727006 3782 4282 40000080 401Other assets000000000037 57637 576TOTAL ASSETS143 998257 803117 2919 20013 27920 13334 02020 13914 15341 205317 785989 007Deposits of central banks1 00028 6440063 4910000093 136Financial liabilities held for trading000000002163 86257 54861 627Financial liabilities at amortised cost441 27197 38331 5194 72312 2163742 9830045 84082 428718 736Deposits of Credit Institutions206 72075 05722 936012 000000039 05567 513423 280Corporate Deposits232 55820 9117 8194 4812163742 983006 78413 595289 721Private Deposits1 9931 4157642420000001 3205 735Subordinated liabilities015 00015 00000000002930 029Other liabilities000000000023 44923 449TOTAL LIABILITIES442 271141 02746 5194 72375 7073742 983021649 702163 454926 977Amounts net of provisions.The table below presents an analysis of the banking portfolio’s sensitivity to interestrate risk, based on the reporting charts prepared for the supervisory body. This analysisis based on a scenario of a standard shock of 200 bp in interest rate and its impact onthe Bank’s net worth and annual financial headroom in individual terms based on theassumptions set out in Banco de Portugal Instruction 19/2005.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._123Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Sensitivity analysis of the impact of a 200 bp variation in the interest rate curve byrelevant currency as at 31 December 010 and 2009:20102009Impact on net worth-15 733-6 232Equity90 25287 896EURImpact on equity, as %Impact on net 12-month interest margin-17%-8 204-7%-2 196Net interest margin13 91110 658Impact on net annual interest margin, as %-59%-21%Impact on net worth5 5105 540Equity90 25287 896EURImpact on equity, as %Impact on net 12-month interest margin6%-1 1066%-1 029Net interest margin13 91110 658Impact on net annual interest margin, as %-8%-10%Impact on net worth-10 223-692Equity90 25287 896TOTALImpact on equity, as %Impact on net 12-month interest margin-11%-8 204-1%-3 225Net interest margin13 91110 658Impact on net annual interest margin, as %-59%-30%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._124Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

35.6. LIQUIDity riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The breakdown of financial assets and liabilities by residual maturity as at 31 December2010 is as follows:3 MONTHS5 years Not definedTOTALFinancial assets held for trading6461 1262 84717 98713 199114 791150 595Other financial assets at fair value through profit or loss003 05949 7281 264138 214192 265Available-for-sale financial assets008 030162 43865 83541 800278 103Cash and cash equivalents and investments at Credit Institutions14 03325 75600089 876129 665Loans and other receivables26 06812 640206 65389 822117 95313 615466 751Investments held to maturity05 00415 65633 4396 293060 391Other assets0000044 89544 895TOTAL ASSETS40 74644 526236 244353 413204 545443 1911 322 666Deposits of Central Banks122 185165 4430000287 628Financial liabilities held for trading00392 4055 885109 697118 027Financial liabilities at amortised cost492 51978 63751 07727 16545 220116 563811 181Deposits of Credit Institutions283 90740 17337 19778642 10795 125499 294Corporate Deposits205 41131 93412 47226 1533 11316 743295 826Private Deposits3 2026 5301 40822704 69516 061Subordinated Liabilities000030 0003330 033Other Liabilities0000014 82714 827TOTAL LIABILITIES614 704244 08051 11629 57181 105241 1211 261 697Amounts net of provisions.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._125Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

As at 31 December 2009 it was as follows:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3 MONTHS5 years Not definedTOTALFinancial assets held for trading962 59010 6349 42917 82764 581105 156Other financial assets at fair value through profit or loss009 18477 92120 993111 217219 315Available-for-sale financial assets05 930024 0687 38636 00473 388Cash and cash equivalents and investments at Credit Institutions0000047 69747 697Loans and other receivables36 17341 207149 374101 83276 17820 709425 473Investments held to maturity010 71227 18541 0781 424080 399Other assets0000037 57837 578TOTAL ASSETS36 27060 438196 376254 328123 807317 788989 007Deposits of Central Banks1 00028 64463 49100093 136Financial liabilities held for trading0002163 86257 54861 627Financial liabilities at amortised cost441 27186 55448 45814 18545 84082 428718 736Deposits of Credit Institutions206 72074 32834 93672939 05567 513423 280Corporate Deposits232 55810 81112 51613 4566 78413 595289 721Private Deposits1 9931 4151 006001 3205 735Subordinated Liabilities000030 0002930 029Other Liabilities0000023 44923 449TOTAL LIABILITIES442 271115 198111 94914 40179 702163 454926 977Amounts net of provisions._126Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)36. FAIR VALUE OF SECURITIES PORTFOLIO AND OTHERFINANCIAL INSTRUMENTSAs at 31 December 2010, this item can be broken down as follows:Securities PortfolioMarket Valueor PriceFair ValueASSETSFinancial assets held for tradingOther financial assets at fair valueAvailable-for-sale financial assetsInvestments held to maturityLoans and other receivables35 865192 344278 10360 39169 95135 865192 344278 10360 29268 452LIABILITIESFinancial liabilities held for trading8 3558 355Other financial instrumentsBalance Sheet ValueFair ValueASSETSCredit extended to clientsOther financial assets396 8019 364396 8019 364LIABILITIESAmounts owed to clients and other borrowings311 887311 8875For loans of less than one year, the balance sheet value is considered to be a reliableapproximation to fair value. This was also the case for indexed loans maturing after oneyear which are otherwise not materially relevant. For deposits maturing in less thanone year or with unspecified maturity, including those which do not pay interest, it wasconsidered that the amount due on the reporting date was a reliable approximation tofair value.In the internal valuation models for financial trading instruments and for instrumentsat fair value through profit or loss, the market interest rates were set based oninformation issued by Bloomberg. The terms up to one year refer to interbank marketrates, while the terms over one year are through interest rate swap listed prices. Theinterest rate curve that results is also adjusted against the values for short-terminterest rate futures. The interest rate for specific periods is calculated by interpolationmethods. The same interest rate curves are also used for projecting non-deterministiccash flows, such as reference rates for example.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._127Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The interest rates used for calculating the interest rate curve relating to 31 December2010, for the EUR and USD currencies, are as follows:CurrencyTERM1 day7 days15 days1 month2 months3 months4 months5 months6 months7 months8 months9 months10 months11 months1 year2 years3 years4 years5 years6 years7 years8 years9 years10 years20 years30 yearsEUR0.25%0.35%0.43%0.62%0.78%0.96%1.07%1.16%1.26%1.31%1.35%1.40%1.44%1.48%1.53%1.56%1.89%2.23%2.56%2.75%2.93%3.06%3.19%3.32%3.70%3.50%USD0.20%0.23%0.23%0.23%0.25%0.29%0.34%0.40%0.46%0.51%0.56%0.62%0.56%0.51%0.45%0.83%1.31%1.76%2.21%2.54%2.86%3.04%3.23%3.41%4.03%4.13%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._128Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)37. BALANCES AND TRANSACTIONS WITH related entitiesItemsKeyManagementMembersClose Familyof KeyManagementMembersRelatedEntitiesShareholdersOtherEntitiesFinancial assets held for trading2 274Credit extended to clients9 637Other assets1 664364 043Amounts owed to other credit institutions5 000Amounts owed to clients and other borrowings5110749 3178468 139Provisions596Other liabilities934 093Interest and similar income36Interest expense and similar charges(93)Income on services and commissions1 114Income on financial assets and liabilities at fair value through profitor loss(84)Personnel expenses(440)(220)General administrative costs/overheads(74)Provisions net of write-backs and cancellations15(26)Transactions with affiliates are treated using the same criteria that are applied tosimilar transactions, and are performed under normal market conditions. In the pastfinancial year, no specific provisions were set up for balances with related entities.38. EVENTS AFTER THE BALANCE SHEET’S DATEOn the date of approval of these financial statements by the Company’s Board ofDirectors, there were no events subsequent to 31 December 2010, date of referenceof these financial statements, requiring adjustments or alterations to the values ofassets or liabilities.The Chartered AccountantThe Board of DirectorsAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._129Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

6.2 CONSOLIDATED FINANCIAL STATEMENTS31/12/2010 31/12/2009CONSOLIDATED BALANCE SHEETNotesVALUE BEFOREPROVISIONS ANDDEPRECIATIONIMPAIRMENTANDDEPRECIATIONNETNETCash and balances at central banks52 217-2 2176 348Due from other banks690 920-90 92041 853Financial assets held for trading7186 241-186 241105 535Other financial assets at fair value through profit or8187 677-187 677219 389lossAvailable-for-sale financial assets9 and 25252 6221 230251 39274 720Loans and advances to banks1012 789-12 789225Loans and advances to clients11 and 25476 9936 367470 626426 249Investments held to maturity1260 391-60 39180 399Assets with repurchase agreements1328 387-28 387-Non-current assets held for sale142 657-2 657-Investment Property15 and 259 6314479 184-Other tangible assets1617 1473 54213 60514 022Intangible assets178 0834 0134 0703 779Investments in subsidiaries, associates and joint181 230-1 230-venturesCurrent tax assets191 012-1 0121 163Deferred tax assets194 227-4 2271 222Other assets20 and 2512 71310912 60411 947TOTAL ASSETS1 354 93715 7081 339 229986 851Deposits from central banks21287 17993 136Financial liabilities held for trading22118 02761 627Deposits from other banks23500 794424 780client accounts and other loans Provisions24292 597278 440Current tax liabilities25601 563Deferred tax liabilities194 098849Other subordinated1936liabilities2630 03330 029Other Liabilities2712 25322 047TOTAL ASSETS1 245 044912 477Share capital2855 00055 000Revaluation reserves28(7 372)(2 216)Other reserves and retained earnings2819 48015 766Profit for the period288 1823 714Interests outside of sphere of control2818 8952 110TOTAL EQUITY94 18574 374TOTAL LIABILITIES AND EQUITY1 339 229986 851(MILHARES DE EUROS)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._130Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

CONSOLIDATED INCOME STATEMENT NotEs 10/12/31 09/12/31Interest and similar income2941 81045 560Interest expense and similar charges2927 44034 667NET INTEREST INCOME14 37010 893Dividend income30407278Fees and commission income3126 13425 411Fees and commission expense31(4 678)(3 574)Income from assets and liabilities valued at fair value through profit or loss32(4 719)(10 764)Income from available-for-sale financial assets321 1491 150Net gains on foreign exchange differences323 43510 446Income from disposal of other assets(5)(30)Other operating income(177)(499)BANKING INCOME35 91633 310Pesonnel costs33(11 388)(10 608)General administrative costs/overheads34(9 425)(12 486)Depreciation and amortisation16 e 17(1 223)(1 034)Provisions net of reinstatement and write-offs251 464(950)Impairment of credit net of reversals and recoveries25(3 536)(1 847)Impairment of other financial assets net of reversals and recoveries25(118)(486)Impairment of other assets net of reversals and recoveries2597(209)Profit of subsidiaries and joint ventures (equity method)(25)(23)PROFIT BEFORE TAX11 7625 669TaxCurrent19(4 604)(933)Deferred19520(1 011)PROFIT AFTER TAX7 6783 725Minority Interests28504(11)NET PROFIT FOR PERIOD8 1823 714Number of issued shares11 000 00011 000 000EARNINGS PER SHARE350.740.34(THOUSAND EUROS)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._131Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

COMPREHENSIVE CONSOLIDATED INCOME STATEMENT NotEs 10/12/31 09/12/31Net profit288 1823 714Fair value gains/(losses) on available-for-sale financial assets, net of tax28(5 156)(148)TOTAL INCOME NET OF TAX283 0263 566_132Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

CONSOLIDATED STATEMENT OF CHANGESIN EQUITYNotesShareCapitalOtherReservesRetainedEarningsRevaluationReservesNetProfitforPeriodInterestsoutside ofsphere ofcontrolTotalEquityBalance at 31.12.20082840 00013 384(404)(2 068)3 0432 16056 115Allocation of net profits ofpreceding periodTransfer to reserves3 043(3 043)and retained earningsShare capital increase15 00015 000Total income(148)3 7143 566Transactions with interests outside(50)(50)of sphere of controlOther changes in equity(257)(257)Balance at 31.12.20092855 00016 170(404)(2 216)3 7142 11074 374Allocation of net profits ofpreceding periodTransfer to reserves3 714(3 714)and retained earningsTransactions with interests outside16 78516 785of sphere of controlTotal income(5 156)8 1823 026Balance at 31.12.20102855 00019 884(404)(7 372)8 18218 89594 185AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._133Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

CONSOLIDATED CASH FLOW STATEMENT NOTES 10/12/3109/12/31Operating ActivityOperating Income:Net Profit for period8 1823 714Other impairment losses3 556-Provisions of Period-4 896Amortisations of Period1 2231 036Allocation to taxes for the period4 257816Minority interests16 78511Dividends(407)(278)Interest on subordinated liabilities579904Other(7 906)1 72226 26912 820Changes in operating assets and liabilities:Changes in operating assets and liabilities:(Increase)/Decrease of financial assets held for trading(80 706)(19 893)(Increase)/Decrease of other financial assets at fair value through31 712(76 975)profit or loss(Increase)/Decrease of available-for-sale financial assets(181 828)5 695(Increase)/Decrease of investments in other credit institutions(12 564)4 278(Increase)/Decrease of Credit extended to clients(44 377)(78 583)(Increase)/Decrease of Investments held to maturity20 0083 714(Increase)/Decrease of Assets with repurchase agreements(28 387)56 528(Increase)/Decrease of Non-current assets held for sale(2 657)-(Increase)/Decrease of other assets(9 762)10 020(Increase)/Decrease of financial liabilities held for trading56 40027 057(Increase)/Decrease of Amounts owed to other credit institutions270 056(19 089)(Increase)/Decrease of Amount owed to clients14 15723 101(Increase)/Decrease of other subordinated liabilities5(3)(Increase)/Decrease of other liabilities(11 338)1 242Income Tax355(271)21 075(63 179)Operating Activity Cash Flow47 344(50 359)INVESTMENT ACTIVITYPurchase of subsidiaries/associates(1 230)-Purchase of tangible assets(426)(1 662)Disposal of tangible assets-1 348Acquisition of intangible assets(582)(1 922)Dividends407278Investment Activity Cash Flow(1 830)(1 959)FINANCING ACTIVITYRevenue due to:Share issues-15 000Payments due to:Dividends paid in period-(148)Interest paid on subordinated liabilities(579)(904)Financing Activity Cash Flow(579)13 948Total44 936(38 370)CHANGES IN CASH AND CASH EQUIVALENTSCash and cash equivalents at start of period48 20086 570Cash and cash equivalents at end of period93 13748 20044 936(38 370)Balance Sheet value of cash and cash equivalents items, at 31 DecemberCash513Current Accounts in Central Banks52 2166 345Current Accounts in Other Credit Institutions690 92041 85393 13748 200AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED_134Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

1. GENERAL INFORMATIONNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Banif – Banco de Investimento, S.A. (the Company) resulted from the split on 15 December2000 of Ascor Dealer – Sociedade Financeira de Corretagem, S.A. In the process, BanifAscor – Sociedade Corretora, S.A., a brokerage house, was also created. Most BanifGroup holdings in investment banking-related areas were transferred on that date tothe new bank.In this way, Banif - Banco de Investimento, SA, came to hold the entire share capitalof Banif Ascor – Sociedade Corretora, SA, Banif Patrimónios – Sociedade Gestora dePatrimónios, SA and Banif Imo – Sociedade Gestora de Fundos de Investimento Imobiliário,SA; a majority stake in the share capital of Banifundos Cisalpina - Sociedade Gestora deFundos de Investimento Mobiliário, SA; and a significant holding in the share capital ofBanif Açor Pensões - Sociedade Gestora de Fundos de Pensões, SA.By public deed authorised on 30 December 2002, Banif Ascor – Sociedade Corretora,SA and Banif Patrimónios – Sociedade Gestora de Patrimónios, SA were merged byincorporation into Banif – Banco de Investimento, SA . The accounting effects of thismerger were reported on 1 January 2002.In February 2003, Banif – Banco de Investimento, SA acquired from Cisalpina Gestioni30% of the share capital of Banifundos Cisalpina - Sociedade Gestora de Fundos deInvestimento Mobiliário, SA, now holding the entire share capital of this company. As aresult, its company name was changed to Banifundos - Sociedade Gestora de Fundosde Investimento Mobiliário, SA.By public deed on 30 December 2003, there was a merger by incorporation of Banifundos- Sociedade Gestora de Fundos de Investimento Mobiliário, SA by Banif Imo – SociedadeGestora de Fundos de Investimento Imobiliário, SA. The accounting effects of this mergerwere reported on 1 January 2003. As of the merger, the incorporating company’s namewas changed to Banif Gestão de Activos - Sociedade Gestora de Fundos de InvestimentoMobiliário, SA.Banif – Banco de Investimento, SA shares are wholly owned by Banif Investimentos, SGPS,S.A., a sub-holding of Banif Financial Group (the Group), whose parent company is BanifSGPS, S.A., which reports consolidated accounts in accordance with the InternationalFinancial Reporting Standards (IAS/IFRS).On 28 February 2011, the Company’s Board of Directors reviewed and approved theBalance Sheet and Income Statement as at 31.12.10, as well as the other Individual andConsolidated Financial Statements. On 28.02.11, the Board of Directors approved theManagement Report which, together with the Financial Statements, will be submittedfor approval at the Annual General Meeting of Shareholders on 29.03.11.2. ADOPTION OF NEW OR REVISED INTERNATIONALFINANCIAL REPORTING STANDARDSThe accounting policies followed in the financial year are consistent with those usedin previous years, with the exception of following new standards and interpretations,amendments or revisions of standards and new interpretations issued by the IASB /_135Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)IFRIC and endorsed by the European Union. Adopting these new standards did not haveany effect on the Company’s position in terms of assets and performance.IFRS 5 (improvement) - Non-current Assets Held for Sale and Discontinued OperationsThe improvement clarifies that:• when a subsidiary is held for sale, all its assets and liabilities shall be classified as heldfor sale under IFRS 5, even when the entity will retain a non-controlling interest in thesubsidiary after the sale.• required disclosures on non-current assets, groups available for sale or discontinuedoperations are only those set out in IFRS 5.IFRS 2 (amendment and improvement) – Share-based PaymentThe amendment to IFRS 2 clarifies the reporting of situations in which an entity receivesa service or products from its employees or suppliers, but payment will be made byits parent company or another group company. The improvement clarifies that thecontribution of a business to a joint venture and combinations under common controlare not covered by IFRS 2.IAS 1 (improvement) – Presentation of Financial StatementsThe improvement clarifies that the terms of settlement of a liability that may result atany time in settlement by the issue of capital instruments by option of the counterpartydoes not affect the classification of instruments convertible into current and noncurrentin the statement of financial position.As a result of the amendment to IAS 27, it is necessary to include two additional linesin the statement of changes in equity: (i) acquisition of subsidiaries and (ii) acquisitionof non-controlling interest to reflect transactions with owners resulting from changesin ownership of subsidiaries that do not result in loss of control.IAS 38 (improvement) – Intangible AssetsThe improvement:• establishes that if an intangible asset acquired as part of a business combination isidentifiable only with another intangible asset, the two can be recognised as a singleintangible asset, provided that they have similar useful lives.• clarifies that valuation techniques for measuring the fair value of intangible assetsacquired in a business combination are mere examples and do not restrict the methodsthat can be used.IAS 39 (amendment and improvement) – Financial Instruments: Recognition andMeasurement – eligible hedged itemsThis amendment:• clarifies that it is possible to designate a part of the changes in fair value orvariability of cash flows of a financial instrument as a hedged item._136Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)• makes clear that inflation is not a separately identifiable risk and cannot bedesignated a hedged risk unless it represents contractually specified cash flows.The improvement makes the following changes:• Exemption from the standard in contracts involving business combinations onlyapplies to forward contracts between a buyer and a selling shareholder for the purposeof buying or selling one acquired on a future date and not to derivatives contracts inwhich it is still necessary for future actions to occur.• If in hedging of cash flows the hedging of an expected transaction results insubsequent recognition of a financial asset or liability, any gains or losses recognisedin total income shall be reclassified to gains and losses in the same period or periods inwhich the hedged cash flows affect profits or losses.• A prepayment option is considered to be closely related to a host contract when theprice reimburses the borrower in an amount up to the approximate present value ofinterest lost during the remainder of the host contract.IFRIC 18 - Transfers of Assets from ClientsEsta interpretação tem por objectivo clarificar a forma de reconhecer imobilizadotangível ou caixa recebidos de clientes com o objectivo de serem usados para adquirirou construir activos específicos, não sendo, por isso aplicável.IFRIC 17 – Distributions of Non-cash Assets to OwnersThis interpretation clarifies recognition of the distribution of goods in kind.to owners and lays down that everyone has the same rights.IFRIC 12 – Service Concession AgreementsThis interpretation applies to concession operators and clarifies how to recogniseliabilities taken on and rights received in concession agreements.Other improvements in the IFRSThe annual IFRS improvement process is designed to solve situations needingimprovement in order to make them generally easier to understand, but are notclassified as priorities. Some improvements have regard to terminology or editorialchanges aimed at consistency between standards and their impact is minimal.Other improvements are likely to result in changes in recognition and measurement. Inaddition to those summarised above, the main improvements that came into effect in2010 were as follows:Improvements from 2009 applicable in 2010• IFRS 8 – Operating Segments: The improvements make clear that assets and liabilitiesby segment only need to be reported when they are included in measures used by theperson who makes operational decisions.• IAS 17 – Leases: The specific provisions on land and buildings are removed, leaving onlythe general provisions._137Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)• IAS 18 – Revenue: Guidelines are added for determining whether an entity is acting asa seller or an agent.• IAS 36 – Impairment of Assets: The improvements make clear that, on testingimpairment of goodwill acquired in a business combination, the largest unit allowedfor allocation of goodwill is the operating segment defined in IFRS 8 which, dependingon the circumstances, may be of a lower level than the reportable segment.• IFRIC 9 – Reassessment of Embedded Derivatives: The improvements make clear thatIFRIC 9 does not apply to possible reassessments on date of acquisition of embeddedderivatives in contracts acquired in combinations between entities or businesses undercommon control or in the formation of joint ventures.• IFRIC 16 – Hedges of a Net Investment in a Foreign Operation: The improvements makeclear than qualifying hedging instruments can be held by a group entity provided thatthe designation, documentation and effectiveness requirements in IAS 39 are met.• IAS 7 - Cash flow statement - It makes clear which operations should beclassified as investment activities and lays down that only outlaysresulting in an asset recognised in the statement of financial position areeligible for classification as investment activities.RECENTLY ISSUED STANDARDS AND INTERPRETATIONS THAT ARE NOT YET IN FORCEThe standards and interpretations issued recently by the IASB that must only beapplied after 1 January 2010 and were not adopted in advance are set out below. Norelevant impacts on the Group’s financial statements are expected from compliancewith these standards and interpretations.a) Endorsed by the EUIFRS 1 (amendment) - Exemptions from disclosure of comparatives required by IFRS7 in first-time adoption of the IFRSThis amendment comes into force in the first financial year starting after 30 June2010 at the latest. It lays down that a first-time adopter does not need to presentcomparatives for the disclosures required by IFRS 7 Financial Instruments: Disclosures.IFRS 7 (amendment) - Financial Instruments: DisclosuresThis amendment comes into force in the first financial year starting after 30 June 2010at the latest. It lays down that the improvements to this standard do not need to affectfinancial statements or comparatives of financial statements prior to 31 December2009.This standard comes into force in the first financial year starting after 31 December2010 at the latest. The main changes are as follows:• Change in the definition of related parties so that some entities cease to be consideredrelated, while others are now considered related• Partial exemption from disclosures of transactions with government bodies and thegovernment itself• Explicit obligation to disclose commitments to related parties, including executorcontracts_138Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)IAS 32 (amendment) - Classification of rights issuesThis amendment comes into force in the first financial year starting after 31 Januaryde 2010 at the latest. It changes the definition of financial liabilities so that issue rights(and certain options and warrants) are classified as equity instruments if:• The rights are allocated proportionally to all owners of the same class of the entity’snon-derivative capital instruments.• They are used to acquire a fixed number of the entity’s own capital instruments inreturn for a fixed amount of any currency.IFRIC 14 (amendment) - Advances for minimum funding requirementsThis amendment comes into force in the first financial year starting after 31December 2010 at the latest. It means that an entity must recognise as assetspayments made in advance and in each year the analysis of the plan surplus mustbe made as if there had been no advance payments.IFRIC 19 – Extinguishing financial liabilities with equity instrumentsThis IFRIC comes into force in the first financial year starting after 30 June 2010 atthe latest. It makes clear that capital instruments issued by a creditor to extinguishfinancial liabilities are considered payments for the purpose of paragraph 41 of IAS 39.b) Not yet endorsed by the EUIFRS 9 – Financial Instruments - introducing new requirements for classifying andmeasuring financial assetsOther amendments to the IFRS – 2010 improvements - The IASB approved 11amendments to six standards.3. BASES FOR PRESENTING ACCOUNTS AND MAIN ACCOUNTINGPRINCIPLES3.1 BASES FOR PRESENTING ACCOUNTSThe Company’s consolidated financial statements are prepared in accordance with theInternational Financial Reporting Standards as adopted by the European Union in theCouncil and European Parliament Regulation 1606/02The International Financial Reporting Standards as approved by the European Unionare different from the full version of the IAS/IFRS as published by the IASB (InternationalAccounting Standards Board), with regard to the elimination of certain restrictionson hedging accounting in IAS 39 - Financial Instruments: Recognition and Valuation.The financial statements were prepared on a historical cost basis, with the exceptionof the re-valuation of financial instruments. The main accounting principles used arepresented below._139Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3.2 COMPARATIVE INFORMATIONThe Company did not alter its accounting policies and practices and all the amountspresented are therefore comparable with the previous year in all materially relevantaspects.3.3 CONSOLIDATION PRINCIPLESThe consolidated financial statements include the accounts of Banif – Banco deInvestimento, SA and the enterprises it controls (“subsidiaries”).Control is consideredto exist wherever the Company has the power to decide an enterprise’s operational andfinancial policies with a view to obtaining benefits from its activities, which normallyoccurs when the Company holds at least 50% of the enterprise’s voting rights.Whenever applicable, subsidiaries’ accounts are adjusted in order to reflect use ofthe accounting policies of Banif – Banco de Investimento, SA. Significant balancesand transactions between Group companies are eliminated during the consolidationprocess.3.4 INVESTMENTS in ASSOCIATED COMPANIESThese are investments in enterprises in which the Group has significant influence, butwhich are not subsidiaries. Significant influence is considered to exist whenever theCompany directly or indirectly holds more than 20% of the voting rights. Investments inassociated companies are recorded in accordance with the equity method. Investmentsare initially recorded at cost, plus or minus recognition of subsequent variations in thepart held in the associated company’s net worth.Goodwill from acquisition is reflected in the value of the investment and undergoesan impairment analysis as part of said value. Any negative goodwill is immediatelyrecognised in profit or loss.As in the procedure used for subsidiaries, whenever applicable, associated companies’accounts are adjusted to reflect the use of the Group’s accounting policies.Investments in associated companies are carried at cost less any impairment losses.3.5 CAsh and cash EQUIVALENTSFor cash flow statement purposes, cash and cash equivalents include cash on hand,and sight deposits at central banks and other domestic and foreign banks, in domesticand foreign currency.3.6 TRANSACTIONS in foreign currencyTransactions in foreign currency are recorded using the exchange rates in force on thedate of the transaction. Monetary assets and liabilities expressed in foreign currencyare converted to euros using the exchange rate on the balance date. Non-monetary_140Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)items carried at fair value are converted using the exchange rate on the last valuationdate. Non-monetary items carried at historical value are converted at their originalexchange rate.Exchange differences in conversion are recognised as gains or losses in the period inthe income statement, with the exception of those arising from non-monetary financialinstruments classified as available for sale, which are recorded against a special equityitem until the asset is divested.3.7 USe of ESTIMATes in the PREPARAtion of thefinancial statementsPreparation of the financial statements requires that estimates and assumptionsbe made by the Company’s management. These affect the valuation of assets andliabilities, income and expenditure, as well as disclosed contingent liabilities. In makingthese estimates, management exercised its best judgement and used the informationavailable on the date the financial statements were prepared. Consequently, futurevalues might differ from the estimates made.The most significant estimates regard the following:Fair value of financial instrumentsWhen the fair values of financial instruments cannot be determined from marked tomarket prices in markets assets, they are calculated with valuation techniques thatinclude mathematical models (marked to model). The input data used in these modelsare, wherever possible, market data. When this is not possible, a degree of judgementis required to establish the fair values, namely in terms of liquidity, correlation andvolatility.Impairment losses in credits extended to clientsCredits extended to clients in an overdue position and with significant total liabilitiesare subject to individual analysis to evaluate the need to record impairment losses.This analysis involves estimating the amount and period of future flows. Theseestimates are based on assumptions concerning a range of factors that may changein the future and, as a consequence, alter the impairment amounts. In addition, anoverall analysis is performed for impairment by credit segments with similar featuresand risks, with impairment losses determined based on historic behaviour of lossesfor the same type of assets.Impairment of capital instrumentsAvailable-for-sale financial assets are considered impaired when a significant andprolonged decline in their fair value, below cost price, becomes apparent or when thereis other objective evidence of impairment. A level of decline considered ‘significant andprolonged’ requires judgement. In this context, the Group determined that a reductionof 30% or more in the fair value of a capital instrument for more than one year wasconsidered significant and prolonged. In addition, other factors are assessed, such asthe volatility of asset prices._141Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Deferred tax assetsDeferred tax assets are recognised for unused tax losses, to the extent that futuretaxable profits are likely to occur within the legally established period. To this effect,judgements are made to determine the amount of deferred tax assets that may berecognised based on these predictions.3.8 FINANCIAL INSTRUMENTS3.8.1 INITIAL RECOGNITION and MEASUREMENT ofFINANCIAL INSTRUMENTSThe purchase and sale of financial assets that require the delivery of assets withinestablished timeframes, according to market regulations or conventions in force, arerecognised on the date of trading, that is to say, on the date of the purchase orsale agreement. Derivative financial instruments are also recognised on the date oftrading.The classification of financial instruments on the date of initial recognition depends ontheir characteristics and purpose of acquisition. All financial instruments are initiallymeasured at fair value plus direct purchase or issue costs, except for assets andliabilities at fair value through profit and loss when said costs are recognised directlyin profit and loss.3.8.2 SUBSEQUENT MEASUREMENT OF FINANCIALINSTRUMENTSFinancial assets held for tradingFinancial assets and liabilities held for trading are those acquired for the purposeof being sold in the short-term and generating a profit from fluctuations in price ordealer’s margin, including all derivative financial instruments not classified as hedges.After initial recognition, gains and losses generated by the subsequent measurementof fair value are reflected in profit or loss for the year. The positive fair values ofderivatives are recorded under assets and the negative fair values under liabilities.Interest and dividends or expenses are recorded in the Income Statement when theright to payment or receipt is established.Financial liabilities from trading also include short sales of securities. These operationsare recorded on the balance sheet at fair value, with subsequent changes in fair valuerecorded in profit or loss for the year under ‘Other financial assets at fair value throughprofit or loss’.Financial assets and liabilities at fair value through profit or lossThese items include financial assets and liabilities irrevocably classified by the Companyon initial recognition at fair value through profit and loss, in accordance with the option_142Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)set out in IAS 39 (fair value option), provided that the conditions for their recognitionare met, to wit:1. The designation eliminates or significantly reduces inconsistencies in themeasurement of financial assets and liabilities and recognition of the respective gainsor losses (accounting mismatch);2. The financial assets and liabilities are part of a group of managed assets or liabilities,or both, whose performance is evaluated on the basis of fair value, according to adocumented risk management or investment strategy; or3. The financial instrument contains one or more embedded derivatives, except whenthe embedded derivatives do not significantly affect the associated cash flows or whenit is clear, with little or no analysis, that the embedded derivatives cannot be separated.After initial recognition, gains and losses generated by the subsequent measurementof the fair value of the financial assets and liabilities are reflected in the IncomeStatement for the year under the item ‘Net gains from financial assets at fair valuethrough profit or loss’.Available-for-sale financial assetsInstruments classified under this item are those that may be sold in response to orin anticipation of liquidity requirements, interest rate, exchange rate or market pricefluctuations, and have not been classified under any other item.After initial recognition, these assets are subsequently measured at fair value or, iftheir fair value cannot be reliably calculated, carried at cost. The respective gains andlosses are reflected under the item ‘Revaluation Reserves’ until they are sold (or untilrecognition of losses through impairment), at which point the accumulated value istransferred from profit or loss for the year to ‘Net gains from available-for-sale financialassets’.The interest arising from the financial assets is calculated using the effective ratemethod and is recognised in the Income Statement under the item ‘Interest and similarincome’. The dividends are recognised in the Income Statement when the right to theirpayment is established, under the item ‘Income from equity-related instruments’. Fordebt instruments issued in foreign currency, the exchange rate differences found arerecognised in operating profit or loss under the item ‘Net gains from foreign exchangedifferences’.The available-for-sale financial assets are analysed when there are objectiveimpairment indicators, namely, when there is a significant or prolonged decline infair values, below cost price. A level of decline considered ‘significant or prolonged’requires judgement. In this context, the Company considers that a reduction of 30%or more in the fair value of a capital instrument or a decline for more than one yearcan be considered significant and prolonged.Financial assets held to maturity‘Financial assets held to maturity’ comprise the fixed- or defined-payment and fixedmaturityfinancial investments, for which there is the intention and scope to hold themuntil maturity._143Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)After the initial recognition they are measured thereafter at the amortised cost,using the effective interest rate method, less impairment losses. The amortised costis calculated taking into account the premium or discount on the acquisition dateand other costs directly ascribable to the purchase as part of the effective interestrate. Amortisation is recognised in the Income Statement under the item ‘Interest andsimilar income’.Impairment losses are recognised in profits and losses under the item “Impairment ofother financial assets net of reversals and recoveries”.Investments in other Credit Institutions and Credit extended to clientsThese items include investments in credit institutions and credit extended to clients ofthe Company.They are unlisted financial assets with fixed or determinable payments that were notacquired for sale in the short term (held for trading), or classified on initial recognitionas financial assets at fair value through profit or loss.Following initial recognition, normally at the amount disbursed, including all transactioncosts and commissions charged, except those for the provision of services (if any),these assets are subsequently measured at amortised cost using the effective ratemethod, and subject to testing for impairment.The amortised cost is calculated by taking into account income or expenses directlyascribable to the origin of the asset as part of the effective interest rate. Depreciationis recognised in profits and losses under the item ‘Interest and similar income’.Impairment losses are recognised in the Income Statement under the item ‘Impairmenton other assets net of reversals’.Loans and accounts receivable are written off when there is no realistic expectation ofcollecting the amounts owed, including through associated collateral.Amounts owed to other credit institutions, Amounts owed to clients, Debt securitiesand Other subordinated liabilitiesThe remaining financial liabilities, which essentially include funds borrowed fromcredit institutions, deposits from clients, or debt issuances not designated as financialliabilities at fair value through profit or loss, and whose terms of contract result in theobligation of delivery to the owner of funds or financial assets, are initially recognisedat fair value of the consideration received net of any directly associated transactioncosts (if any) and subsequently valued at amortised cost using the effective ratemethod. Amortisation is recognised in the Income Statement under the item ‘Interestexpense and similar charges’.Repos and Reverse ReposRepos are sales of financial assets for which there is a repurchase agreement at afuture date. The proceeds received from the sale (funding) have an underlying interestrate (repo rate). The value of the funding is recorded under the item ‘Funds from othercredit institutions’ at its contracted value, which corresponds to the net consideration_144Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)received, and interest expense is recognised in accordance with the principle ofaccrual-based accounting and recorded under Interest and similar charges. Theassets remain in the lender’s custody as a guarantee for the funding.Reverse repos are financial asset purchases, which are associated to a repurchaseagreement at a future date at a fixed price or for a price equal to the purchase priceplus interest linked to the term of the operation and are not recognised in the balancesheet. The purchase value recorded as loans to other financial institutions or clients,as appropriate, and the interest receivable are recognised according to the principleof accrual-based accounting and are recorded under ‘Interest expense and similarcharges’.Fair valueThe fair value used in the valuation of financial assets and liabilities held for trading,classified at fair value through profit or loss, and available-for-sale financial assets isdetermined according to the following criteria:1. For instruments traded on active markets, the fair value is determined on the basisof the closing price, the price in the last transaction carried out or the value of the lastknown bid;2. In the case of assets that are not traded on active markets, the fair value is determinedusing valuation techniques that include the recent transaction prices for similarinstruments and other valuation methods normally used in the market (discountedcash flow, option valuation models, etc.).Variable-income assets, such as common shares and derivative instruments whoseunderlying assets are variable-income assets, and for which it is impossible to obtainreliable valuations, are carried at cost, less any impairment losses.ImpairmentThe Company regularly assesses whether there is objective evidence of impairment infinancial assets recorded at depreciated cost, such as investments at credit institutions,instruments held to maturity, credit granted and receivables. Impairment losses arereported against profits and losses.Whenever there is an estimated reduction in impairment loss in a subsequent period, theamount previously recognised is reversed by adjusting the impairment loss account. Theamount of the reversal is recognised directly on the Income Statement under the sameitem.A credit or client credit portfolio, defined as a group of credits with similar riskcharacteristics, is impaired whenever:- there is objective evidence of impairment resulting from one or more events occurringafter their initial recognition and,- if this event (or events) has an impact on the recoverable value of future cash flows fromthe credit or client credit portfolio and its measurement can be estimated with reasonablecertainty.Two methods of analysis are used to determine impairment losses:a) Individual analysis_145Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Assessment of the existence of impairment losses in individual terms is conducted bymeans of a casuistic analysis of the situation of clients with significant total creditexposure. The Company assesses the existence of objective evidence of impairment ofeach client on each balance sheet date, considering the following factors:– the client’s economic and financial situation– the client’s overall exposure and the existence of non-performing credits inthe Group and financial system– business information on the client– analysis of the client’s business sector, if applicable– the client’s connections to the group to which it belongs, when applicable,and an analysis of the group on the basis of the above variables in terms of the clientconsidered individually.The following factors are considered when determining individual impairment losses:– The client’s economic and financial ability to generate sufficient resources toservice the debt in the future– The value of the real guarantees associated and the estimated amount andrecovery time– The assets of clients in liquidation or insolvency and the existence of prioritycreditors.Credits analysed individually for which no objective impairment is found are groupedon the basis of similar risk characteristics and assessed collectively for impairmentpurposes.Credits analysed individually for which an impairment loss has been estimated are notincluded in the collective assessment.Whenever an impairment loss is identified in credits to clients assessed individually,the amount of the loss is the difference between the book value of the credit andthe current value of its estimated future cash flows less the original interest rate inthe contract. Credit to clients reported in the balance sheet is reduced by using animpairment loss account and the amount recognised in the income statement under“Impairment of net credit of recoveries and reversals”. For credits with a variableinterest rate, the discount rate used to determine any impairment loss is the effectiveannual rate in the contract.The calculation of the current value of estimated future cash flows from a creditwith real guarantees reflects the cash flows that may result from the recovery anddivestment of the collateral less the costs of recovery and sale.b) Collective analysisCredits assessed collectively are grouped by segments with similar risks andcharacteristics. Impairment losses for these credits are estimated on the basis ofhistorical experience of losses in portfolios with a similar risk, the economic environmentand its influence on historical losses. The Group regularly updates the historicalparameters used to estimate losses in its collective analysis.Whenever a credit is considered uncollectable and its estimated impairment loss is_146Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)100% thereof, it is cancelled out against the value of the loss. The credit is thus writtenoff from assets.If written-off credits are recovered, the amount recovered is credited to profit and lossunder the above item “Impairment of net credit of recoveries and reversions”.DerivativesIn its current activity, the Company uses certain derivative financial instrumentsboth to satisfy its clients’ needs and to manage its own interest rate risk positionsor other market risks. These instruments involve variable degrees of credit risk(maximum potential accounting loss due to possible non-compliance by counterpartswith contractual obligations) and market risk (maximum potential loss due to changesin value of financial instruments as a result of variations in interest rates, exchangerates and listed prices).The notional amounts of derivative transactions are used to calculate the flows to beexchanged under the contracts, in net terms, and although they constitute the mostcommon measurement of volume used in these markets, they do not correspond toany quantification of the credit or market risk involved. In the case of interest andexchange rate derivatives, credit risk is measured according to the replacement cost atcurrent market prices of contracts in which a position of potential gain is held (positivemarket value) should the counterparty enter into default.Derivatives embedded in other financial instruments are separated from the hostinstrument whenever their risks and characteristics are not closely related to those ofthe host contract and the entire instrument is not carried in the initial recognition atfair value through profit or loss (fair value option).The results of the subsequent measurement of fair value are recognised in the IncomeStatement for the year at the same time as the results of the measurement at fairvalue of the hedged instrument under ‘Net gains from financial assets at fair valuethrough profit or loss’.Derivatives have been used by the Group mainly to hedge the risk of derivativetransactions with clients: OTC derivatives (cross currency swap, interest rate swap,equity swap, etc. are contracted with clients where the risk is hedged by back-to-backoperations with counterparties in the market.No hedging operations are recorded on the financial statements, since all existingderivative instruments have been classified as trading derivatives because they donot meet the requirements for hedge accounting under IAS 39, or are associated withliabilities at fair value through profit or loss. Consequently, all derivatives are recordedunder assets and liabilities for trading.3.8.3 DERECOGNITION of financial ASSETS AND LIABILITIESFinancial assetsA financial asset (or when applicable part of a financial asset or part of a group of financialassets) is derecognised when:_147Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)1. The rights to receive the asset’s cash flows expire; or2. The rights to receive the cash flows have been transferred or an obligation has beenundertaken to pay all cash flows receivable with no significant delay to third parties undera pass-through agreement, and3. The risk and benefits of the asset have been substantially transferred or they have notbeen transferred or held but control over the asset has been transferred.Financial liabilitiesFinancial liabilities are derecognised when the underlying obligation expires or iscancelled. If a financial liability is replaced by another with the same counterparty onsubstantially different terms from those initially established or the initial terms aresubstantially altered, this replacement or alteration is treated as a derecognition ofthe original liability and recognition of a new one, and any difference between theirvalues is recognised in profit and loss for the year.3.9 non-current assets HELD FOR SALENon-current assets are classified as held for sale whenever their balance sheet valuewill be recovered by sale. This only occurs if the sale is highly likely and the asset isavailable for immediate sale in its present state. The sale must take place within amaximum of a year after classification under this item. An extension of the periodduring which the sale must be completed does not rule out an asset (or group fordivestment) being classified as held for sale if the delay was caused by events orcircumstances beyond the Company’s control and it maintains the commitment tosell the asset.The Company essentially records property received as reimbursement of credit in thisitem.Assets recorded in this category are valued at cost or fair value, whichever is lower,determined on the basis of valuations by independent experts, less costs of sale. Theseassets are not depreciated. If assets classified in this category cease to meet theimmediate sale conditions, they are reclassified under “Investment property”.3.10 INVESTMENT propertyInvestment property is recognised initially at cost, including transaction costs. Theamount carried includes costs of additional investment in existing investment property,if the recognition criteria are met, but excludes current maintenance costs.After initial recognition, investment property is recorded at fair value, which reflectsthe market conditions on the balance sheet date. Gains and losses resulting fromalterations in fair value of investment property are included in profit and loss for theyear to which they refer.Investment property is derecognised when it is divested or future economic benefitsfrom holding it cease to be expected._148Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)On divestment, the difference between the net value of divestment and the amount ofthe asset recorded recognised in profit and loss in the period in which it was divested.Transfers to and from investment property are made when there is a change in use.In the transfer of investment property to property for own use, the estimated costfor subsequent accounting is the fair value on the date of the change in use. If aproperty for own use is classified in investment property, the Group records the assetin accordance with the policy applicable to property for own use on the date of itstransfer to investment property.3.11 Other tangible fixed assetsIntangible fixed assets include work on property for own use, vehiclesand other equipment.Property used by the Company for its operations abroad is classified as own property.These are carried at historical cost, less accumulated depreciation, and revaluedaccording to the legal regulations in force.The remaining tangible fixed assets are carried at cost less accumulated depreciation.Repair, maintenance and other expenses associated with the use of these assets arerecognised as costs as they occur.Tangible assets are depreciated on a straight-line basis in accordance withNotice 9/94 of 2 November, as follows:Buildings[3 – 20] yearsvehicles4 yearsOther equipment[3 – 10] yearsA tangible asset is derecognised when sold or when there is no future economicbenefit expected from its use or sale. On the date of derecognition, the gain or losscalculated for the difference between the net sale value and the net accountingvalue is recognised in the Income Statement under the heading ‘Other OperatingIncome’.3.12 INTANGible assetsTangible fixed assets, essentially computer software, are carried at cost less accumulateddepreciation and impairment losses. The assets are amortised on a straight-line basisover the period of their estimated useful life, which is currently 3 years.Intangible assets may include capitalised internal expenses, namely for in-housesoftware development. To this effect, expenses are only capitalised as of the time thatthe requirements set forth in IAS 38 are met, i.e. the requirements inherent in thedevelopment phase.3.13 Income taxIncome tax expense equals the sum of current and deferred income tax._149Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Current tax is calculated based on the rates applicable in the jurisdictions in which theCompany operates.The Company also records as deferred income tax liabilities or assets those amountsrecognised as tax payable or recoverable in the future that result from temporarytaxable or deductible differences, namely those related to provisions that are temporarilynot deductible for tax purposes, the revaluation of securities and derivatives that arenot taxed until they are sold, the taxation of pension liabilities and other employeebenefits, and capital gains that are not taxable if reinvested.Deferred income tax assets and liabilities are calculated and valued on an annual basisusing the tax rates that are expected to be in force when the temporary differencesare reversed. These correspond to the rates approved or deemed to be approved on thebalance date. Deferred income tax liabilities are always recorded. Deferred income taxassets are recorded only to the extent that they are likely to materialise through theexistence of future taxable profits.Income taxes are recorded against profit or loss for the year.3.14 PROVISIONS and CONTINGENT LIABILITIESA provision is made when there is a present legal or constructive obligation as a resultof past events, when it is probable that an outflow of resources will be requiredto settle the obligation and a reliable estimate can be made of the amount of thisobligation. The provision is the Company’s best estimate of any amounts that it wouldbe necessary to disburse to settle the liability on the balance sheet date.If the future expenditure is unlikely to materialise, the liability is considered to becontingent. Contingent liabilities have to be disclosed unless there is only a remoteprobability that they will materialise.3.15 RECOGNITION of earnings and COSTSIn general, earnings and costs are recognised on the basis of the period of validityof operations in accordance with the accounting principle of accruals and deferrals,i.e. they are recorded as they are generated, irrespective of when they are collectedor paid. Income is recognised to the extent that it is probable that economic benefitsassociated with the transaction will flow to the Group and the amount of the incomecan be reliably measured.For financial instruments measured at depreciated cost and financial instrumentsclassified as “Available-for-sale financial assets”, interest is recognised by the effectiverate method, which corresponds to the rate that exactly discounts future cashreceipts or payments until maturity, or until the next repricing date, for the net amountcurrently recorded in financial assets or liabilities. When the effective interest rate iscalculated, future cash flows are estimated considering the terms of the contract andall the other incomes or charges directly associated with the contracts._150Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)3.16 COMMISSIONS for SERVICESThe Company charges commissions to its clients for the provision of a broad range ofservices. These include fees and commissions for ongoing services, for which clients aredebited on a periodic basis, or commissions charged on a one-off basis, for significantstand-alone transactions.Commissions charged for services provided during a certain period are recognisedalong that period. Commissions related to a significant stand-alone transaction arerecognised when the transaction occurs.3.17 DIVIDENDSDividends obtained are recognised when the right to receive them is established.Dividends distributed to shareholders are recognised as a liability and recorded againstequity when approved. Dividends for the year approved by the Board of Directorsafter the reference date of the financial statements are disclosed in the Notes to theFinancial Statements.4. SEGMENTED REPORTINGIn the Company’s segmented reporting as at 31 December 2010, primary reporting iscarried out by business area. The areas include Corporate Finance, Trading and Sales,Brokerage, Retail Banking, Commercial Banking, Payments and Settlements, Custody,Asset Management and other activities.The different business processes were divided on the basis of their nature, similarity,organisation and management processes in effect at the Company._151Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

4.1 – Business SEGMENTSNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Business segments as at 31 December 2010:CATEGORYCOMMERCIALBANKINGRETAIL BANKINGCORPORATEFINANCEBROKERAGECUSTODYASSETMANAGEMENTOTHERTradingsalesTOTALInterest and similar income4 5313722 4515242333 90941 810Interest expense and similar charges2 133(227)(250)(1)(2 345)(2 070)(24 680)(27 440)NET INTEREST INCOME6 6641452 201(1)(1 821)(2 047)9 22914 370Dividend income(95)3289183407Fees and commission income1 241934 5161 31711815 3792 0361 43426 134Cost of services and commissions17(129)(441)(3 216)(329)(580)(4 678)Income from assets and liabilities at fair value(855)418554(14)(1 019)842(4 645)(4 719)through profit or lossIncome from available-for-sale financial(160)1641549911 149assetsNet gains on foreign exchange differences8683 3593 435Income from disposal of other assets(5)(5)Other operating income44(79)134(70)(107)(177)BANKING INCOME6 8646567 0638571529 8136409 87135 916Personnel costs(948)(1 025)(1 378)(968)(115)(3 301)(1 694)(1 959)(11 388)General administrative costs/overheads(606)(549)(713)(1 184)(84)(3 283)(982)(2 024)(9 425)Amortisation in period(82)(85)(107)(120)(14)(264)(367)(184)(1 223)Provisions net of reinstatement and write-offs(205)(42)2121 4991 464Impairment of credit net of reversals and(581)1(2 769)(108)(79)(3 536)recoveriesImpairment of other financial assets net of7402(178)11(118)reversals and recoveriesImpairment of other assets net of reversals and9797recoveriesProfit of subsidiaries and joint ventures (equity(25)(25)method)PROFIT BEFORE TAX4 449(1 044)2 136(1 415)(61)2 942(2 477)7 23211 762Current(155)(132)(850)(198)(2)(1 503)(450)(1 314)(4 604)Deferred5345252681453(804)452520PROFIT AFTER TAX4 347(1 131)1 538(1 545)(62)1 892(3 731)6 3707 678Of which: profit after tax of discontinuedoperationsMinority interests5031504Net Profit for Period4 347(1 131)1 538(1 545)(62)2 395(3 731)6 3718 182_152Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)CATEGORYCOMMERCIALBANKINGRETAIL BANKINGCorporateFinanceBROKERAGECUSTODYASSETMANAGEMENTOTHERTradingsalesTOTALInterest and similar income2 9102601 174(3)813441 10445 560Interest expense and similar charges(29)(5)37159(255)(34 572)(34 667)NET INTEREST INCOME2 8812541 211(3)240(221)6 53210 893Dividend income1277278Fees and commission income2 3331624 6841 4929114 5521 34275625 411Fees and commission expense(71)(225)(418)(2 342)(47)(471)(3 574)Income from assets and liabilities at fair value1765667(16)95(12 194)(10 764)through profit or lossIncome from available-for-sale financial1 1501 150assetsNet gains on foreign exchange differences510 44110 446Income from disposal of other assets(30)(30)Other operating income(26)(23)(39)(17)13(607)(55)255(499)BANKING INCOME5 1171 1586 2971 03710511 8579946 74633 310Personnel costs(800)(618)(1 156)(952)(74)(4 349)(1 169)(1 491)(10 608)General administrative costs/overheads(658)(543)(810)(1 154)(93)(5 561)(1 052)(2 614)(12 486)Amortisation in period(58)(63)(78)(81)(11)(229)(369)(145)(1 034)Provisions net of reinstatement and write-offs1318853(99)550(1 672)(950)Impairment of credit net of reversals and(1 655)(128)(57)85)(2)(1 847)recoveriesImpairment of other financial assets net of(8)(8)52(492)16(486)reversals and recoveriesImpairment of other assets net of reversals and(11)(198)(209)recoveriesProfit of subsidiaries and joint ventures (equity(23)(23)method)PROFIT BEFORE TAX2 069(115)4 253(1 149)(73)1 583(1 541)6425 669Current(6)8(291)735(719)71(41)(902)Prior-Year corrections(1)2(47)151(7)15(8)(31)Deferred(547)20(827)23015(135)355(122)(1 011)PROFIT AFTER TAX1 514(85)3 088(831)(52)722(1 100)4703 725Of which: Profit after tax of discontinuedoperationsMinority interests(64)53(11)Net Profit for Period1 514(85)3 088(831)(52)657(1 047)4703 7144.2 – GEOGRAPHICAL SEGMENTSThe Company operates exclusively in Portugal.5. CASH AND CASH EQUIVALENTS AT CENTRAL BANKSThis item consists of:CashSight deposits at Banco de Portugal201012,216----------2,217======200936,345----------6,348======The sight deposits at the Banco de Portugal include deposits made in order to complywith legal requirements concerning minimum cash availability. In accordance withBanco de Portugal Notice no 7/94, this amount should correspond to 2% of eligibleliabilities. These deposits started earning interest as of 1 January 1999.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._153Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)6. CASH AND CASH EQUIVALENTS AT OTHER CREDITINSTITUTIONSThis item consists of:Sight depositsIn PortugalAbroad201012,29478,626----------90,920======20093,78038,073----------41,853======7. FINANCIAL ASSETS HELD FOR TRADINGThis item consists of:Securities portfolioDerivatives with positive fair value201071,407114,834----------186,241======200941,00864,527----------105,535======This item is composed of derivative financial instruments, all of which are classifiedas held for trading. The negative fair value corresponds to derivatives recorded under‘Financial liabilities held for trading’ (note 22).ITEMCURRENCYNotional2010FAIR VALUE2009FAIR VALUEPOSITIVENEGATIVEPOSITIVENEGATIVECurrency ForwardsEUR329 7239 5959 0465 3895 431Cross Currency Interest Rate SwapsEUR9 6906976951 1841 184Credit Default SwapEUR289 54271 16268 40748 31742 707Equity SwapsEUR000209210Interest Rate SwapsEUR387 58133 38030 7938 2027 354Total Return SwapsEUR42 10707301 226662TOTAL114 834109 67164 52757 548AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._154Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Securities portfolio as at 31 December 2010NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEET VALUE1 - Debt instrumentsIssued by residentsPortuguese sovereign debtOT 5.45% Set. 2013OT 5.45% Set. 2013Other residentsOthersUnsubordinated debtBANIF SABANIF BANCO DE INV -PERPETUAS SUBBANCO COMERCIAL ACORES 03/31/2011BANCO COMERCIAL ACORES 10/23/2016BANCO COMERCIAL ACORES 09/25/2017BANIF SGPS SABANIF SGPS SAIssued by non-residentsForeign sovereign debtFED REPUBLIC OF BRAZIL 11/01FED REPUBLIC OF BRASIL 03/30FED REPUBLIC OF BRASIL 27FED REPUBLIC OF BRAZIL 01/20BANCO NAC DESENV BNDES 0 06/16/08FED REPUBLIC OF BRAZIL 09/12FED REPUBLIC OF BRASIL 02/25FED REPUBLIC OF BRASILFED REPUBLIC OF BRASILBANCO NAC DESENV 6 1/2 06/19INTL FINANCE CORPORATION 9 1/4BANCO NAC DESENV ECON 07/20BANCO NAC DESENV ECON 09/17Irish Gov 4 01/15/14Irish Gov 4 01/15/14EUREUREUREUREUREUREUREUREUREURUSDUSDUSDUSDEURUSDUSDUSDUSDBRLUSDEUREUREUR63 00063 00010 000250 000210 000185 750164 000628 00016 000250 000333 00030 00016 000210 000995 00030 000407 000105 00098 000265 000200 000423 00045 00045 0001.011.011.001.000.990.830.800.960.961.011.811.531.621.091.101.381.201.121.101.031.020.990.910.9133 8796464101262081551326081527446135201711 1193237290811261574254141(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._155Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEOther non-residentsOthersUnsubordinated debtBRAZIL DEV FUND BNDES 9 5/8 12/11USD21 0001.0717TRADE INVEST LIMITED 4.7 06/18/11EUR742 0000.98727TRADE INVEST LIMITED 0 06/18/11EUR5 750 0000.99230CIA BRAS BEBIDAS 12/11USD398 0001.08322PETROBRAS INT FINANCE 07/02/13USD1 231 0001.161 110BANCO ITAU CAYMAN, SA 08/11USD85 0001.0569PETROBRAS INTL FINANCE 12/18USD273 0001.22249EURO INVEST LIMITED 5 12/29/49USD296 0000.95211VALE OVERSEAS LIMITED 01/34USD1 0001.241VOTORANTIM OVERSEAS 01/14USD189 0001.10161BANCO BRADESCO SA 04/15/14EUR1 730 0001.101 923PETROBRAS INTL FINANCEUSD71 0001.1763BANCO DO BRASIL (CI) 09/14USD33 0001.1830BANCO BRADESCO 8 3/4 10/13USD200 0001.14173PEMEX PROJ FDG MASTER TREUR175 0000.97178TELE N L PARTICIPACOESUSD540 0001.02412CIA BRAS BEBIDAS 09/13USD10 0001.159VOTORANTIM OVERSEAS 06/20USD920 0001.10758PEMEX PROJ FDG MASTER TREUR60 0001.0766UNIBANCO 8.7 07/29/49USD118 0001.0090BRASKEM INTL LTDUSD97 0001.1886FED REPUBLIC OF BRAZILBRL422 0001.16231CENTRAL ELET BRASILEIRAS SAUSD225 0001.17198BANCO DO BRASIL (CAYMAN)USD370 0001.01282NATIONAL STEEL SAUSD390 0001.00303CESP-COMP ENER SAO PAULO 03/11 REGSUSD790 0001.01615BANCO INDUSTR E COMRCLUSD153 0001.01119LPG INTERNATIONAL INC 12/20/2015USD281 0001.11233ENERGIPE Y SAELPA 07/19/13USD5 0001.144CESP-COMP ENER SAO PAULO 08/11/13USD295 0001.13257FED REPUBLIC OF BRAZIL 01/22BRL740 0001.18414BANCO MERCANT DO BRASILUSD20 0001.0316BANCO VOTORANTIM SAUSD100 0001.0278BERTIN LTDA 10/05/16USD150 0001.08124CIA SANEAMENTO BÁSICO 11/16USD950 0001.10792MARFRIG OVERSEAS LTD 11/16/2016USD198 0001.05157VALE OVERSEAS LIMITED 01/23/2017USD135 0001.11115VALE OVERSEAS LIMITED 11/21/36USD254 0001.09208GP INVESTMENTS LTD 12/23/2049USD251 0001.00191COSAN FINANCE LTD 02/01/2017USD45 0001.0737(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._156Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEPTJMT0AE0001EUR22 20011.40253PTSEM0AM0004EUR14 0008.28116PTZON0AM0006EUR24 0003.3981PTSNC0AM0006EUR143 4151.35194PTGAL0AM0009EUR40 00014.34574PTPTC0AM0009EUR18 0008.38151PTALT0AE0002EUR18 0003.4061B.Euro AccoesEUR12 6051.8623Banif IberiaEUR4 7295.0824B.Euro AccoesEUR4 2411.868Banif Euro FinanceirEUR5 4024.7626Banif IberiaEUR3 1015.0816Banif IInfrastructurEUR1 2009 553.6511 464B.Euro AccoesEUR618 3601.861 152B.Euro AccoesEUR286 3671.86534Banif ImogestEUR9 44737.99359Issued by non-residentsPARMALAT FINANZIARIA SPAEUR30 0000.000SPDR Trust series 1USD184125.7217iShares MSCI EmergEUR50934.1117Telefonica, S.A.EUR13 00016.97221Repsol S.A.EUR17 00020.85354BSCHEUR7 5007.9359MapfreEUR29 0002.0860BBVA SAEUR38 0007.56287Viscofan SAEUR2 20028.3662Gamesa SAEUR25 0005.71143InditexEUR2 10056.03118Tecnicas Reunidas SAEUR3 80047.62181Arcelor Mittal SpainEUR1 10028.4131Ebro FoodsEUR3 80015.8360Grifols SAEUR12 00010.20122Pescanova SAEUR8 40024.60207Obrascon HuarteEUR6 60022.68150Telecinco SAEUR3 5008.2329Vueling AirlinesEUR6 5009.7363Sacyr VallehermosoEUR14 0004.7567SPDR Trust series 1USD92125.729iShares MSCI EmergEUR38834.1113Schroder Emerg MktUSD3 78712.4235Schroder Conv BondEUR129104.0213DWS AKTIEN STRA DEUTEUR56172.6310DWS Invest Conv.EUR164131.7722(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._159Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEDWS Inv.Dividend NCEUR94111.4210PICTET EMERGING MKTSUSD79583.7635PICTET JAPAN EQU SELJPY1197 366.898Pictet US Equi Sel RUSD230109.5719PICTET CONV. BONDSEUR227105.7324PICTET LAT AME “R”USD411133.7541FRANKLIN MUTUAL BEACUSD86224.2416F&C GL CONVERT BONDEUR2 50714.8837Allianz RCM US Eq ATUSD325106.5726Allianz RCM EU Eq ATEUR131166.9022Pioneer Abs ReturnEUR310 2109.1434Schroder Emerg MktUSD60012.4224Schroder Conv BondEUR154104.0216DWS AKTIEN STRA DEUTEUR66172.6311DWS Invest Conv.EUR154131.7720DWS Inv.Dividend NCEUR44111.425PICTET EMERGING MKTSUSD54583.7624PICTET JAPAN EQU SELJPY1427 366.8910Pictet US Equi Sel RUSD147109.5712PICTET CONV. BONDSEUR217105.7323PICTET LAT AME “R”USD326133.7533FRANKLIN MUTUAL BEACUSD59324.2411F&C GL CONVERT BONDEUR1 55314.8823Allianz RCM US Eq ATUSD220106.5718Allianz RCM EU Eq ATEUR98166.9016Pioneer Abs ReturnEUR121109.1413Fine Art FundUSD18 17089.241 213PREFF-PAN EURO R ESTEUR29 75080.672 400AVIVA CENT EUROP FUNEUR4 403 4270.803 523Schroder Emerg MktUSD44 39412.42413Schroder Conv BondEUR6 783104.02706DWS Invest Conv.EUR5 447131.77718PICTET JAPAN EQU SELJPY4 7167 366.89320Pictet US Equi Sel RUSD4 400109.57361BELM Asset Based LenUSD39 40128.60843BELM RX SPC FI DEC08USD3 98295.99286FRANKLIN MUTUAL BEACUSD22 69524.24412MELLON GLOB ASIAN EQUSD45 8213.51120DB GLOB MAST SER4-05EUR2 170209.58455DB GLOB MAST L 07/07EUR1 988155.93310JPM Greater ChinaUSD74 090 4120.01501F&C GL CONVERT BONDEUR23 95614.88356AVIVA CENT EUROP FUNEUR896 2850.80717GREFF- EURO R EST AEUR2 29271.47164Schroder Emerg MktUSD9 16312.4285Schroder Europ.LargeEUR242146.1735Schroder Conv BondEUR1 490104.02155DWS Invest Europ EqEUR48116.756DWS Invest Conv.EUR1 195131.77157PICTET EMERGING MKTSUSD83583.7636(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._160Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEPICTET JAPAN EQU SELJPY2 1357 366.89145Pictet US Equi Sel RUSD1 151109.5794BELM Asset Based B+USD7 83711.9970FRANKLIN MUTUAL BEACUSD9 51224.24173MELLON GLOBAL FUNDUSD78 3621.70100FIDELITY AMERIC USDUSD18 3405.0369DB GLOB MAST SER4-05EUR238209.5850DB GLOB MAST L 07/07EUR836155.93130JP MORGAN EUROP PROPEUR45 528.0022JPM Greater ChinaUSD76 983 1150.01521F&C GL CONVERT BONDEUR6 10414.88913 - Other2 824Issued by residentsCIA SEG ACORES SA 17/12/2017EUR685 0000.80549RENTIPAR FINANCEIRA SGPS SAEUR2 408 0000.942 265RENTIPAR FINANCEIRA SGPS SAEUR11 0000.9410Total71 407AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._161Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As required by paragraph 2(c) of Banco de Portugal Instruction 18/2005, securitiesmaturing in one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUEBANCO COMERCIAL ACORES 03/31/2011BANIF SGPS SABANIF SGPS SAFED REPUBLIC OF BRAZIL 11/01BRAZIL DEV FUND BNDES 9 5/8 12/11TRADE INVEST LIMITED 4.7 06/18/11TRADE INVEST LIMITED 0 06/18/11CIA BRAS BEBIDAS 12/11BANCO ITAU CAYMAN, SA 08/11BANCO DO BRASIL (CAYMAN)CESP-COMP ENER SAO PAULO 03/11 REGSBANCO BMG SABANCO DAYCOVAL SAEURO INVEST LIMITED 6 29/12/2011EURO INVEST LIMITED 5 29/12/2011PORTB 0 11/18/1111/03/3111/07/1511/07/1511/01/2411/12/1211/06/1811/06/1811/12/1511/08/1511/01/2311/03/0211/05/2311/07/2111/12/2911/12/2911/12/292086081527417727230322692826151943428911758TOTAL4 284AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._162Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)8. OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFITOR LOSSAs at 31 December 2010, this item consists of:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments54 051Issued by residentsPortuguese sovereign debtMedium-term treasury bills 5%EUR38 000 0001,0139 320Medium-term treasury bills 5.45EUR00,650O.T. PGB 3.2% 04/15/11EUR3 000 0001,003 059PGB 4 3/8 06/16/14 JUNEUR80 0000,9780Issued by non-residentsForeign sovereign debtOT ANGOLA 15 NOV 2012USD1 050 0001,00789Other non-residentsOthersUnsubordinated debtCLARIS LTD/MILLESIME CDOEUR2 000 0000,691 375DEUTSCHE BANK AG LONDONUSD2 000 0000,841 264EURO INVEST LIMITED 04/13/2012EUR8 356 0000,978 1632 - Equity instruments133 625Issued by residentsGALERIAS NAZONIEUR7500,000BANIF IMOPREDIALEUR1 544 3447,5111 597FUNDO CAPITAL RISCO CAPVENEUR4312 677,111 154BANIF IMOGESTEUR551 31937,9920 944LUSO CARBON FUND-FUNDO ESP FECHADOEUR82 56 498,884 633NEW ENERGY FUNDEUR164 48 848,568 011PORTO NOVO F.I.I.F.EUR20 788103,982 161FLORESTA ATLÂNTICA - SGFII (CL B)EUR40 00051,232 049BANIF CAPITAL INFRASTRUCTURE FUNDEUR1 0359 377,369 706BANIF GLOBAL PRIVATE EQUITY F - FCREUR1 000 0001,041 044Issued by non-residentsSHOTGUN PICTURESEUR10 0000,000BANIF MULTI-FUND GLOBAL REAL ESTATEEUR31 690113,563 599BANIF US REAL ESTATE FUND CLASSUSD157 650119,5314 103GED SUR FCR-CL AEUR10044,554GED SUR FCR-CL BEUR49 90044,552 223FUNDO INV PART AMAZONIA ENERGIABRL95 000 0001,0042 837BANIF INSTITUCIONAL FI MULTIMERCADOBRL4 541 8591,452 971BANIF MAESTRO FIMBRL5 452 2201,333 258BANIF EQUITY HEDGE FIMBRL2 921 1612,533 332TOTAL187 677AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._163Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Debt instruments are carried on the balance sheet at market value plus accrued interest.In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUEO.T. PGB 3.2% 04/15/11TOTAL11/04/15 3 0593 0599. AVAILABLE-FOR-SALE FINANCIAL ASSETSAs at 31 December 2010, this item consists of:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments171 174Issued by residentsPortuguese sovereign debtMedium-term treasury bills 5%EUR20 500 0001.0121 212PGB 3,35 10/15/15EUR20 000 0000.8918 023PORTUGUESE TREASURY BILLS 4.35 10/16/17EUR5 000 0000.894 496PARPUBLICA 3 1/2 07/13EUR10 000 0000.909 191Treasury bills 4.8 06/15/20EUR17 155 0000.8715 433Issued by non-residentsForeign sovereign debtBANCO NAC DESENV 6 1/2 06/19USD1 000 0001.10826VOTO VOTORANTIM LDA 04/17EUR1 200 0001.001 240Other non-residentsOthersUnsubordinated debtCIMPOR FINANCIAL OPERTNSEUR2 000 0001.002 054CIMPOR FINANCIAL OPERTNSEUR55 0001.0056TELE N L PARTICIPACOESUSD1 774 0001.021 354CAIXA GERAL DEPÓSITOS FINANCEEUR1 150 0000.50574CESP-COMP ENER SAO PAULO 01/15/2015USD1 654 0000.811 004ETAB ECON CASINO GUICH-P 04/04/2013EUR250 0001.08283CAIXA GERAL FINEUR209 0000,50105AQUEDUCT TRADING SERVICES COUSD28 131 4781.0023 371GE CAP EUR FUND 5 1/4 01/31/13EUR3 250 0001.053 583(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._164Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEBANK OF AMERICA CORP 7 06/15/16EUR1 000 0001.081 114CITIGROUP INC 7 3/8 06/16/14EUR2 500 0001.112 863LLOYDS BANK TSB BANK PLC 5 3/8EUR2 500 0000.982 493RCI BANQUE SA 4 10/21/11EUR500 0001.02512BANK OF IRELAND 4 5/8 09/14EUR1 000 0000.83842ENEL FINANCE INTL SA 4 09/14/16EUR500 0001.00507ALLIED IRISH BKS PLC 4 1/2 10/01/12EUR500 0000.80406ABERTIS INFRAESTRUCTURAS 10/16EUR500 0000.95478GAS NATURAL CAPITAL 4 3/8 11/16EUR500 0000.94475GOLDMAN SACHS GROUP INC FLOAT 10/19EUR1 000 0000.97982TELEFONICA EMISIONES SAUEUR2 000 0000.981 966MORGAN STANLEY 4 1/2 10/29/14EUR1 000 0001.011 017ANGLO AMERICAN CAPITAL 12/16EUR500 0001.04522NOMURA EUROPE FINANCE NV 12/14EUR500 0001.04523VIVENDI 4 7/8 12/19EUR500 0001.01507DONG ENERGY A/SEUR250 0001.02256EDP FINANCE BV 3 1/4 03/15EUR3 000 0000.922 834GOLDMAN SACHS GROUP INC 03/17EUR2 000 0000.961 996GLENCORE FINANCE EUROPEEUR750 0001.00782RABOBANK NEDERLAND 03/20EUR500 0000.95500ROYAL BANK OF SCOTLAND PLC 03/20EUR1 500 0000.951 486VALE SAEUR1 500 0001.011 571BES INVESTIMENTO BRASIL 5 5/8 03/15USD800 0000.98594MERCK FIN SERVICES GMBHEUR1 000 0001.011 037INTESA SANPAOLO SPAEUR2 000 0000.971 938LAFARGE SA 5 1/2 12/19EUR250 0000.97244NATIONWIDE BLDG SOCIETY 01/15EUR1 000 0000.981 011GAS NATURAL CAPITAL 4 1/8 01/18EUR1 000 0000.90908DAIMLER AG 4 1/8 01/17EUR1 500 0001.031 605VODAFONE GROUP PLC 01/22EUR3 000 0001.013 159BARCLAYS BANK PLC 01/17EUR4 500 0000.994 616ALSTOM 4 1/8 02/17EUR500 0000.99516CASINO GUICHARD 4,379 02/17EUR250 0001.01263TELECOM ITALIA SPA 5 1/4 02/22EUR1 000 0000.961 003INDEPENDENCIA INTERNATIO 12/30/16USD287 1000.0218CAIXA ECO MONTEPIO GERAL 0 12EUR3 000 0000.872 624VEOLIA ENVIRONNEMENTEUR500 0001.08558CITIGROUP INC 7 3/8 09/04/19EUR500 0001.11567CAIXA GERAL DEPOSITOS 12/12/2011EUR300 0000.98306CAIXA GERAL DEPOSITOS 12/12/2011EUR5 000 0000.985 101ATLANTES MORTGAGE PLCEUR8 000 0000.902 369ATLANTES MORTGAGE PLCEUR20 000 0000.905 922AZOR MORTGAGES PLCEUR8 100 0000.931 562ENI SPA 4 06/29/20EUR1 000 0000.98997(CONTINUED)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._165Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)(continued)NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUEDEUTSCHE TELEKOM INT FIN 07/13/22EUR2 000 0000.971 973SCHNEIDER ELECTRIC SA 3 5/8 07/20EUR500 0000.97491MORGAN STANLEY 5 3/8 08/10/20EUR500 0000.96489AREVA SA 3 1/2 03/21EUR1 000 0000.92932TELEFONICA EMISIONES SAU 3.661 17EUR500 0000.95482KONINKLIJKE KPN NV 3 3/4 09/21/20EUR500 0000.94477BBVA SENIOR FINANCE SA 2 3/4 09/12EUR2 000 0000.981 9772 - Equity instruments16 319Issued by residentsFOMENTINVEST SGPSEUR3 076 9241.805 530FLORESTA ATLÂNTICA - SGFII, SAEUR10 12511.88120BEIRA VOUGAEUR20 3170.0010BEIRA VOUGA 95EUR21 5000.0010GRANDE HOTEL CALDAS FELGUEIRAEUR50 3000.58184COMPANHIA DAS QUINTAS SGPS SAEUR34 3171.50172FOMENTINVEST SGPSEUR385 0001.00385BANIF EUROPA DE LESTEEUR264 9144,.081 082NEW ENERGY FUNDEUR1948 848.56928FUNDO CAPITAL RISCO CAPVENEUR4002 677.112 000FUNDO CAPITAL RISCO CAPVENEUR192 677.1157GED SUR CAPITAL S.A., SGECREUR30 0000.9127PREFF-PAN EUROPEAN REAL STATE FUNDEUR12 75079.661 016AVIVA CENTR EUROPEAN PROPERTY FUNDEUR1 543 0120.781 204JP MORGAN EUROPEAN PROPERTY FUNDEUR155 390.8381PRADERA EUROPEAN RETAIL FUND 2EUR300 0005.421 626FINE ART FUND (CP)USD12 645125.491 188PRAX CAPITAL III, SCA, SICAREUR3 000233.507013 - Other65 129Issued by residentsCP COMBOIOS DE PORTUGAL 4.17 10/19EUR5 000 0000.773 890PARPUBLICA PARPUB5 1/4 09/17EUR2 000 0001.032 077PORTUCEL - EMP CELUL PAPEL 03/10EUR2 000 0001.002 006CAIXA GERAL DEPO 5 1/8 02/14EUR3 250 0000.923 134BANCO BPI SA 3 07/17/12EUR1 000 0000.96970BANCO BPI SA 01/12EUR5 000 0000.944 721BANCO COMERCIAL PORTUGUESEUR950 0000.97956BANCO COMERCIAL PORTUGUESEUR100 0000.97101BANIF BANCO INTERNACIONAL FUNCHALEUR48 186 0000.9647 275Total252 622AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._166Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUECIMPOR FINANCIAL OPERTNSCIMPOR FINANCIAL OPERTNSRCI BANQUE SA 4 10/21/11CAIXA GERAL DEPOSITOS 12/12/2011CAIXA GERAL DEPOSITOS 12/12/2011TOTAL11/05/2711/05/2711/10/2111/12/1211/12/122 054565123065 1018 03010. INVESTMENTS AT CREDIT INSTITUTIONSThis item consists of:Term depositsIn PortugalAbroad11. CREDIT EXTENDED TO CLIENTS201011,4171,372----------12,789======2009-225----------225======This item consists of:Domestic loansCorporateSyndicated loansOther loansCredit on Current AccountOverdraftsOther creditPrivateOther loansCredit on Current AccountOverdraftsOther credit201045987,050199,9651,8302761,15137,051141,196200994288,725153,0364,216141-34,90856957AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._167Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Foreign loansCorporateOther loansCredit on Current AccountCredit and interest in arrearsSecurities portfolioImpairment (Note 25)24,28932,186----------385,86721,175----------407,042----------69,951----------476,993----------(6,367)----------470,626======28,45127,022----------338,45422,852----------361,306----------67,786----------429,092----------(2,843)----------426,249======The residual period for maturity of clients credit is shown in Note 36.8.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._168Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As at 31 December 2010, the details of our securities portfolio were as follows:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments35 559Issued by non-residentsOther non-residentsOthersUnsubordinated debtGRANITE MORTGAGES PLCEUR1 000 0001.03984MARBLE ARCH RESIDENTIAL SECURISATIOEUR3 000 0001.041 022HARVEST CLO SAEUR1 500 0001.031 499PARAGON MORTGAGES PLCEUR1 500 0001.011 161MARLIN (EMC-II) BVEUR7 000 0001.01520GRANITE MORTGAGES PLCEUR2 000 0001.02744LOCAT SECURITISATION VEHICLE SRLEUR3 000 0001.002 823AVOCA CLO BVEUR1 000 0000.96908HEWETT,S ISLAND CDO, LTDUSD2 000 0000.881 378HEWETT,S ISLAND CDO, LTDUSD2 000 0000.741 214OPERA FINANCE UNI INVEST BVEUR2 500 0001.011 774HARBOURMASTER CLOEUR5 000 0000.554 497AVOCA CLO BVEUR2 500 0000.972 056LAMBDA FINANCE BVEUR2 000 0001.021 906PROVIDE PLCEUR2 500 0001.042 487MAGI FUNDING PLCEUR2 500 0000.932 043ALFA BANKUSD2 000 0001.0072CHEYNE CREDIT OPPORTUNITY CDOEUR2 500 0000.941 658GERMAN RESIDENTIAL ASSETEUR2 000 0001.041 543ALFA DIV PYMT RT 12/15/2011EUR2 500 0001.01481GRESHAM CAPITAL CLO BV 2006-3X CEUR2 000 0000.951 501BLUEBONNET FINANCE PLC 12/20/2016EUR2 000 0000.871 806RESOURCE EUROPE CLO B.V. 05/22/2023EUR2 000 0000.931 4813 - Other34 392Issued by residentsPEBBLE-CONSULTORIAEUR15 250 0001.0014 203BANCO COMERCIAL PORTUGUES 0 11EUR20 000 0001.0020 189TOTAL69 951AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._169Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCE SHEET VALUEALFA BANKALFA DIV PYMT RT 12/15/2011BANCO COMERCIAL PORTUGUES 0 11TOTAL11/03/1511/12/1511/06/277248120 18920 743Due to the exceptional macroeconomic circumstances with effects on liquidity andavailability of current prices on the market, the Group reclassified as at 30 September2008 financial instruments from the category ‘Available-for-sale financial instruments’to ‘Other credits and amounts receivable’ , taking account of the amendment to IAS 39described in Note 2. The securities reclassified under this item are as follows:NAMEQUANTITYBALANCESHEET VALUEMARKET VALUEGRANITE MORTGAGES PLC1 000 0009841 034MARBLE ARCH RESIDENTIAL SECURISATIO3 000 0001 0221 076HARVEST CLO SA1 500 0001 4991 554MARLIN (EMC-II) BV7 000 000520533GRANITE MORTGAGES PLC2 000 000744781HARBOURMASTER CLO5 000 0004 4972 764ALFA BANK2 000 0007275ALFA DIV PYMT RT 12/15/20112 500 000481503Total9 8198 320If these securities had not been reclassified, they would have had a negative impact of7,000 euros on the profit for 2010.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._170Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)12. INVESTMENTS HELD TO MATURITYNATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments44 360Issued by non-residentsForeign sovereign debtNATIONAL BANK OF GREECE SAEUR1 000 0000,75935Other non-residentsOthersUnsubordinated debtBRISA FINANCE BV 09/13EUR2 500 0001,002 435GE CAPITAL EURO FUNDINGEUR4 200 0001,004 204CITIGROUP INC 06/14/12EUR2 537 0000,982 490PORTUGAL TELECOM INT FIN 12EUR2 500 0001,012 492MORGAN STANLEY & CO INTLEUR3 000 0000,972 904CREDIT SUISSE USA INC 04/12/13USD7 500 0000,995 524FRIESLAND BANK FLOAT 04/13EUR2 500 0000,962 439GOLDMAN SACHS GROUP INCEUR1 500 0000,911 436BCP FINANCE BANK LTD 02/03/2011EUR5 000 0000,995 004BES FINANCE LTDEUR5 000 0000,964 989BANCO BMG SAUSD1 000 0001,01742BANCO FIBRA SA 06/06/2011USD800 0001,00594EDP FINANCE BV 5 1/2 02/14EUR1 500 0001,011 681PORTUGAL TEL INT FINEUR3 900 0000,903 921CRITERIA CAIXACORP SAEUR2 500 0000,972 5713 - Other16 031Issued by residentsEUR8 000 0000,978 308BANCO TOTTA SA 3 3/4 06/12EUR2 400 0000,882 594BANCO ESPIRITO SANTO 5 5/8 06/14EUR5 000 0000,975 128BANCO COMERCIAL PORTUGUESTotal60 391AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._171Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)In compliance with paragraph 2 c) of Banco de Portugal Instruction 18/2005, securitiesthat mature within one year are:NATURE AND TYPEMATURITYBALANCESHEET VALUEGE CAPITAL EURO FUNDINGBCP FINANCE BANK LTD 02/03/2011BES FINANCE LTDBANCO BMG SABANCO FIBRA SA 06/06/2011BANCO COMERCIAL PORTUGUES11/05/0411/02/0311/07/1811/05/2311/06/0611/06/174 2045 0044 9897425945 128TOTAL20 659Given the exceptional economic climate in 2008, the Group chose to reclassify some ofthe securities it held in the available-for-sale category, now having the intention andcapacity to hold them until maturity. Accordingly, the securities in the following tablewere transferred to the “held to maturity” portfolio:NAMEQUANTITYBALANCESHEET VALUEMARKET VALUEBRISA FINANCE BV 09/132 500 0002 4352 532CITIGROUP INC 06/14/122 537 0002 4902 494PORTUGAL TELECOM INT FIN 122 500 0002 4922 589MORGAN STANLEY & CO INTL3 000 0002 9032 913CREDIT SUISSE USA INC 04/12/137 500 0005 5245 548FRIESLAND BANK FLOAT 04/132 500 0002 4392 399GOLDMAN SACHS GROUP INC1 500 0001 4361 370BCP FINANCE BANK LTD 02/03/20115 000 0005 0044 956BES FINANCE LTD5 000 0004 9894 812Total29 71229 613If these securities had not been reclassified, they would have had a positive impact of438,000 euros on the profit for 2010.13. Assets with repurchase agreementsThis item consists of:Reverse reposAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED.201028,387----------28,387======2009------------======_172Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)14. non-current assets HELD FOR SALEThis item consists of:Property in lieu of payment20102,657----------2,657======2009------------======15. INVESTMENT PROPERTYBuildings20109,184----------9,184======2009------------======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._173Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

16. OTHER TANGIBLE ASSETSNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The movements in the period under review were as follows:ItemBalance at startof yearGrossBalanceAmortisation+ImpairmentChanges in the periodTransfersAmortisationGrossBalanceBalance at year’s endAcquisitionsAmortisation+ImpairmentNetBalanceTangible Fixed AssetsREAL ESTATE13 31376414430713 4571 07112 386Land2 3552 3552 355Buildings10 295174144(2 355)1618 0843357 749Work in rented property3 0185901463 0187362 282EQUIPMENT3 4091 9362815353 6902 4711 219Furniture and office supplies529744369572143429Machinery and tools694913617886622Computer equipment1 6531 2641102421 7631 506257Interior systems5943717(6)57595428167Transport equipment523166103144626310316Security equipment1892220119Other equipment2333426719TOTAL16 7222 70042584217 1473 54213 605No revaluations were performed during the year.17. OTHER INTANGIBLE ASSETSThe movements in the period under review were as follows:ItemBalance at startof yearGrossBalanceAmortisation+ImpairmentChanges in the periodTransfersAmortisationGrossBalanceBalance at year’s endAcquisitionsAmortisation+ImpairmentNetBalanceIntangible AssetsGoodwill919191Software4 0783 6261503183594 5483 985563In progress3 196430(318)3 3083 308Others13662213628108TOTAL7 5013 6325813818 0834 0134 07018. INVESTMENTS in subsidiaries, associated companiesand joint venturesNameCore business% ShareholdingValue ofShareholdingAdditional capitalpaymentsTotal EquityNet profitMCO2Fund managament25% 1131 300 5 324(280)AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._174Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

19. INCOME TAXNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)19.1 DEFERRED taxes– MOVEMENTs in the PERIOD09/12/31 Changes in Period10/12/31ItemNetDeferredTaxIncreasesEquityProfitsRealisations/Reverse EntriesEquityProfitsNetDeferredTax1. Provisions/Impairment not tax deductible600414411603General credit riskSpecific credit risk171210381Provisions for debtors429204306032. Evaluations not approved for tax purposes1 1144 442171 95533 615Derivatives532Portfolio of securities available for sale7994 4421 9553 286Other: Investment securities (former category 25)310173273. Book entered tax lossesYear N-14. Other1055Settlement of client fees1055TOTAL1 7244 4424311 9554194 223AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._175Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

19.2 current taxesNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)CURRENT TAXDEFERRED TAXITEMTaxableAmountTaxTaxableAmountTaxTax Costs at standard rateProfits before tax11 7623 117Corporate income tax and other taxes on profits4 604Deferred tax(520)Net profit for period after deferred taxes7 678Standard income tax rate25%Surcharges on standard tax rate1,5%Changes to net worth(17)(4)Additions113Subtractions(28)(7)Non-Deductible Expenses15 1644 0183 441912Fines20Non-Deductible Provisions12 1243 2133 430909Other3 038805113Non-Taxable Revenue(11 394)(3 019)(1 479)(392)Non-Deductible Provisions(8 649)(2 292)(1 286)(341)Non-taxable dividends from subsidiaries(2 581)(684)Other(164)(44)(193)(51)Taxable Profit (Tax Loss)15 514Taxable amount15 514Total Tax4 111Taxable Profit (Tax Loss) Sub-totalIncome tax withheld at source and advance tax payments993Other adjustments to add to tax492Total payable (receivable)3 611Tax Costs – Actual RateTotal tax burden4 604Deferred tax recognised in period520Actual tax rate26,50%_176Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

20. OTHER ASSETSThis item consists of:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)20102009Sundry debtorsSecurities transactions to be settledOther assets transactions to be settledExchange rates to be settledDeferred cost expendituresOther revenue receivableImpairment on other assets (Note 22)21. AMOUNTS OWED TO CENTRAL BANKSThis item consists of:3,6628213,351-6874,192----------12,713----------(109)----------12,604======5,0681814,8472238081,467----------15,594----------(647)----------11,947======Amounts owed to central banks2010287,179----------287,179======200993,136----------93,136======’Amounts owed to central banks’ corresponds to refinancing operations with theEuropean Central Bank (ECB) for provision of liquidity operations collateralised byeligible assets.22. FINANCIAL LIABILITIES HELD FOR TRADINGThis item consists of:Short salesDerivatives with negativefair value (Note 7)20108,356109,671----------118,027======20094,07957,548----------61,627======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._177Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Short sales as at 31 December 2010, can be broken down as follows:NATURE AND TYPE CURRENCY QUANTITY PRICE BALANCESHEETVALUE1 - Debt instruments8 356Issued by non-residentsForeign sovereign debtFED REPUBLIC OF BRAZIL 01/41USD-138 0001.00107INTER-AMERICAN DEVEL BK 9 1/2 01/14BRL-180 0001.0492ITAU UNIBANCO HOLDING SA 04/15/20USD-750 0001.03587Other non-residentsOthersUnsubordinated debtMORGAN STANLEY 05/03/2017BRL-380 0000.99172ANHEUSER-BUSCH ABIBB 9 3/4 11/15BRL-270 0001.02126ITAU UNIBANCO/KY ITAU 10 1/2 11/15BRL-253 0001.03118MORGAN ST & CO MS11 1/2 10/22/20BRL-50 0001.0223CSN ISLANDS VIII CORPUSD-18 0001.1616PEMEX PROJ FDG MASTER TRUSD-20 0001.0216BRASKEM SAUSD-51 0001.0239COSIPA COMMERCIAL LTDUSD-575 0001.16500PETROLEO INTL FIN CO 10/06/16USD-1 398 0001101 166CESP-COMP ENER SAO PAULO 01/15/2015USD-250 0000.81152MINERVA OVERSEAS LTD 02/01/2017USD-94 0001.0476REDE EMPRESAS DE ENERCIA 04/02/2049USD-69 0000.9952BRASKEM FINANCE SAUSD-57 0001.0545LUPATECH FINANCE 9 7/8 07/10/49USD-190 0000.93142VOTORANTIM OVERSEAS 6 5/8 09/19USD-251 0001.04199EMBRAER OVERSEAS LTD 6 3/8 01/20USD-6 0001.065PETROBRAS INTL FINANCE CO 01/40USD-387 0001.05312BES INVESTIMENTO BRASIL 5 5/8 03/15USD-255 0000.98189BANCO VOTORANTIM 7 3/8 01/20USD-565 0001.06462BANCO INDUSTR E COMRCL 01/13USD-900 0001.04721SANTANDER BRASIL 4 1/2 04/15USD-606 0001.03470BANCO ABC-BRASIL SA 7 7/8 04/20USD-110 0001.0588BRASKEM SAUSD-40 0001.0331BANCO BRADESCO (CAYMAN) 5.9 01/21USD-310 0001.00238ODEBRECHT FINANCE LTD 7 1/2 49-15USD-400 0001.01304ITAU UNIBANCO HLDG SA/KY 01/21USD-545 0001.00414SUZANO TRADING BAHIA 5 7/8 01/21USD-460 0000.99345BRASKEM FIN LTD BRASKM7 3/8 12/49USD-460 0001.01353BANCO DO BRASIL 5 3/8 01/21USD-250 0000.98186PETROLEOS MEXICA PEMEX 6 03/05/20USD-105 0001.0785PETROLEOS MEXICA PEMEX 5 1/2 01/21USD-48 0001.0238ODEBRECHT VIII/I ODEBRE6.35 21-20USD-400 0001.05315PEMEX PROJ FDG MASTER TR 08/16EUR-155 0001.10174TOTAL8 356AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._178Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)23. AMOUNTS OWED TO OTHER CREDIT INSTITUTIONSFrom credit institutions in PortugalDepositsLoansFrom foreign credit institutionsDepositsLoansRepos201081,325264,723----------346,048----------115,3896,55032,807----------154,746----------500,794======2009148,24995,301----------243,550----------116,431-64,799----------181,230----------424,780======24. AMOUNT OWED TO CLIENTS AND OTHER LOANSThis item consists of:DepositsSightTerm201064,450228,147----------292,597======200969,268209,172----------278,440======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._179Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

25. IMPAIRMENTNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Movements under this item for 2010 and 2009 were as follows:ItemCREDITEXTENDEDTO CLIENTSAvailablefor-salefinancialassetsOtherassetsOtherprovisionsTotalBalance at 31/12/20089965812 9306175 124Increases1 8476893653 2116 112Write-offs0(9)(361)(2 250)(2 620)Used00(2 287)0(2 287)Transfers/Foreign exchange differences0(20)0(15)(35)Balance at 31/12/20092 8431 2416471 5636 294Increases3 5362901731 3185 317Write-offs0(206)(237)(2 782)(3 225)Used00(475)0(475)Transfers/Foreign exchange differences(12)(95)0(39)(146)Balance at 31/12/20106 3671 230108607 76526. OTHER SUBORDINATED LIABILITIESAs at 31 December 2010, this item relates to two issuances, which are described below.In 2006, an issuance was made of 15,000 variable rate 2006/2016 subordinated bonds -Obrigações de Caixa Subordinadas do Banif – Banco de Investimento, S.A. - representedby 15,000 notes of EUR 1,000 each. The interest on these bonds is payable six-monthlyat the end of the period on 29 June and 29 December of each year. For the first fiveyears the rate will be equal to the 6-month Euribor rate on the second business dayprior to the beginning of each interest accounting period, plus 0.875%. If the bonds arenot called early, as of the 11th coupon and until maturity, the interest rate will be equalto the 6-month Euribor plus 1.15%. The loan will be repaid at par all at once on 29 June2016, though it may be totally or partially repaid earlier at the Bank’s discretion (calloption), with prior authorisation from Banco de Portugal on maturity of the 10th, 12th,14th, 16th or 18th coupon, with no premium added to the amount repaid. Any partialearly repayment may only be made for 25% or 50% of the initial issuance, entailing acorresponding reduction of the face value of the bonds.In 2007, 15,000 perpetual subordinated bonds were issued at a value of 1,000 euroseach. The interest on these book-entry bearer bonds will be paid quarterly as of thedate of issue on 28 February, 28 May, 28 August and 28 November of each year (“interestpayment dates). They are subject to optional repayment and the first payment willbe made on 28 August 2007 and the last on the date of maturity or on the date(s) ofearly repayment, if they occur. Interest up to but not including 28 May 2017 (first dateof repayment by issuer’s option) will be calculated on the basis of 3-month Euriborquoted on the second target business day immediately prior to the starting date ofeach interest period, plus 1.35% percent a year, as of that date on the basis of 3-monthEuribor plus 2.35% a year (1% step-up). Banif – Banco de Investimento has an optionAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._180Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)to repay the bonds, partially or in full, on any interest payment date as of 28 May 2017inclusive (first optional call date), subject to providing bondholders with prior notice ofno less than 30 days and no more than 60 days (this notice is irrevocable). The bondswill be redeemed at par, together will any accumulated interest up to the date setfor redemption. Exercise of this optional repayment is subject to prior approval fromBanco de Portugal.27. OTHER LIABILITIESThis item consists of:Stock market trades to be settledCharges payableOther creditorsDeferred income receivedOther interim accounts28. EQUITY TRANSACTIONS20103,0372,1651,368631,817----------12,253======20091704,34314,279123,243----------22,047======As at 31 December 2010 and 2009, the equity items can be broken down as follows:CapitalReserves and retained earningsRevaluation reserves of financial assetsclassified as available for saleNet profit for the yearUncontrolled interests201055,00019,480(7,372)8,18218,895----------94,185======200955,00015,766(2,216)3,7142,110----------74,374======The ‘Security revaluation reserves’ item can be broken down as follows:AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._181Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)20102009Loans granted and accounts receivableFinancial assets available for saleInvestments held to maturityDeferred taxes2049,658168(2,658)----------7,3725522.198264(798)----------2,216====== ======The total for loans granted and investments held to maturity recorded under equityrefers to potential losses involving financial assets that had previously been recordedas available-for-sale financial assets, whose value would be amortised during theremaining life of the asset using the effective interest rate method.As at 31 December 2010 and 2009, the item Uncontrolled interests can be broken downas follows:10.12.31 09.12.31ENTITY Balance Sheet Value Profit/loss BALANCE SHEET VALUE PROFIT/LOSSBANIF Açor Pensões1 934( 78 )1 79464Centro Venture261( 1 )2602Banif Investimento Conservador309( 5 )00Banif Iberia3 017600Art Invest1 067000Infra Invest - FEI5 77231000Banif Gestão Patrimonial4 30031700Banif Gestão Activa1 877( 34 )00Banif Investimento Moderado358( 11 )00Banif Capital0055( 55 )18 8955042 10911AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._182Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As at 31 December 2010 and 2009, the contribution of each company to net income wasas follows:ENTITY31/12/2010 31/12/2009Banif - Banco de InvestimentoBanif CapitalBIAMBanif Gestão de ActivosCentro VentureGammaBanif MultifundBanif Açor PensõesEcoprogresso - TradingBanif Europa de LesteBanif FortunyBanif Investimento ConservadorBanif IberiaArt InvestInfra Invest - FEIBanif Gestão PatrimonialBanif Gestão ActivaBanif Investimento ModeradoReverse entry of dividendsConsolidation corrections5 83684192 889132811603333(248)164(129)(237)(636)20138 187(2 550)2 5458 1821 742(221)611 54621862467----------3 406(1 380)1 6883 71429. INTEREST RECEIVED AND SIMILAR INCOME AND INTERESTPAID AND SIMILAR COSTSThis item consists of:Interest received and similar incomeInterest on cash at other credit institutionsInterest on investments at credit institutionsInterest from credit extended to clientsInterest from credit extended to clients (securities)Interest on financial assets held for tradingInterest on financial assets at fairprofit and lossInterest from available-for-sale financial assetsInterest from investments held to maturity20101,00520014,9023,01411,1552,4237,2271,884----------41,810======20091091,19813,4623,57918,8222,0955,5522,743----------45,560======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._183Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Interest paid and similar costsNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Interest on amounts owed to other creditinstitutionsInterest on amounts owned to clients and otherborrowingInterest on liabilities held for tradingInterest on other subordinated liabilities6,81510,3909,623612----------27,440======5,56310,41417,758932----------34,667======30. INCOME FROM EQUITY INSTRUMENTSThis item consists of:Other dividends received2010407----------407======2009278----------278======31. FEES AND COMMISSION INCOME AND EXPENSEThis item consists of:20102009Commission-based incomeServices for management, custody and depositof securitiesConsultancy servicesSecurities tradesOther commissions earnedCommission-based expenseBanking services from third partiesSecurities tradesOther commissions paid16,8536,4601,6231,198----------26,134======2561,8892,533----------4,678======15,7877,8041,553267----------25,411======2,69080678----------3,574======AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._184Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)32. GAINS/LOSSES ON FINANCIAL TRANSACTIONSThis item consists of:Profit/loss of assets and liabilities at fair valuethrough profit or lossGains on financial assets at fair valuethrough profit and lossSecuritiesDerivativesLosses on financial assets at fair value throughprofit and lossSecuritiesDerivativesProfit/loss of available-for-sale assetsGains on exchange differencesLosses on exchange differencesProfit/loss of assets and liabilities at fair valuethrough profit or lossGains on exchange differencesLosses on exchange differences33. PERSONNEL COSTSThis item consists of:Remuneration of management and supervisorybodiesRemuneration of employees:Monthly remunerationHoliday and Christmas payLunch allowanceOther additional paymentsAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED.201025,95853,080(23,282)(60,475)----------(4,719)======2.023(874)----------1,149======11,718(8,283)----------3,435======20101,7425,7181,080282463----------9,285----------200910,29937,988(5,626)(53,425)----------(10,764)======2,412(1,262)----------1,150======17,215(6,769)----------10,446======20091,7495,171926261290----------8,397----------_185Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Mandatory social charges:Remuneration-related chargesPension chargesOther social chargesOther personnel costs1,69314677----------1,916----------187----------11,388======1,54714056----------1,743----------468----------10,608======The Company and its employees contribute to a defined contribution fund. Members’contributions entitle them to individually acquired rights34. GENERAL ADMINISTRATIVE COSTS/OVERHEADSThis item consists of:Water, energy and fuelOther suppliesRents and leasesCommunicationsTravel and expense accountsAdvertising and publicationsMaintenance and repairSpecialist services35. EARNINGS PER SHAREBasic earnings per share:20102081261,0604296831,135565,728----------9,425======20092341,0321,1926001,044906617,417----------12,486======Item10/12/31 09/12/31Net profit for periodWeighted average of issued ordinarysharesGains per basic share (expressed asearnings per share)8 182 33111 000 0000,743 713 53411 000 0000,34AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._186Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)36. RISKS FROM FINANCIAL INSTRUMENTS36.1. risk management POLICIESAs it is part of Banif Grupo Financeiro, the risk policies followed by Banif - Banco deInvestimento, S.A. (BBI) abide by the guidelines laid down for the Group as a whole, withthe specificities inherent in its activities as an investment banking unit in Portugal,taking account of the control and diversification of risks not only at the level of theBank and its subsidiaries but also at a consolidated level for the Group.The Bank’s Board of Directors defines the Company’s risk strategy and policies,delegating everyday risk management to the Executive Committee and the director withresponsibility in this area. In terms of governance, there are the Boards of Directors ofthe main subsidiaries, such as Banif Gestão de Activos, Banif Açor Pensões (BAP) andBanif Capital (BAC).In functional terms, risk management and monitoring is centralised in the Risk ReportingDepartment (DRR), a unit that is independent from the originating departments andenjoys the necessary autonomy. It analyses the different types of risk: credit, market,liquidity and operational in a cross-sectoral and integrated manner and its scope ofactivity extends to the Bank and its subsidiaries. This department reports directly to amember of the Executive Committee appointed Global Head of Risk Management.Supporting the decisions of the Executive Committee, there are also a number ofspecialised committees that play a decisive role in financial and non-financial riskmanagement and control.At the Bank, they include the following:• The Credit and Risk Committee, whose objective is to analyse and adjudicate onoperations involving a credit risk to the bank and defines credit limits, including thecounterparty credit risk. It is presided over by the Vice-Chief Executive Officer and mustinclude a risk management director, a director from the proposing department and theheads (or their representatives) of the Risk & Reporting and Legal & Tax Departments.• The Assets and Liabilities Committee (ALCO), which its objective is to manage thebalance sheet’s structural risk, including interest rate, liquidity, foreign exchangeand market risks. It is chaired by the Executive Director responsible for the FinancialDepartment. All the Bank’s executive directors sit on this committee, as do thosein charge of the Finance, Risk and Reporting, Accounting and Financial Controldepartments (or their representatives).• The Markets Committee has consultative duties and proposes to the ExecutiveCommittee the investment strategy for the bank’s own portfolio, monitors itsimplementation and analyses risk factors critical to growth in its value. It is presidedover by the director of Equity and Fixed Income. Its members are the heads (or theirrepresentatives) of the Equity, Fixed Income, Financial, Risk & Reporting and PrivateClients Departments.• The Credit Recovery Committee, which monitors credit in default (including otheraccounts receivable) and defines operational measures and strategies. It is presidedover by the executive director for risk management and must include the BGA directorof Property Investment and the heads (or their representatives) of the Risk & Reporting,AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._187Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Credit, Legal & Tax, Property Investment, Operations, Accounting and Financial ControlDepartments and client management department.At BGA:• The Equity and Multiclass Investment Committee defines the investment strategyof equity and multiclass investment funds and special investment funds managed,monitors its implementation, analyses critical risk factors affecting growth in the valueof the funds’ portfolios and assists in defining and preparing management informationon the strategy implemented and reporting it to the Board of Directors. It is presidedover by the Vice-Chairman of the BGA Board of Directors and its other members are thedirector in charge of the Equity and Multiclass Investment Department.• The Property Investment Committee proposes to the Board of Directors the investmentstrategy for property investment funds under management and monitors this strategy,analyses critical risk factors affecting growth in the value of the funds’ portfoliosand assists in defining and preparing management information. Its members are theChairman of the BGA Board of Directors (who presides over the committee), the directorof the Property Investment Department, the director of the Legal & Tax Department, thedirector of the Risk & Reporting Department and the Property Investment Department.• The Alternative Investment Committee defines and proposes to the BGA Board ofDirectors the investment strategy for special alternative funds under managementand monitors its implementation, analyses critical risk factors affecting growth in thevalue of the portfolio and assists in defining and preparing management information. Itreports periodically on its decisions to the BGA Board of Directors da BGA. Its membersare the Chairman of the Board of Directors (who presides), the director of the AlternativeInvestment & Private Equity Department, the Global Head of Financial Advisory andM&A and the Alternative Investment & Private Equity Department.• The Rent Recovery Committee monitors rents in arrears for property in the propertyinvestment funds and proposes individual courses of action. It revises and proposesimpairment provisions. Its voting members are the director of the Risk ManagementDepartment (who presides), the director of the Legal & Tax Department, the directorof the Property Investment Department and the Legal & Tax Department.• The Investment and Portfolio Management Committee proposes to the ExecutiveCommittee the investment strategy discretionary management portfolios, analysescritical risk factors and prepares management information. It is presided over by thedirector of the Portfolio Management Department and its members are the PortfolioManagement Department, representatives and assets management specialists.Acting throughout the Bank and its subsidiaries:• The Risk Management Committee ensures that the current risk profile in line withthe defined level and reports any deviations. It conducts detailed revisions of thecompliance monitoring programme and risk profile by category. It is presided over bythe Executive Director tasked with managing the Risk and Reporting Department. Themembers of this committee are all the Bank’s executive directors and the heads (or theirrepresentatives) of the Risk & Reporting, Legal & Tax, Compliance, Audit, Operations,Information Systems, Accounting and Financial Control, Organisation & Quality andResources and Services departments.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._188Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

36.2. EXPOSure to riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)BBI is owned 100% by Banif Investimentos SGPS, S.A., a sub-holding company of BanifGrupo Financeiro, whose parent company is Banif SGPS, S.A., which submits consolidatedaccounts for public use. In prudential terms, within the perimeter of the Bank and itssubsidiaries, reporting is carried out on an individual basis by the different companies,such as BBI and BGA.The consolidated financial statements in this report include the accounts of BBI andits subsidiaries and from an accounting point of view control is considered to exist ifit owns at 50% of a company’s voting rights. The Bank is thus consolidating severalinvestment funds managed by BGA. However, the funds are managed independentlywith the appropriate segregation of functions from the Bank in order to preventpotential conflicts of interest and to maximise risk/return for investors in accordancewith applicable investment policies and regulations.We now describe the main characteristics of the funds consolidated in BBI by the equitymethod (holding of 20% to 50%) or full method (over 50%), in terms of investmentpolicies:Banif Europa de Leste (equity method) is fund that, through aggregation of assets anddynamic management and selection of investment funds, shares and bonds, achievesdiversification that dilutes the risk inherent in each one and obtains positive returns.Its aim is constant fine-tuning of a strategy of low correlation between assets in orderto optimise the fund’s risk/return ratio. The fund directs its investment into securitiesor collective investment bodies that invest mainly in Germany, Austria, Russia, Romania,Turkey, Bulgaria, the Czech Republic, Poland, Lithuania, Latvia, Hungary, Estonia,Slovakia, Slovenia, Croatia and Ukraine.Banif Gestão Patrimonial (full method) is a special investment fund in the internationalfinancial and property markets. It combines classes of assets with a low correlationwith each other in order to optimise the risk/return ratio and uses investment fundsthat may not be subject to prudential supervision. In conceptual terms, the fund hasan average allocation of 30% in property funds, 15% in shares or mutual funds, 15%in hedge funds, 20% in bonds or bond funds, 5% in other assets and 15% in regulatedabsolute return vehicles.Banif Gestão Activa (full method) is a special investment fund in the internationalfinancial and property markets. It combines classes of assets with a low correlationwith each other in order to optimise the risk/return ratio and uses investment fundsthat may not be subject to prudential supervision. In conceptual terms, the fund hasan average allocation of 20% in property funds, 40% in shares or mutual funds, 20%in hedge funds, 10% in bonds or bond funds, 5% in other assets and 5% in regulatedabsolute return vehicles.Banif Investimento Moderado (full method) is a flexible open mutual investment fundthat provides investors with an investment option based on carefully selected assetsand is not limited to their nature. As it is a flexible fund, its composition may vary to alimited extent according to investment policy.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._189Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Banif Investimento Conservador (full method) is a flexible open mutual investment fundthat provides investors with an investment option based on carefully selected assetsand is not limited to their nature. As it is a flexible fund, its composition may vary to alimited extent according to investment policy.Banif Iberia (full method) is a flexible open mutual investment fund that provides itsinvestors with an absolute positive long-term return in rollover periods of 12 monthsby investing mainly in shares admitted to trading at Euronext Lisboa and the MadridStock Exchange and money market instruments and systematic use of Euronext Lisboaand MEFF derivatives. The allocation of shares and the proportion of other types ofinstrument are flexible and may vary from 0% to 100%.Art Invest (full method) is a special fund that provides its investors with access toinvestments in art while also being able to enjoy works of art on temporary loan. Thefund’s portfolio consists of investments in other funds pursuing the same investmentpolicy as Art Invest, such as the Fine Art Fund, and a wide variety of works of art.Paintings, sculptures, tapestries, photographs, tiles, ceramics, engravings and printsare some of the types of assets that may make up the fund’s portfolio.Infra Invest (full method) is a special open investment fund that invests directly orindirectly in quoted or unquoted assets, projects or companies associated withinfrastructures in order to form a diversified portfolio based on carefully selectedinvestments and dynamic portfolio management. The distinction between projectsand companies comes essentially from the stage of development of an infrastructureproject.The tables on the following pages show the risk indicators for the mutual fundsmanaged by BGA: Europa de Leste, Banif Investimento Conservador, Banif InvestimentoModerado, Banif Iberia, Banif Gestão Activa and Banif Gestão Patrimonial, which areconsolidated in the Bank’s accounts.In addition to investment funds, BBI’s three main subsidiaries in terms of net assets areBGA (€13.3 million), BAP (€4.3 million) and Gamma (€3.9 million). Considering their typeof activity, management of mutual and property investment funds, special investmentfunds and flexible funds in the case of BGA and pension funds in the case of BAP,their exposure to financial risks is generally very low and is almost zero in the maincategories. The main source of revenue of these two companies is commissions for thefunds they manage, with no need for balance sheet resources, and so their exposureto the risk of financial instruments is negligible. The risk of the funds managed bythese companies is borne entirely by the investors who own the investment units.Gamma’s exposure to risk is also generally low as a result of its activity, which consistsof managing securitisation operations and is almost zero in the main financial riskcategories. The company’s main source of revenue is commissions for managingoperations, with no need for balance sheet resources, and so its exposure to the risk offinancial instruments is negligible. The independent assets associated with each issueof securitised bonds are the only ones responsible for their reimbursement.Therefore, in terms of exposure to financial risks at BBI Consolidado, considering itssubsidiaries’ activities, the risks arise almost entirely from the risk incurred by theAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._190Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Bank in its own balance sheet (and off-balance sheet), in individual terms. Net assets onthe consolidated balance sheet total 1.339 billion euros as at 31 December 2010, whileBBI’s individual net assets are €1.322 billion (€1.316 billion adjusted for intra-groupoperations, including a loan of €1.5 million granted to Banif Capital and the reversalof provisions against impairment), corresponding to around 98%, reflecting the lowmateriality of the subsidiaries in terms of exposure to risk.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._191Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)EntityBusiness activity Net Assets Share %Banif Banco de Investimento - Consolidated1 339 229100,0%Banif Banco de Investimento (individual)Investment banking1 322 66698.8%Banif CapitalVenture capital firm1 9870.1%BIAMInvestment fund management firm7900.1%Banif Gestão de ActivosInvestment fund management firm13 2421.0%Centro VentureVenture capital firm5340.0%GammaCredit securitisation firm3 9210.3%Banif MultifundSubsidiary of BIAM2520.0%Banif Açor PensõesPension fund management firm4 3360.3%Ecoprogresso - TradingEnvironmental and development consultancy firm3830.0%Banif Europa de LesteFund managed by BGA1 0970.1%Banif FortunyFund managed by BGA9 3450.7%Banif Investimento ConservadorFund managed by BGA5270.0%Banif IberiaFund managed by BGA3 3050.2%Art InvestFund managed by BGA1 8080.1%Infra Invest - FEIFund managed by BGA5 7910.4%Banif Gestão PatrimonialFund managed by BGA9 6770.7%Banif Gestão ActivaFund managed by BGA2 1820.2%Banif Investimento ModeradoFund managed by BGA5420.0%Minority interests and adjustments-43 156-3.2%The net assets in proportion to the percentage holding of the fund was considered with investment funds.Therefore, in view of the low materiality of the subsidiaries in exposure to overall riskand active, independent management of the investment funds consolidated in theaccounts, we have presented the information by main risk categories focusing on theBank individually.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._192Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Main risk indicators for Banif Europa de Leste:TOTAL RISK17,77 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 248 344 EurosValue-At-Risk(%) 10,09%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksDWS RUSSIA156 4106.35%540.00112.73%DWS TUERKEI56 7452.30%636.5422.03%RAIFF-EUV-RTF v332 83113.52%335.44324.43%PICTET-EASTERN EUROPE-R EUR382 61315.54%234.85427.96%RAIFF-OST AKT V246 0709.99%434.82517.71%1 174 67047.7%84.9%Greatest Contributions to Total RiskPICTET-EASTERN EUROPE-R EUR382 61315.54%234.85427.96%RAIFF-EUV-RTF v332 83113.52%335.44324.43%RAIFF-OST AKT V246 0709.99%434.82517.71%Real Estate LESTE1 159 97547.11%111.75615.15%DWS RUSSIA156 4106.35%540.00112.73%2 277 89992.5%98.0%Portfolio ConcentrationBy actual SHARETop 592.51%Real Estate Leste47.11%PICTET-EASTERN EUROPE-R EUR15.54%RAIFF-EUV-RTF V13.52%RAIFF-OST AKT V9.99%DWS RUSSIA6.35%Top10100.00%Top20100,00%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._193Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Main risk indicators for Banif Investimento Conservador:TOTAL RISK5,46 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 24 157 EurosValue-At-Risk(%) 3,10%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksPICTET LAT AME “R”32 4704.16%425.66115.38%DWS AKTIEN STRA DEUT11 3411.45%2824.8224.60%B.Euro ACCOES7 9021.01%3323.9133.41%PICTET EMERGING MKTS23 8163.05%721.29410.30%FRANKLIN MUTUAL BEAC10 7091.37%2921.1754.29%86 23811.1%38.0%Greatest Contributions to Total RiskPICTET LAT AME “R”32 4704.16%425.66115.38%Schroder Emerg MkT24 2083.10%620.52710.30%PICTET EMERGING MKTS23 8163.05%721.29410.30%Allianz RCM US Eq AT17 4932.24%2118.96116.41%Allianz RCM EU Eq AT16 1792.07%2219.80106.25%114 16614.6%48.6%rtfolio ConcentrationBy actual SHARETop 5100.00%OT 5.45% Set. 20138.29%PORTB 0 11/18/117.38%Irish Gov 4 01/15/145.44%PICTET LAT AME “R”4.16%Banif Euro Financeiras3.52%Top1052.91%Top2078.45%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._194Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Main risk indicators for Banif Investimento Moderado:TOTAL RISK6,89 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 31 564 EurosValue-At-Risk(%) 3,91%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksPICTET LAT AME “R”40 9585.07%325.66115.42%DWS AKTIEN STRA DEUT9 7251.20%2724.8223.20%B.Euro ACCOES23 4862.91%1123.9138.22%PICTET EMERGING MKTS34 7214.30%621.29411.90%FRANKLIN MUTUAL BEAC15 5691.93%2321.1755.10%124 46015.4%43.8%Highest Individual RisksPICTET LAT AME “R”40 9585.07%325.66115.42%Schroder Emerg MkT35 2594.37%520.52711.92%PICTET EMERGING MKTS34 7214.30%621.29411.90%B.Euro ACCOES23 4862.91%1123.9138,.22%Allianz RCM US Eq AT25 7893.19%918.96117.68%160 21319.8%55.1%Greatest Contributions to Total RiskBy actual SHARETop 527.33%PORTUGAL, REPUBLIC OF (GOVERNMENT) 5.45% 201309238.01%IRELAND, REPUBLIC OF (GOVERNMENT) 4% 201401155.25%PICTET-LATAM LC DBT-R USD5.07%F&C GLOBAL CONV BOND A HEDGE4.63%SISF EMERGING MKTS B ACC4.37%Top1056.89%Top2081.32%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._195Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Main risk indicators for Banif Ibéria:NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)TOTAL RISK4,29 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 146 926 EurosValue-At-Risk(%) 2,44%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksPICTET LAT AME “R”66 5001.02%2252.5314.02%DWS AKTIEN STRA DEUT142 8002.20%1050.53210.15%B.Euro ACCOES63 2451.05%2047.2832.65%PICTET EMERGING MKTS79 3501.32%1643.6143.05%FRANKLIN MUTUAL BEAC149 6552.22%942.0459.27%501 5507.8%29.1%Greatest Contributions to Total RiskPICTET LAT AME “R”418 2755.13%434.362123.84%Schroder Emerg MkT573 6002.07%1128.132720.11%PICTET EMERGING MKTS354 4502.38%827.302812.25%B.Euro ACCOES142 8002.20%1050.53210.15%Allianz RCM US Eq AT287 280-0.22%2839.2899.70%1 776 40511.6%76.0%Portfolio ConcentrationBy actual SHARETop 522.46%CIMPOR CIMENTOS (EUR5(6.94%PESCANOVA SA (EUR6)3.43%SONAE.COM SGPS3.21%TECNICAS REUNIDAS3.00%REPSOL SA (RG) (EUR1(R5.88%Top1041.53%Top2055.43%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._196Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Main risk indicators for Banif Gestão Activa:TOTAL RISK11,84 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 257 432 EurosValue-At-Risk(%) 6,72%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksCHN Real ESTATE550 23414.37%230.92123.52%B.Euro ACCOES533 55913.93%323.91223.89%EUR Portugal Real ESTATE358 8759.37%423.49314.21%DWS I.EURO.EQ.NC5 6000.15%1822.7840.23%JPM PROPERTY21 6700.57%1722.0650.88%1 469 93738.4%62.7%Greatest Contributions to Total RiskB.Euro ACCOES533 55913.93%323.91223.89%CHN Real ESTATE550 23414.37%230.92123.52%EUR Portugal Real ESTATE358 8759.37%423.49314.21%Real Estate LESTE717 02818.72%111.75157.78%Real Estate GLOBAL163 8044.28%619.43126.35%2 323 49960.7%75.7%Portfolio ConcentrationBy actual SHARETop 560.88%Real Estate LESTE18.72%CHN Real ESTATE14.37%B.Euro ACCOES13.93%EUR Portugal Real ESTATE9.37%F MUTUAL BEACON N (ACC) USD4.48%Top1085.97%Top20100.00%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._197Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Main risk indicators for Banif Gestão Patrimonial:TOTAL RISK10,28 %(Standard deviation of Portfolio)With derivativesValue-At-Risk(EUR) 704 074 EurosValue-At-Risk(%) 5,84%(Maximum loss of portfolio over a 30-day horizon at 95% probability)MarketValuePortfolioShareRankTotal RiskRankContributionto Total RiskHighest Individual RisksCHN Real ESTATE529 5584.39%630.9215.16%B.Euro ACCOES1 152 1289.55%323.91219.63%PREFF FUND2 399 93319.89%221.64337.38%MELLON GLOB ASIAN EQ120 5581.00%1221.5941.57%FRANKLIN MUTUAL BEAC409 7313.40%821.1755.27%4 611 90838.2%69.0%Greatest Contributions to Total RiskPREFF FUND2 399 93319.89%221,64337.38%B.Euro ACCOES1 152 1289.55%323,91219.63%Real Estate LESTE3 522 74229.20%111,75918.90%FRANKLIN MUTUAL BEAC409 7313.40%821,1755.27%CHN Real ESTATE529 5584.39%630,9215.16%8 014 09266.4%86.3%Portfolio ConcentrationBy actual SHARETop 570.45%Real Estate Leste29.20%PREFF Fund19.89%B.Euro Accoes9.55%DWS Invest Conv.5.95%Schroder Conv BOND5.86%Top1093.39%Top20100.00%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._198Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

36.3. by risk categorya) Credit riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Credit risk arises from the probability of loss due to the inability of a counterparty tofulfil their financial commitments to the Company, including possible restrictions ontransferring payments from abroad. In the case of securitised credit, risk arises frompotential changes in the value of instruments due to the degradation of the issuer’scredit quality.At the Bank, the credit risk underlying its activity arises essentially from its portfolioof bonds and credit granted and guarantees provided to clients, as an area thatcomplements other investment banking activities, such as project finance, privatebanking and corporate finance, among others.The bank’s policy entails granted collateralised credit and more than 85% of creditsare covered by real guarantees, particularly mortgages and pledges of securities. Allcollateral received is valued at fair value on the basis of its market value, taking accountof the specificities of each type of collateral. In the case of mortgage loans, the Bankuses the consultancy services of the most renowned property appraisal companies.In credits with pledged securities, there is daily monitoring of the market value of thepositions pledged using in-house software that produces the necessary warnings torequest additional margins or to call in the guarantees.All operations are analysed and discussed by the Credit and Risk Committee, whichmeets regularly and has powers of decision for certain degrees of risk. Its decisionsare later submitted to the Executive Committee for approval. Larger operations mustbe ratified by the Bank’s Board of Directors. Similarly, the counterparty credit risk ofderivatives operations is analysed by the DRR and discussed and approved by the Creditand Risk Committee, depending on its delegation of powers.Periodically an overall analysis is conducted of credit to clients with a view to monitoringthe risk of concentration in terms of sectors and major risks and of the quality of ourportfolio and its level of collateralisation. Among other points, the composition of theportfolio is analysed by type of associated collateral in order to monitor exposure to thenet risk and the average spread with a view of overseeing the risk-return ratio.Regarding monitoring the credit risk of exposures to bank portfolio securities, chartsare drawn up containing a credit quality analysis of the portfolio based on the ratingsfrom the main international agencies, along with in-house monitoring models. Inindividual terms, the Bank does not have historical information or a large enoughcredit portfolio to enable it to conduct an exhaustive study of the frequency of actualdefaults and losses (PD and LGD). The PD and LGD of Banif – Banco Internacional doFunchal, S.A. are applied to only some generally insignificant credit segments. Thecalculation of impairment losses is done individually or casuistically, taking account ofthe specificities of the operation and the best estimate of the recoverable value (creditand guarantees) on the date of evaluation.In the case of securitised credit, including securitisations (ABS, CDO and CLOs) casuisticAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._199Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)analyses are also conducted to assess the existence of impairment, based on marketinformation, including investor reports and in-house models for monitoring the creditrisk of securities.b) Market risksMarket risk arises from the probability of loss due to unfavourable movements in themarket price of instruments in the trading portfolio, including fluctuations in interestand exchange rates, share prices and the price of goods. The main type of market risksto which the Bank is exposed are short-term positions in debt and equity securities,currency, goods and derivatives.At the Bank the market risk results essentially from exposure to securities held in thetrading portfolio. The bank does not have a policy of trading in derivatives. As a rule,the derivatives acquired serve the purpose of hedging positions, mainly in operationsundertaken for clients, through symmetric transactions with other counterpartiesthat annul the market risk between them, and of hedging the Bank’s own portfoliorisks.Some years ago, the Bank and its subsidiaries made great efforts to revise and perfecttheir ways of measuring and monitoring the market risk and used a market riskanalysis tool for the purpose, BarraOne, owned by MSCI Barra, which is an internationalexample to be followed.This system makes it possible to analyse the portfolio risk broken down into thedifferent explanatory factors, for example between specific components of theoverall or market risk, which is then broken down into different parts. The total risktakes into account the correlation between the assets, both at the top level and atthe various risk disaggregation levels. BarraOne uses a multi-factor system basedon fundamentals that include intuitive economic characteristics in choosing issuesor factors based on market data and risk estimates aimed at forward-looking riskmanagement.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._200Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The diagram below shows how the risk is broken down and conducts a sensitivityanalysis for each of the items applicable to the portfolio.TOTAL RISKForeignExchange RiskGlobalMarket RiskCorrelationImpactSpecificRiskGlobal Risk(CommonFactors)CorrelationImpactIndustryStyleInterest Rate(Yield Curve)SpreadEmergingMarketsCommoditiesHedge FundsCorrelationImpactThe calculation of the VaR is thus broken down into the following factors:• Exchange risk - the component of VaR attributable to the explicit and implicit currencyrisk, for example through indirect investment. Due to the extreme sensitivity of thisfactor, the model uses only the last 17 weeks of data as a history.• Local market risk – the component of the VaR attributable to the market risk per se,excluding the exchange risk. The risk for each market breaks down into 3 components:global risk, specific risk and correlation.• Global risk - the risk explained by common market factors, including the industry,style, interest rate, spread, emerging market, hedge fund and commodities risks. Itanalyses the risk to the portfolio resulting from exposure to specific factors in eachmarket/model.i) Industry – each asset is classified in the most suitable sector (using the Barramethod), so that the VaR component explained by the sector is calculated.ii) Style – in this item the model captures the risk deriving from the asset having thefollowing: i) a large or a small capitalisation; ii) the expectation of high growth versuslower valuations; long and short-term volatility pattern;iii) Interest rate (yield curve) – includes the risk arising from changes in the yield curveAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._201Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)and twist or butterfly, which corresponds to three risk factors for each market. TheEuro Area model comprises models for the countries in that zone.iv) Spread – it analyses the difference between the swap curve and the public debtcurve and credit events and calculates allocation in terms of risk.v) Emerging markets – this comes from the additional risk due to the issuer being froman emerging country or the asset being issued in an emerging country.vi) Commodities – it obtains risk estimates for commodity futures and spots. The modeluses 26 sub-indexes to analyse the risk from different commodity types, which are lateraggregated into five large groups and integrated into the multi-class model through acovariance matrix. It is not applicable to BBI.vii) Hedge funds – this obtains estimates of the risk for exposure to this type of asset.It is not applicable to BBI.• Specific risk – a risk that is not explained by common factors, i.e. a single riskexclusive to each asset and therefore diversifiable. This model combines the estimatefor the average specific risk level and the specific risk value given the asset’s basiccharacteristics.At the Bank, the VaR is calculated using the parametric model, applied at a 10-dayhorizon and with a 99% confidence interval, in line with the recommendations fromthe New Basel Agreement and the Banco de Portugal (Notice 8/20079). For investmentfunds, the VaR is calculated in accordance with applicable regulations (CMVM), with an95% confidence interval and a 30-day horizon.c) Exchange rate riskExchange Rate Risk is the risk that the value of financial assets denominated in foreigncurrencies may fluctuate due to changes in the exchange rates.The Bank systematically monitors its overall exposure to exchange rate risk. To thiseffect, a daily calculation is made of its exchange position against the major currencies,primarily covering positions resulting from trading activity in the securities portfolio,as well as variations in the Company’s net (potential or realised) profit as a result ofconverting the balances of each account at the ECB fixing rates.In general, the exposure of the Bank’s subsidiaries to the exchange risk is notsignificant. The investment funds normally hedge the exchange risk with derivativesin accordance with their investment policies.d) Interest rate riskThe interest rate risk arises from the probability of negative impacts on profit or loss orequity to movements in interest rates, taking into account the balance sheet structureof an institution. This type of risk is assessed systematically at medium to long termand covers exposure of the bank portfolio on the basis of periods in line with therecommendations of the New Basel Agreement and Banco de Portugal (Notice 19/2005).The interest rate risk in the trading portfolio should be assessed as part of marketrisk, focusing on the short term, given that this portfolio is usually managed on a dailybasis. The analysis model used by the Bank is based on the BarraOne tool and breaksAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._202Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)down the market risk into its different components, including the interest rate riskembedded in the variation in price (breakdown of the VaR into its different components,including the interest rate risk).Exposure monitoring charts are produced regularly showing assets and liabilitiesby maturity in overall terms. A separate analysis is also conducted for the bank andtrading portfolio showing mismatches of periods for re-fixing of the rate of assets andliabilities and by main currencies.The interest rate risk at the Bank’s main subsidiaries is negligible. The investmentfunds, depending on investment policies and strategies, may use derivatives to hedgethe interest rate risk.e) Liquidity riskLiquidity risk arises from the probability of losses due to the inability of an institutionto make liquid funds available to fulfil its obligations, under reasonable conditions.At BBI, liquidity levels are adapted on the basis of the amounts and periods of thecommitments made and resources obtained using the identification of gaps. Its policiesregarding obtaining funding, both from clients and on the market, have guaranteedstability of resources based on an integrated Group logic.There is an operating unit within BBI to maximise the management of structuralbalance sheet risks. Its main goal is to set and implement financial policies, particularlyin terms of liquidity and cash management on an individual basis for the bank and tocomplement consolidated management by the Banif Group in this area.f) Operational riskOperational risk arises from the probability of losses due to inadequacy or deficiency ofprocedures, personnel or internal systems, or external events, including legal risks. Thisprobability of loss may result from failures in the analysis, processing or settlement oftransactions, internal and external fraud, activity being affected due to outsourcing,lack of sufficient or qualified human resources or the inadequacy of infrastructures.Banif Grupo Financeiro is aware of the importance of effective monitoring of theoperational risk and about four years ago began a special project in this area. Inits initial stage, it involved surveying and recording occurrences likely to cause anoperational risk in order to monitor and mitigate it. At the Bank and its subsidiaries,this project began in the first quarter of 2008., The DRR is responsible for operationalrisk management, which entails assessing, monitoring and controlling these risks inorder to mitigate them and draw up information to support decision-making.Operational risk managers (OR Managers) have been appointed for critical areas andthey also record operational risk events or shortcomings in everyday management inspecial software: the SAS OpRisk Monitor. There is currently a group of OR Managerswho collect and record operational risk events so that the Bank has the informationit needs to assess the risk, so that it can later be mitigated. They also meet needs forextra internal control. These managers report events detected in the software in theirAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._203Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)area of influence or another using a special external tool which interfaces betweenthem, the DRR and Corporate Risk Department of the Banif Group. It is possible to obtainstatistics by reporting area, frequency, origin, process, risk source, etc.This is how we will achieve our goal of monitoring and measuring the operationalrisk inherent in our business and detailing occurrences in different processes andintervening areas. This results in an effective, dynamic assessment of current internalcontrol systems.In addition to the legal, statutory and ethical provisions that apply to financialintermediation activities, a concern of the Company’s management has been to prepareand distribute manuals, regulations, circulars and other internal directives which helpto ensure compliance with the standards applicable to the relevant area of business.This information is duly circulated to all staff and made available for consultation onthe Company’s intranet. In addition to this, the Legal & Compliance and Internal Auditdepartments work to complement and reinforce the measures adopted.There is a routine for monitoring and revising the internal control system, whichfollows regulatory guidelines and our organisational culture. Pursuant to the internalcontrol requirements of Banco de Portugal and the CMVM, we regularly conduct a selfassessmentfor each type of risk in accordance with a matrix provided by Banco dePortugal in its risk assessment model report. Specifically, as part of the reinforcementof our internal control system, an in-house project called Certification of Risks &Controls performs an exercise in which the heads of each unit are invited to conductself-assessments.Internal auditing is responsible for developing mechanisms for assessing theadequacy of internal control and monitoring it. It identifies shortcomings or weakpoints in the design, implementation or use of the internal control system and theyare properly recorded, documented and reported to appropriate management levelsso that they can be dealt with. An internal tool, Audit Follow Up, was developed forthe purpose.The Board of Directors and senior managers receive regular reports on the monitoringof the internal control system, including identification of shortcomings or weak pointsdetected, assessed individually or together.36.4. CREDIT riskFor the purpose of analysing the credit risk in this note, we considered securitiesportfolios and credit to clients. The value of the financial assets held for tradingtherefore excludes the market value of derivatives.The item Cash at other credit institutions refers essentially to margin calls bycounterparties derivative and repo operations and clearing operations. The itemInvestments at credit institutions consists entirely of deposits at other bankinginstitutions in Banif Grupo Financeiro.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._204Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)Financial assets by item in the balance sheet of BBI Consolidado (including subsidiaries),have the following exposure to the credit risk a 31 December 2010:Maximum Exposure Collateral Net ExposureFinancial assets held for trading71 406071 406Other financial assets at fair value through profit or loss187 67742 107145 570Available-for-sale financial assets251 3924 865246 528CREDIT EXTENDED TO CLIENTS470 626360 649109 977Investments held to maturity60 391060 391TOTAL CREDIT RISK EXPOSURE1 041 492407 620633 871Amounts net of impairment. Amount of collateral considered up to the amount ofexposure.At individual level at BBI:Maximum Exposure Collateral Net ExposureFinancial assets held for trading35 760035 760Other financial assets at fair value through profit or loss192 26542 107150 158Available-for-sale financial assets278 1034 865273 239CREDIT EXTENDED TO CLIENTS466 751355 254111 498Investments held to maturity60 391060 391TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 047Amounts net of provisions. Amount of collateral considered up to the amount ofexposure.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._205Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The item Credit extended to clients includes a portfolio of securities to a value of almost€70 million carried at depreciated cost consisting essentially of structured products(ABS, CDO, CLO), classified in IAS terms as Loans & Receivables (LaR). Excluding theseinstruments, the amount of credit granted net of impairment totalled around €400million as at 31 December 2010 in consolidated terms (€396 million net of provisionson an individual basis), €361 million (€355 million on an individual basis) of whichwas collateralised by real guarantees, including mortgages and pledged securitiesrepresenting a ratio of more than 85%. More than €100 million in the portfolio at theend of the year referred to project and acquisition finance operations.Concentration of BBI’s individual credit risk by sector as at 31 December 2010:Maximum Exposure Collateral Net ExposureIndustry6 61406 614Construction41 64739 8681 779Retail sales7540754Services25 772025 772Financial Institutions and Insurers133 7430133 743Public sector174 4030174 403Others620 055332 099287 957Private individuals30 28330 25825TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 046Amounts net of provisions.In terms of distribution by sector, the public sector component to the amount of €174million as at 31 December 2010 corresponds to the entire public debt or debt guaranteedby a central government, €170 million (or 98%) of which refers to the Portuguesesovereign risk (public debt or debt guaranteed by the Portuguese government).Concentration of credit risk by geographical region as at 31 December 2010:Maximum Exposure Collateral Net ExposurePortugal747 798304 524443 274European Union107 33928 94678 393Rest of Europe000North America43 34612 60830 738Latin America116 42247 60368 819Rest of World18 3668 5449 822TOTAL CREDIT RISK EXPOSURE1 033 271402 225631 046Amounts net of provisions.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._206Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The tables below show all financial assets by quality of credit. Their external ratings areallocated by the main international agencies: Moody’s, Fitch and S&P. The measurementof ratings followed the standard method in the Basel II Agreement. The lower of thetwo best ratings was chosen if there were different ratings for the same asset. TheHigh Grade classification corresponds to ratings between [AAA and A-], Standard Gradeto ratings between [BBB+ to BBB-] and Sub-Standard Grade to ratings of BB+ or below.Credit or securities positions without external ratings awarded by any of the three maininternational agencies are classified as Not Rated. The main slice of unrated exposures,totalling €658 million as at 31 December 2010, corresponding to 66%, has to do withcredit granted to companies and individuals, such as mortgage loans or credit withpledged securities and project finance and acquisition finance operations. The weightof unrated assets in the other financial assets at fair value through profit and lossportfolio is also significant and totals around €146 million. A considerable contributionwas made to this by investment in fund units (€138 million), which have no externalrating. Of the exposure to investment funds, around €42 million is collateralised bysurety deposits at BBI, and so its exposure to risk is zero. The remainder refers almostentirely to funds managed by Banif Group companies or subsidiaries.Breakdown of of BBI’s financial assets by quality of credit and balance sheet item as at31 December 2010:High GradeStandardGradeSub-StandardGradeNot RatedTotalFinancial assets held for tradingOther financial assets at fair value through profit or lossAvailable-for-sale financial assetsCREDIT EXTENDED TO CLIENTSInvestments held to maturity2 36416 196036 4507 64922 3554 1782 1641 02117 2561 33513 023146 37767 177431 192035 760192 265278 103466 75160 39143 723173 45510 65436 701TOTAL CREDIT RISK EXPOSURE266 89782 65025 955657 7691 033 271Amounts net of provisions.36.5. market riskThe table below shows the calculation of Value-at-Risk (VaR) for the trading securitiesportfolio of BBI Consolidado, which includes the portfolios of investment funds andother subsidiaries. It totalled €79 million in absolute values (€71 million in long positionsand €8 million in short). This accounting item is the one with the greatest differencebetween the Bank’s consolidated and individual accounts due to incorporation ofthe investment funds’ portfolios, which are recorded at the Bank in the portfolio ofavailable-for-sale financial assets available (reflected in a decrease in the consolidatedaccounts).Specialised “MSCI Barra” BarraOne software was used to calculate the riskmeasurement. VaR was calculated with a 10-day horizon and 99% probability, inaccordance with international good practice, in particular the recommendationscontained in the Basel capital agreement.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._207Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)As at 31 December 2010, the VaR of the consolidated trading portfolio was around €1.2million, representing 2% of its net market value. The system rejected from calculationof VaR assets whose market value totalled around €15 million, as there was no marketinformation for the risk analysis. They were essentially assets in a venture capital andart fund.The breakdown in the VaR by type of risk for the BBI Consolidado trading portfolio as at31 December 2010 is as follows:PortfolioVARTotal RiskMarket RiskOverall Risk (Common Factors)SharesSectorStyleBondsYield CurveSpreadEmerging MarketsCorrelation – Common FactorsSpecific RiskForeign Exchange RiskCurrency/Market Correlation1 1921 2091 1961 1221 11371393339120157(476)176684(701)Source: Barra OneThe tables below show the calculation of Value-at-Risk (VaR) for the trading portfolioheld by BBI, on an individual basis. The Bank’s securities trading portfolio totalledaround €43 million in absolute values (€35 million in long positions and €8 million inshort) consisting essentially of fixed-income securities in which the share competentis negligible.The breakdown of VaR of BBI on an individual basis by type of security as at 31 December2010 is as follows:SharesBondsDiversification EffectTotalPortfolio VaR(thousandeuros)5587(6)586PortfolioVaR (%)15.92. 0n.a.2,0AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._208Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The breakdown of VaR of BBI on an individual basis by type of risk as at 31 December2010 is as follows:StandardDeviationPortfoliorisk %PortfoliovariancePortfolio VaR(thousandeurosLocal Market Risk2.4832.2%6.16333Overall Risk (Common factors)2.2426.2%5.01300Industry0.030.0%0.004Style0.010.0%0.002Interest rate (yield curve)1.8217.3%3.30244Spread0.914.3%0.83122Emerging markets1.339.2%1.77178Correlation – Common Factorsn.a.-4.7%-0.89n.a.Specific Risk (Selection)1.076.0%1.15144Foreign Exchange Risk3.9481.4%15.56529Currency/Market Correlationn.a.-13.6%-2.59n.a.TOTAL RISK4.37100.0%19.12586As at 31 December 2010, the trading portfolio’s VaR for BBI on an individual basiswas around €586,000 representing 2% of the portfolio’s net market value. The risk ofexposure to shares is completely immaterial at a VaR of €5,000. The overall VaR of theBBI’s trading portfolio corresponded to less than 1% of the Bank’s own funds (Tier 1).36.6. EXCHANGE rate riskAs mentioned above, with the exception of the Bank, the exchange risk of the othersubsidiaries is immaterial. The highest exposures were amounts in BRL and USD, a longposition of €9.7 million and a short position of €9.2 million respectively, while the othercurrencies were insignificant.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._209Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)BBI’s individual exchange position by currency was as follows as at 31 December 2010:Net PositionCurrencyUSDGBPCHFJPYSEKNOKDKKCADZARAUDMOPBRLPLNHUFTRYLong134.51.62.171.026.35.80.30.09 738.76.00.40.3Short9 178.55.136.7. interest rate riskThe breakdown of the Bank’s individual financial assets and liabilities by interest ratere-fixing period= 5 yearsTOTALsensitiveFinancial assets held for trading1 2691 2694 5905037458 4292 5832 2711 96412 182114 791150 595Other financial assets at fair value through profit or loss1 2641 37512 01239 32080138 214192 265Available-for-sale financial assets13 0124 86527 4875 91972 89614 4118 93724 50264 27341 800278 103Cash and Cash Equivalents and Investments at Credit Institutions11 40089 878101 278Loans and Other Receivables110 366198 415124 84519 11739313 615466 751Investments held to maturity12 95116 0376 46310 8012 4356 8474 85760 391Other Assets2 63325 75644 89373 282TOTAL ASSETS152 896247 717175 39850325 781131 44619 42918 13526 46681 704443 1911 322 666Deposits of Central Banks122 185165 443287 628Financial liabilities held for trading39168737921 4085 885109 697118 027Financial liabilities at amortised cost492 51997 02238 42810 9001 7508 78045 220116 563811 181Deposits of Credit Institutions283 90740 95927 7978 4001 00042 10795 125499 294Corporate Deposits205 41149 5349 3422 5006308 5533 11316 743295 826Private Deposits3 2026 5301 2881202274 69516 061Subordinated Liabilities15 00015 0003330 033Other Liabilities14 82714 827TOTAL LIABILITIES614 704277 46653 46710 9001 7508 948737921 40851 105241 1211 261 697Amounts net of provisions.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._210Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The table below shows an analysis of the banking portfolio’s individual sensitivity tointerest rate risk at BBI, the only company subject to this prudential reporting, based onthe parameters laid down by the supervisory body. This analysis is based on a scenarioof a standard shock of 200 bp in interest rate and its impact on the Bank’s net worthand annual financial headroom in individual terms based on the assumptions set outin Banco de Portugal Instruction 19/2005.Sensitivity analysis of the impact of a 200 bp variation in the interest rate curve byrelevant currency as at 31 December 2010:20102009Impact on net worth-15 733-6 232Equity90 25287 896EURImpact on equity, as %Impact on net 12-month interest margin-17%-8 204-7%-2 196Net interest margin13 91110 658Impact on net annual interest margin, as %-59%-21%Impact on net worth5 5105 540Equity90 25287 896EURImpact on equity, as %Impact on net 12-month interest margin6%-1 1066%-1 029Net interest margin13 91110 658Impact on net annual interest margin, as %-8%-10%Impact on net worth-10 223-692Equity90 25287 896TOTALImpact on equity, as %Impact on net 12-month interest margin-11%-8 204-1%-3 225Net interest margin13 91110 658Impact on net annual interest margin, as %-59%-30%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._211Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

36.8. LIQUIDity riskNOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)The breakdown of individual financial assets and liabilities by residual maturityas at 31 December 2010 is as follows:1 to 3 3 months5 yearsNot definedTOTALFinancial assets held for trading6461 1262 84717 98713 199114 791150 595Other financial assets at fair value through profit or loss003 05949 7281 264138 214192 265Available-for-sale financial assets008 030162 43865 83541 800278 103Cash and Cash Equivalents and Investments at Credit Institutions14 03325 75600089 876129 665Loans and Other Receivables26 06812 640206 65389 822117 95313 615466 751Investments held to maturity05 00415 65633 4396 293060 391Other Assets0000044 89544 895TOTAL ASSETS40 74644 526236 244353 413204 545443 1911 322 666Deposits of Central Banks122 185165 4430000287 628Financial liabilities held for trading00392 4055 885109 697118 027Financial liabilities at amortised cost492 51978 63751 07727 16545 220116 563811 181Deposits of Credit Institutions283 90740 17337 19778642 10795 125499 294Corporate Deposits205 41131 93412 47226 1533 11316 743295 826Private Deposits3 2026 5301 40822704 69516 061Subordinated Liabilities000030 0003330 033Other Liabilities0000014 82714 827TOTAL LIABILITIES614 704244 08051 11629 57181 105241 1211 261 697Amounts net of provisions.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._212Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)37. FAIR VALUE OF FINANCIAL INSTRUMENTSAs at 31 December 2010, this item may be broken down as follows:Securities PortfolioBalance sheetvalueMarket Value orPriceFair ValueMarketAnalysisASSETSFinancial assets held for trading186 241186 241Other financial assets at fair value187 677186 3041 372Available-for-sale financial assets251 392251 392Investments held to maturity60 39160 291Loans and Other Receivables67 78666 28836 909LIABILITIESFinancial liabilities held for trading118 027118 027Other Financial InstrumentsASSETSCredit extended to clientsOther financial assetsLIABILITIESAmounts owed to clients and otherborrowingsBalance sheetvalue402 84012 604292 597Market Value orPrice402 84012 604292 597Fair ValueMarketAnalysisFor loans of less than one year, the balance sheet value is considered to be a reliableapproximation to fair value. This was also the case for indexed loans maturing afterone year.For deposits maturing in less than one year or with unspecified maturity, includingthose which do not pay interest, it was considered that the amount due on the reportingdate was a reliable approximation to fair value.In the internal valuation models for financial trading instruments and for instrumentsat fair value through profit or loss, the market interest rates were set based oninformation issued by Bloomberg. Periods up to one year refer to interbank moneymarket rates, while periods of over one year are through interest rate swap prices.The interest rate curve that results is also adjusted against the values for short-terminterest rate futures. The interest rate for specific periods is calculated by interpolationmethods. The same interest rate curves are also used for projecting non-deterministiccash flows, such as reference rates for example.AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._213Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)CurrencyTERM1 day7 days15 days1 month2 months3 months4 months5 months6 months7 months8 months9 months10 months11 months1 year2 years3 years4 years5 years6 years7 years8 years9 years10 years20 years30 yearsEUR0.25%0.35%0.43%0.62%0.78%0.96%1.07%1.16%1.26%1.31%1.35%1.40%1.44%1.48%1.53%1.56%1.89%2.23%2.56%2.75%2.93%3.06%3,19%3,32%3,70%3,50%USD0.20%0.23%0.23%0.23%0.25%0.29%0.34%0.40%0.46%0.51%0.56%0.62%0.56%0.51%0.45%0.83%1.31%1.76%2.21%2.54%2.86%3.04%3.23%3.41%4.03%4.13%AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._214Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010 AND 2009BANIF – BANCO DE INVESTIMENTO, S.A.(AMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED)38. BALANCES AND TRANSACTIONS WITH related entitiesRubricasElementoschavegestãoMembros próximos dafamília dos elementoschave de gestãoEntidadesAssociadasAccionistasOutrasentidadesCash and Cash Equivalents at other Credit Institutions264Financial assets held for trading2 274Credit granted to clients9 637139Other assets1 664364 043Amounts owed to other credit institutions5 000Amounts owed to clients and Other borrowings5110749 3178468 139Provisions596Other liabilities935 237Interest and similar income36Interest expense and similar charges(93)Income on services and commissions1 114Services and commissions expense2 275Income on financial assets and liabilities at fair value throughprofit or loss(84)Personnel expenses(440)(220)General administrative costs/overheads(74)Provisions net of reinstatement and write-offs15(26)Transactions with affiliates are treated using the same criteria that are applied tosimilar transactions, and are performed under normal market conditions.In the past financial year, no specific provisions were set up for balances withrelated entities.39. EVENTS AFTER THE BALANCE SHEET’S DATEOn the date of approval of these financial statements by the Company’s Board ofDirectors, there were no events subsequent to 31 December 2010, date of referenceof these financial statements, requiring adjustments or alterations to the values ofassets or liabilities.The Registered AccountantThe Board of DirectorsAMOUNTS IN THOUSANDS OF EUROS UNLESS OTHERWISE INDICATED._215Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7. Notes to theAnnual Reportand financialstatements

7.1 - INFORMATION pursuant to ARTicle 447 of theCOMPANY codeInformation on the movement of shares and bonds by members of the Board of Directorsand Audit Board during 2010, in compliance with Article 447 of the Company Code.BOARD OF DIRECTORSJoaquim Filipe Marques dos SantosAs at 31 December 2010 he owned 1,714,113 shares in Banif - SGPS, SA – SociedadeAberta and the following movements of shares in the above company took place in theyear:Transaction Number Session Date Settlement DateQuantity of sharesacquiredUnit price(EUR)Final price(EUR)14327-Apr30-Apr521.000 €52.00 €14427-Apr30-Apr3001.000 €300.00 €14527-Apr30-Apr12,8671.000 €12,867.00 €15127-Apr30-Apr45681.000 €4,568.00 €15227-Apr30-Apr30731.000 €3,073.00 €15327-Apr30-Apr91401.000 €9,140.00 €TransactionTotal30.00030.000,00 €7928-Apr03-May11,6730.940 €10,972.62 €8028-Apr03-May25,0000.940 €23,500.00 €8128-Apr03-May5,0000.940 €4,700.00 €8228-Apr03-May6000.940 €564.00 €8328-Apr03-May1,7930.940 €1,685.42 €8428-Apr03-May9340.940 €877.96 €TransactionTotal45,00042,300.00 €18603-May06-May12,3690.930 €11,503.17 €18703-May06-May20,3050.930 €18,883.65 €18803-May06-May12,3260.930 €11,463.18 €TransactionTotal45,00041,850.00 €4305-May10-May1,0000.860 €860.00 €4405-May10-May2,0000.860 €1,720.00 €4505-May10-May5,0000.860 €4,300.00 €4605-May10-May2,7070.860 €2,328.02 €4705-May10-May9,5000.870 €8,265.00 €4805-May10-May7,5000.870 €6,525.00 €4905-May10-May10,0000.870 €8,700.00 €5005-May10-May2,0000.870 €1,740.00 €5105-May10-May2930.870 €254.91 €5705-May10-May10,0000.860 €8,600.00 €TransactionTotal50,00043,292.93 €_217Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

On 21/12/10 he purchased 214,264 BANIF - SGPS, SA shares in the Company’s share capitalincrease operation. They were subscribed on that date by pre-emptive reserve at a priceof € 1 per share.On 31/12/2010, he owned one share (1) in Banif – Banco Internacional do Funchal (Brasil),SA, one share (1) in Banif - Banco de Investimento (Brasil) and one share (1) in Banif –Corretora de valores e Câmbio, SA.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Artur Manuel da Silva FernandesAs at 31 December 2010, he owned one share in Banif – Banco Internacional do Funchal(Brasil) S.A., one share in Banif - Banco de Investimento (Brasil), S.A., one share in BanifCorretora de Valores e Câmbio, S.A., one share in Econofinance, S.A. (all preference shareswith no voting rights) and one share in Banif Gestão de Ativos (Brasil) – Sociedade Gestorade Fundos de Investimento Mobiliário, S.A. (ordinary share with voting rights). He did nottrade any shares in the period in question.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Nuno José Roquette TeixeiraAs at 31 December 2010, he owned one preference share with no voting rights in Banif -Banco de Investimento (Brasil), one preference share with no voting rights in Banif Corretorade valores e Câmbio, S.A. He did not trade any shares in the period in question.With regard to the entities set out in Art. 447(2), none of them owned or traded shares orbonds of Banif - Banco de Investimento or companies dominated by it or in the same groupin the year in question.José Paulo Baptista FontesAs at 31 December 2010, he owned 8,898 shares in Banif S.G.P.S., S.A., 10,000 EuroinvestSérie 10 bonds and 15 Banif-SGPS 2010/2013 bonds. He carried out the followingtransactions in 2010:• On 15 October 2010, he sold 25 do Banif - Banco de Investimento perpetual bonds ata unit price of € 1,000.• On 21 December 2010 he purchased 1,112 shares in Banif S.G.P.S., S.A., at a unit priceof € 1, exercising his pre-emptive right in the share capital increase• On 23 December 2010 he purchased 15 da Banif S.G.P.S. 2010/2013 bondsat a unit price of € 1,000.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question._218Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Raul Manuel Nunes da Costa Simões MarquesAs at 31 December 2010, he owned one share in Banif - Banco de Investimento (Brasil), oneshare in Banif Corretora de Valores e Câmbio, S.A. (both nominal preference shares withno voting rights), one share in Banif Gestão de Ativos – SGFIM (Brasil), S.A. (ordinary sharewith voting rights), 50 perpetual subordinated bonds of Banif - Banco de Investimento(upper Tier II) and three Banif 2009/2019 subordinated bonds.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Maria da Conceição Rodrigues LealAs at 31 December 2010, she owned 13 shares in Banco de la Pequeña y MedianaEmpresa, S.A.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Carlos Eduardo Pais e JorgeAs at 31 December 2010, he did not own, nor did he own during 2010, any shares or bondsof Banif - Banco de Investimento or companies dominated by it or in the same group.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Vasco Clara Pinto FerreiraAs at 31 December 2010 he owned one share in Banif - Banco de Investimento (Brasil)and one share in Banif Corretora de Valores e Câmbio, S.A (both preference shares withno voting rights).With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.Alexandre Jaime Boa-Nova e Moreira dos SantosAs at 31 December 2010, he owned 50,000 bonds in Banif - Banco de Investimento (Brasil).In 2010, he did not own or trade any other shares or securities in any Banif Group company.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question._219Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

João Manuel Mora de Ibérico NogueiraAs at 31 December 2010, the company Iberparticipa, S.G.P.S., S.A., which he controls, owned1,820,000 shares in Banif S.G.P.S., S.A., 1,820,000 mandatory convertibles in Banif SGPS SAand 2,638 Banco Mais 2004/2011 subordinated cash bonds with a face value of € 50.He did not personally trade shares or bonds of Banif - Banco de Investimento or companiesdominated by it or in the same group in the year in question.Carlos Alberto Rodrigues Ballesteros Amaral FirmeAs at 31 December 2010, he did not own nor did he trade in 2010 any shares or bondsof Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A., or companiesdominated by it or in the same group.With regard to the entities set out in Art. 447(2), none of them owned or traded sharesor bonds of Banif - Banco de Investimento or companies dominated by it or in the samegroup in the year in question.AUDIT BOARDFernando Mário Teixeira de AlmeidaAs at 31 December 2010 he did not own nor did he trade in 2010 any shares or bonds ofBanif - Banco de Investimento, or companies dominated by it or in the same group.• On 3 May 2010 he purchased 10,000 shares in Banif S.G.P.S., S.A. at a unit price of€ 0.93 and on 5 May 2010 he purchased 10,000 shares in Banif S.G.P.S., S.A. at a unitprice of € 0.87 (by apportionment).• As at 31 December 2010 in the name of the family business Quinta de Sourinho –Agricultura e Turismo, Lda., he owned 220,238 shares in Banif S.G.P.S., S.A. He did notperform any operations in 2010.José Luís Pereira de MacedoAs at 31 December 2010 he did not own nor did he trade in 2010 any shares or bonds ofBanif - Banco de Investimento, or companies dominated by it or in the same group.Rui Manuel Braga de AlmeidaAs at 31 December 2010 he owned 2,468 shares in Banif S.G.P.S., S.A. He carried out thefollowing transaction in 2010:• On 21 December 2010 he purchased 308 shares in Banif S.G.P.S., S.A. at a unit price of€1 by subscription in the preference reserve during the increase in the company’s sharecapital._220Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.2 INFORMATION ON SHARES AND BONDS OF COMPANIESIN BANIF - GRUPO FINANCEIRO TRADED OR HELD DURINGTHE YEAR BY COMPANIES IN THE SAME GROUP:BANIF - SGPS, S.A.Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value QuantityValueAcções Banif Mais, SGPS, SA17 500 000216 741 739.51Acções Banif - Investimentos, SGPS, SA1 998 0009 968 963.20Acções Banif Comercial, SGPS, SA47 488 000239 324 646.71Acções Banif - Imobiliária, SA150 000985 375.25Acções Rentipar Seguros, SGPS, SAShare capital increase03-03-104 706 878of Banif, SA31-03-103 814 65112 930 52972 243 800.49Acções Banco Caboverdiano de Negócios, SA465 1825 129 647.00Acções Banif Bank Malta PLC17 999 99917 999 999.60Acções Banca Pueyo, SA9 996 00049 363 497.59Acções Bankpime25 169 03713 970 000.00Banif Holding (Malta) PLC1 9981 998.00Acções Banieuropa, SL100 000100 000.00Acções Inmobiliária Vegas Altas66935 397 652.20BANIF - SGPS, S.A.Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueAcções Banif Go20 000 00019 651 707.22Acções Banif – Banco InternacionalShare capital increase29-12-1042 800 000214 000 000.00156 000 000775 338 574.25do Funchal, SAof Banif, SAAcções Banif (Açores) SGPS, SA4 016 98320 735 497.00Acções Banif Rent60 000500 000.00Acções Banif Banco Internacional do FunchalShare capital increase25-06-1020 145 4175 232 699.21206 645 44157 726 740.18(Brasil), SAof Banif (Brasil), SAAcções Banif Banco Internacional do FunchalShare capital increase25-06-103 602 907935 754.4240 534 39110 323 171.62(Brasil), SAof Banif (Brasil), SAAcções Banif International Bank, Ltd25 00025 000.00Acção Banif Bank Malta PLC10.40_221Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

BANIF - SGPS, S.A.Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueCommercial paper:Banif GO 42 nd IssueRepayment26-02-20105 000 0005 000 000.00Banif GO 44 th IssueIssue (sale)26-05-201020 000 00020 000 000.00Banif GO 44 th IssueRepayment26-08-201020 000 00020 000 000.00Banif GO 45 th IssueIssue (sale)26-08-201020 000 00020 000 000.00Banif GO 45 th IssueRepayment26-11-201020 000 00020 000 000.0000.00Preferential shares:Acções Pref Banif Finance FLT PRPIssue (sale)06-09-201093 00088 350.00Issue (sale)20-10-2010223 000217 158.50Issue (sale)25-10-20104 0004 000.00Issue (sale)27-10-201027 00025 650.00604 000586 898.95Obrigações Banif Finance FLT DEZ 14Issue (sale)20-10-2010500 000497 527.50Obrigações Banif Finance Sub DEZ 19Issue (sale)29-09-201092 00069 000.00Obrigações Banif Fin. 5% NOV 13 USDIssue (sale)23-11-20103 071 0003 071 000.00 USDRepayment24-11-2010304 000304 000.00 USDIssue (sale)24-11-2010250 000250 000.00 USDRepayment02-12-2010153 000153 000.00 USDRepayment03-12-2010100 000100 000.00 USDRepayment07-12-2010769 000769 000.00 USDRepayment16-12-2010200 000200 000.00 USDRepayment21-12-20101 128 0001 128 000.00 USDRepayment30-12-2010400 000400 000.00 USDIssue (sale)31-12-20109 196 0009 243 257.22 USD9 463 0009 511 629,30 USDObrigações Banif Fin. 6% NOV 13Issue (sale)23-11-20102 176 0002 176 000.00Repayment24-11-2010260 000260 000Repayment24-11-2010472 000472 000Repayment25-11-2010120 000120 000Repayment30-11-2010187 000187 000Repayment06-12-201055 00055 000Repayment07-12-2010501 000501 000Repayment13-12-2010250 000250 000Repayment20-12-2010280 000280 000Issue (sale)31-12-20107 359 0007 404 380.007 410 0007 455 703.50Obrigações Banif CY ASF OUT 2010Repayment28-10-201020 00020 000.000Resident Bonds:Obrigações Banif LeasingObrigações INV.TX VR 2016Obrigações Rentipar 2008/2012Issue (sale)11-06-2010160.000160.000.00Obrigações Açoreana TX VR DEZ 17Rentipar Seguros 2015Issue (sale)06-05-201040.000.00040.000.000.00Repayment06-05-20101.500.00015.000.000Repayment11-05-20105.000.0005.000.000Repayment18-05-20109.000.0009.000.000Issue (sale)31-12-20105.000.0005.036.284.7229 500 00024 681 027.78(CONTINUED)_222Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)BANIF - SGPS, S.A.Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações Banif SGPS 2008/2011Issue (sale)06-01-20107 0006 755.00Issue (sale)07-01-201010 0009 650.00Issue (sale)11-01-20107 0006 755.00Issue (sale)15-01-2010117 000112 905.00Issue (sale)21-01-201073 00070 445.00Issue (sale)22-01-20104 0003 860.00Issue (sale)25-01-201052 00050 180.00Issue (sale)29-01-201019 00018 335.00Issue (sale)02-02-20101 000965.00Repayment03-02-2010290 000281 300.00Issue (sale)17-02-20105 0004 825.00Issue (sale)15-03-20105 0004 825.00Issue (sale)21-04-201074 00071 410.00Issue (sale)24-05-20101 000965.00Issue (sale)24-05-20102 0001 930.00Issue (sale)02-06-20106 0005 790.00Issue (sale)23-06-201074 00071 410.00Issue (sale)08-07-20104 0003 860.00Issue (sale)16-07-201010 0009 650.00Issue (sale)22-07-201010 0009 650.00Issue (sale)05-08-201027 00026 055.00Issue (sale)11-08-20101 000965.00Issue (sale)12-08-201019 00018 335.00Issue (sale)13-08-201021 00020 265.00Issue (sale)23-08-20107 0006 755.00Issue (sale)25-08-20107 0006 755.00Issue (sale)25-08-2010558 000538 470.00Issue (sale)02-09-20103 0003 895.00Issue (sale)03-09-20107 0006 755.00Issue (sale)20-09-201044 00042 460.00Issue (sale)21-09-201015 00014 475.00Issue (sale)01-10-20102 0001 930.00Issue (sale)19-10-20107 0006 755.00Issue (sale)25-10-201010 0009 650.00Issue (sale)04-11-201010 0009 650.00Issue (sale)07-12-20103 0002 895.00933 000940 915.99Obrigações EMT 2005/2010Repayment30-09-2010382 000382 000.0000.00Open Resident Funds:Infrainvest FEIAIssue (sale)29-12-201098094 979.0560 9805 666 408.18Closed Resident Funds:Fundo de Capital de Risco Capven150401 566.29Banif Renda Habitação10.00010 046 453.00Banif ImogestIssue (sale)29-12-20101 788 53567 150 188.871 788 53567 943 225.29Banif Gestão Imobiliária25 00023 249 245.00_223Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

BANIF - SGPS, S.A.Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações Açoreana TX VR DEZ17950 000950 000.00Obrigações TRADE INV FLT2007/10Final reimbursement30-07-20106 374 0006 136 877.6300.00Obrigações Rentipar Seguros 2010/2015Acquisition18-05-20109 0009 000 000.00Sale31-12-20105 0005 000 000.004 0004 000 000.00Obrigações Banif 08/18 CX SUB546 000546 000.00Investaçor SGPS, SA1 183 9009 376 488.00Habiprede, SA5 0001 250 000.00CSA - Companhia de Seguros Açoreana, SAMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações BANIF BI 07/49 TV 28/05/2049 CALL 2017200 000.00160 808.57Obrigações BANIF 09/19 TV 30/06/20195 000 000.004 530 814.09Obrigações BANIF 09/49 TF/TV 6,25% 30/12/204917 500 000.0017 685 605.98CALL 2014Obrigações BCA 06/16 TV 23/10/2016 CALL 20111 800 000.001 783 981.91Acções BANIF ACOR PENSOES SGFP108 000.001 107 193.81Acções Preferenc. BANIF FINANCE 08/49 TV25 000 000.0025 000 000.0031/12/2049 CALL 2018UP BANIF ACÇÕES PORTUGAL359 721.001 503 885.57UP BANIF CAPITAL INFRASTRUCTURE FUND – FCRBuy30-06-20102 280.0022 800 000.002 400.0022 505 662.80UP BANIF EURO ACÇÕESBuy06-08-2010977 988.001 834 998.981 603 873.002 972 847.05UP BANIF EURO CORPORATEBuy29-12-20109 764.0040 998.06UP BANIF EURO CORPORATEBuy29-12-20102 381.009 997.58UP BANIF EURO CORPORATEBuy29-12-2010952.003 997.5413 097.0055 205.89UP BANIF BANIF IBERIABuy06-08-2010177 185.00917 995.49177 185.00896 272.61UP BANIF EURO OBRIGAÇÕES TAXA FIXASell21-10-20106 000.0039 579.60UP BANIF EURO OBRIGAÇÕES TAXA FIXASell21-12-201035 530.00221 735.62UP BANIF IMOGEST257 879.009 796 359.03UP BANIF IMOPREDIAL5 504.0041 331.18Banif Investimentos, SGPS, SAMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueQuota Espaço Dez11 358.39Acções Banif – Banco de Investimento, SA11 000 00056 878 624.84Acções Banif Comercial, SGPS, SA8 512 00050 220 800.00Acções Banif (Cayman), Ltd26 000 00019 638 078.13Acções Banif Brasil, Ltda120 00054 110.11Acções Banif Securities Holding, Ltd2 1081 475 826.97Acções Banif International Bank, Ltd24 975 00024 975 000.00Acções Banif - Banco de Investimento (Brasil), SAShare capital increase25-06-1022 412 344 11 250 000.00 BRL187 084 57527 006 210.89of BBI BrasilAcções Banif International HoldingsAcquisition of31-12-1015 008 874 15 008 874.15 USD15 008 87411 232 505.73shareholding_224Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Banif Açor Pensões, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/2010Banif - Banco de Investimento 2007-2049 250 000.00Banif International Asset ManagementSecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/2011Acções Banif Multifund, Ltd100 USDNumberone, SGPS, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/2011Acções Banif Finance, Ltd.Share capitalincrease31/12/09 99 000 / 74 090.70 EUR_225Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Banif – Banco Internacional do Funchal (Cayman), LtdMovementsValueCurrencySecurities Position at 31/12/2010Transaction DATE QuantityObrigações BANIF SFE USD MULT ACT 2005/20100,00Final26-02-103 115 000.003 115 000.00USDPTBAFIXE0001reimbursementObrigações BANIF 08/18 CX SUB507 000.00EURPTBAFOXE0003Obrigações CX BCA 2007/2017612 800.00EURPTBCAIXE0004Obrigações BANIF 01/11 CX SUB8 720 000.00EURPTBAFGXE0003EURObrigações CX BCA 2007/20171 488 250.00PTBCAFXE0007Buy – OFBObrigações BANIF FIN FLT DEZ14650 000.00Buy – OFB29-01-10400 000.00360 000.00EURXS0208463306Buy – OFB31-03-1020 000.0018 000.00EURBuy – OFB30-04-1050 000.0044 000.00EURObrigações BANIF FIN FLT DEZ20156 410 000.00Buy – OFB31-03-1030 000.0025 950.00EURXS023980444530-04-10240 000.00199 200.00EURBuy – OFBEURObrigações BANIF FIN FLT NOV100,00Final30-06-1028 018 000.0028 018 000.00EURXS0273479914reimbursement05-11-1028 018 000.0028 018 000.00EURBuy – OFBObrigações BANIF FIN SUB PERP0,00Buy – OFB28-01-1090 000.0063 000.00EURXS0280064204Venda - OFB30-03-105 600 000.003 920 000.00EURBuy – OFB31-08-105 690 000.003 840 750.00EURObrigações BANIF FIN FLT DEZ160,00Buy – OFB26-02-103 000 000.002 400 000.00EURXS0280064469Buy – OFB30-04-105 000 000.004 100 000.00EURSell - OFB25-08-1018 400 000.0013 064 000.00EURBuy – OFB31-08-1026 400 000.00 19 536 000.00 70EURObrigações BANIF FIN FLT PRP3.661.000,00018-05-10100 000.00000.00EURXS0337503154Obrigações BANIF FIN 2009 (USD)683.000,00USDXS0433827994Obrigações BANIF FIN 2009 (EUR)5.735.000,00EURXS0433827994Sell - OFBObrigações BANIF FIN SUB 3% DEZ190,00Sell - OFB19-01-1079 000.0059 250.00EURXS0476077366Sell - OFB20-01-101 330 000.00997 500.00EURSell - OFB21-01-10400 000.00300 000.00EURSell - OFB29-01-1010 000.007 500.00EURSell - OFB17-02-10100 000.0075 000.00EURSell - OFB18-05-1092 000.0069 000.00EURSell - OFB28-05-101 000 000.00750 000.00EUR31-12-1088 853 000.0068 638 942.50EUR_226Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Banif International Bank, Ltd (Bahamas)Movements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações BANIF FIN SUB DEZ14Buy02-11-10274 000246 600.00XS0208463306Buy13-12-10800 000540 000.00Sell31-12-10800 000540 000.00274 000246 600.00Obrigações BANIF FIN SUB 3% DEZ19Buy31-12-1088 853 00068 638 942.5088 853 00068 638 942.50XS0476077366Obrigações BANIF FIN SUB PERPBuy13-12-108 160 0004 630 800.00XS0280064204Sell31-12-108 160 0004 630 800.0000.00Obrigações BANIF FIN FLT DEZ 16Buy13-12-10500 000317 500.00XS0280064469Sell31-12-10500 000317 500.0000.0Banif Holding (Malta) PLCMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueAcções Banif Investimentos, SGPS, PREF.S/VOTO 2 000 10 000.00Banif Bank Malta PLCMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações Banif SGPS 2008/2011PTBNFLOE0002Buy03-02-10290 000281 300.00920 000OBRIGAÇÕES BANIF FIN 6% NOV 13Transfer22-02-103 000 0000.00XS0273479914Final03-11-103 000 0003 000 000.00ReimbursementObrigações BANIF FIN 6% NOV 13Subscription10-12-1010 000 00010 028 330.00XS0568463367Sell20-12-1050 00050 000.00Sell22-12-10545 000545 000.00Sell23-12-10936 000936 000.00Sell27-12-10404 000404 000.00Sell28-12-10112 000112 000.0028-12-10350 000350 000.0029-12-10194 000194 000.0030-12-1050 00050 000.007 359 000Obrigações BANIF FIN 5% NOV13 USDSubscription10-12-1010 000 00010 023 610.00XS0568466030Sell21-12-10208 000208 000.00Sell22-12-10184 000184 000.00Sell23-12-10196 000196 000.00Sell28-12-10216 000216000.009 196 000_227Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Banif Finance LtdMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações Banif Float 30 DEZ 2015Obrigações Banif Float 30 DEZ 2015Obrigações Banif sfe 09 FIT PRPObrigações BIB 6,5% PERP9 3902 73610 00010 0009 390 000.002 257 200.0010 000 000.0010 000 000.00Banif Mais SGPS, SAMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueAcções Banco Mais, SA100 000 000100 000 000.00Acções Tecnicrédico ALD – Aluguer de Automóveis,SA200 0001 000 000.00Quotas Margem – Mediação de Seguros, Lda.36 234.97Acções Banco Pecúnia, SASell 10-02-10 577 256 38 700 000 R$00.00Acções TCC Investmentsb Luxembourg SARL10012 500.00Obrigações de Caixa Subordinadas com JuroSuplementar Banco Mais 2004 / 20112100.00Banco Mais, SAMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueAcções Banif Plus Bank Zártkoruen Mukodo3 000 000 000ReszvenytársaságAmortisation26-03-1028 350 00028 350 000.001 500 000HUFObrigações BMORE 3 Class DPartial22-02-101 104 812.371.104 812.3700AmortisationObrigações BMORE 4 Class EPartial20-05-10959 114.22959 114.22AmortisationPartial20-08-10790 992.68790 992.68AmortisationPartial22-11-10667 458.05667 458.052 391 267.082 391 267.08AmortisationObrigações BMORE 5 Class B41 250 00041 250 000.00Obrigações Atlantres Finance 3 Class CBuy29-07-1016 125 173.0016 125 173.00Obrigações Rentipar Seguros SGPS, SA 2010/2015Buy31-12-101005 000 000.001005 000 000.00_228Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

TCC Investments Luxembourg, SARLMovements Position at 31/12/2010SecuritiesTransactionDate Quantity Value Quantity ValueObrigações BMORE 4 Class D5804 000 000.00Obrigações BMORE 4 Classe EPartial22-02-10473 491.02473 491.02AmortisationPartial20-05-10411 048.95411 048.95AmortisationPartial20-08-10338 996.86338 996.86AmortisationPartial22-11-10286 053.45286 053.451 024 828.751 024 828.75AmortisationObrigações BMORE 5 Class C2 750 0002 750 000.00Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Gestão de Activos, SA400 000Banif Açor Pensões, SA189 000Banif Capital, SABuy22-Jun-1030 000150 000150 000Centro Venture382 500Gamma STC, SA250 000Banif International Asset ManagementUSD 50 000Acções Banif SGPS, SAAcquisition4-Feb-102 5002 950Acções Banif SGPS, SAAcquisition5-Feb-102 5002 775Acções Banif SGPS, SAAcquisition5-Feb-102 5002 700Acções Banif SGPS, SAAcquisition11-Feb-10100 000115 000Acções Banif SGPS, SADisposal11-Feb-1050 00057 500Acções Banif SGPS, SADisposal12-Feb-10284327Acções Banif SGPS, SADisposal15-Feb-1050 00057 500Acções Banif SGPS, SAAcquisition23-Mar-102 8003 220Acções Banif SGPS, SADisposal23-Mar-1010 00011 500Acções Banif SGPS, SAAcquisition30-Mar-102 5002 850Acções Banif SGPS, SAAcquisition1-Apr-102 5002 800Acções Banif SGPS, SAAcquisition9-Apr-103 2503 705Acções Banif SGPS, SAAcquisition9-Apr-109621 097Acções Banif SGPS, SAAcquisition9-Apr-10600684Acções Banif SGPS, SAAcquisition9-Apr-10172196Acções Banif SGPS, SAAcquisition27-Apr-102 5002 525Acções Banif SGPS, SAAcquisition27-Apr-102 3622 386Acções Banif SGPS, SAAcquisition27-Apr-10100101Acções Banif SGPS, SAAcquisition27-Apr-103838Acções Banif SGPS, SAAcquisition28-Apr-101.4211 378Acções Banif SGPS, SAAcquisition28-Apr-103 5793 472Acções Banif SGPS, SAAcquisition28-Apr-101 000960Acções Banif SGPS, SAAcquisition28-Apr-101 000960Acções Banif SGPS, SAAcquisition28-Apr-103 0002 880Acções Banif SGPS, SADisposal30-Apr-105 0004 950Acções Banif SGPS, SAAcquisition5-May-103 0002 580(continued)_229Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Acções Banif SGPS, SAAcquisition6-May-103 0002 430Acções Banif SGPS, SADisposal10-May-103 0002 700Acções Banif SGPS, SADisposal10-May-103 0002 730Acções Banif SGPS, SAAcquisition25-May-10794643Acções Banif SGPS, SAAcquisition25-May-10161130Acções Banif SGPS, SAAcquisition25-May-107158Acções Banif SGPS, SAAcquisition25-May-10241195Acções Banif SGPS, SAAcquisition25-May-101 7331 404Acções Banif SGPS, SADisposal2-Aug-10500455Acções Banif SGPS, SADisposal2-Aug-104 5004 095Acções Banif SGPS, SADisposal3-Aug-105 0005 000Acções Banif SGPS, SAAcquisition10-Aug-105 0004 550Acções Banif SGPS, SAAcquisition19-Aug-10300267Acções Banif SGPS, SAAcquisition19-Aug-102 0001 780Acções Banif SGPS, SAAcquisition19-Aug-102 7002 403Acções Banif SGPS, SAAcquisition23-Aug-101 000860Acções Banif SGPS, SAAcquisition23-Aug-10500430Acções Banif SGPS, SAAcquisition23-Aug-103127Acções Banif SGPS, SAAcquisition23-Aug-10126108Acções Banif SGPS, SAAcquisition23-Aug-10157135Acções Banif SGPS, SAAcquisition23-Aug-109481Acções Banif SGPS, SAAcquisition23-Aug-104740Acções Banif SGPS, SAAcquisition23-Aug-102421Acções Banif SGPS, SAAcquisition23-Aug-101210Acções Banif SGPS, SAAcquisition23-Aug-10316272Acções Banif SGPS, SAAcquisition23-Aug-1010187Acções Banif SGPS, SAAcquisition23-Aug-109279Acções Banif SGPS, SAAcquisition24-Aug-102 5002 125Acções Banif SGPS, SAAcquisition24-Aug-101 2561 068Acções Banif SGPS, SAAcquisition24-Aug-10744632Acções Banif SGPS, SAAcquisition25-Aug-102 5002 050Acções Banif SGPS, SADisposal27-Aug-105 0004 250Acções Banif SGPS, SADisposal27-Aug-102 0001 700Acções Banif SGPS, SADisposal27-Aug-102 5002 125Acções Banif SGPS, SADisposal27-Aug-1011 0009 350Acções Banif SGPS, SADisposal27-Aug-10500425Acções Banif SGPS, SADisposal3-Sep-102 5672 413Acções Banif SGPS, SADisposal3-Sep-102 4332 287Acções Banif SGPS, SAAcquisition7-Sep-10636591Acções Banif SGPS, SAAcquisition7-Sep-107 8647 314Acções Banif SGPS, SAAcquisition8-Sep-10149139Acções Banif SGPS, SAAcquisition8-Sep-104 8514 511Acções Banif SGPS, SAAcquisition9-Sep-102 4102 217Acções Banif SGPS, SAAcquisition9-Sep-101 2731 171Acções Banif SGPS, SAAcquisition9-Sep-101 3171 212(continued)_230Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Acções Banif SGPS, SADisposal10-Sep-104 1893 938Acções Banif SGPS, SADisposal10-Sep-10811762Acções Banif SGPS, SAAcquisition13-Sep-104 2094 041Acções Banif SGPS, SAAcquisition13-Sep-10791759Acções Banif SGPS, SADisposal13-Sep-101 9421 923Acções Banif SGPS, SADisposal13-Sep-10600594Acções Banif SGPS, SADisposal13-Sep-102 4582 433Acções Banif SGPS, SADisposal13-Sep-105 0004 900Acções Banif SGPS, SADisposal13-Sep-105 0004 950Acções Banif SGPS, SADisposal13-Sep-105 0004 900Acções Banif SGPS, SADisposal13-Sep-102 5002 450Acções Banif SGPS, SADisposal14-Sep-1010 0009 700Acções Banif SGPS, SADisposal14-Sep-1010 0009 900Acções Banif SGPS, SAAcquisition17-Sep-105 0005 150Acções Banif SGPS, SAAcquisition17-Sep-102 5002 550Acções Banif SGPS, SAAcquisition17-Sep-102 5002 525Acções Banif SGPS, SAAcquisition20-Sep-102 0002 000Acções Banif SGPS, SAAcquisition20-Sep-105 0004 850Acções Banif SGPS, SAAcquisition20-Sep-103 0002 910Acções Banif SGPS, SAAcquisition20-Sep-102 0001 940Acções Banif SGPS, SAAcquisition20-Sep-10500485Acções Banif SGPS, SAAcquisition20-Sep-102 5002 400Acções Banif SGPS, SAAcquisition20-Sep-102 5002 375Acções Banif SGPS, SAAcquisition20-Sep-1040 00038 000Acções Banif SGPS, SAAcquisition20-Sep-102 5002 350Acções Banif SGPS, SADisposal22-Sep-105 0004 850Acções Banif SGPS, SADisposal22-Sep-105 0004 900Acções Banif SGPS, SADisposal23-Sep-104 0003 960Acções Banif SGPS, SADisposal23-Sep-10814806Acções Banif SGPS, SADisposal23-Sep-107 0006 930Acções Banif SGPS, SADisposal23-Sep-10686672Acções Banif SGPS, SADisposal23-Sep-1010 0009 900Acções Banif SGPS, SADisposal23-Sep-10814814Acções Banif SGPS, SADisposal23-Sep-109 1869 186Acções Banif SGPS, SAAcquisition23-Sep-103 0002 940Acções Banif SGPS, SAAcquisition23-Sep-109 5009 310Acções Banif SGPS, SADisposal23-Sep-105 0004 950Acções Banif SGPS, SADisposal27-Sep-10746746Acções Banif SGPS, SADisposal27-Sep-10504504Acções Banif SGPS, SADisposal27-Sep-103 2503 250Acções Banif SGPS, SADisposal27-Sep-103 0003 000Acções Banif SGPS, SADisposal29-Sep-105 0005 200Acções Banif SGPS, SAAcquisition29-Sep-101 5181 548Acções Banif SGPS, SAAcquisition29-Sep-103 0003 060Acções Banif SGPS, SAAcquisition29-Sep-10480490(continued)_231Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Acções Banif SGPS, SAAcquisition29-Sep-1022Acções Banif SGPS, SAAcquisition30-Sep-102 1902 212Acções Banif SGPS, SAAcquisition30-Sep-104 4554 500Acções Banif SGPS, SAAcquisition30-Sep-103 3553 389Acções Banif SGPS, SADisposal1-Oct-1010 00010 300Acções Banif SGPS, SAAcquisition5-Oct-1010 00010 500Acções Banif SGPS, SADisposal6-Oct-105 0005 350Acções Banif SGPS, SADisposal6-Oct-102 5002 675Acções Banif SGPS, SADisposal6-Oct-102 5002 675Acções Banif SGPS, SADisposal8-Oct-105 0005 500Acções Banif SGPS, SADisposal8-Oct-1010 00011 100Acções Banif SGPS, SADisposal8-Oct-102 5002 800Acções Banif SGPS, SADisposal8-Oct-105 0005 600Acções Banif SGPS, SADisposal8-Oct-102 4372 778Acções Banif SGPS, SADisposal8-Oct-102 4372 778Acções Banif SGPS, SADisposal8-Oct-10126144Acções Banif SGPS, SAAcquisition11-Oct-10375450Acções Banif SGPS, SAAcquisition11-Oct-101 2611 513Acções Banif SGPS, SAAcquisition11-Oct-103 8604 632Acções Banif SGPS, SAAcquisition11-Oct-10640768Acções Banif SGPS, SAAcquisition11-Oct-104 1624 870Acções Banif SGPS, SAAcquisition11-Oct-10838980Acções Banif SGPS, SAAcquisition11-Oct-10500600Acções Banif SGPS, SAAcquisition11-Oct-103 3644 037Acções Banif SGPS, SAAcquisition14-Oct-101 0931 279Acções Banif SGPS, SAAcquisition14-Oct-101 4071 646Acções Banif SGPS, SAAcquisition25-Oct-102 5002 775Acções Banif SGPS, SAAcquisition26-Oct-10500525Acções Banif SGPS, SAAcquisition26-Oct-102 0002 100Acções Banif SGPS, SADisposal27-Oct-10594624Acções Banif SGPS, SADisposal27-Oct-101 4671 540Acções Banif SGPS, SADisposal27-Oct-105 5335 810Acções Banif SGPS, SADisposal27-Oct-101 0001 050Acções Banif SGPS, SADisposal27-Oct-103 4673 640Acções Banif SGPS, SADisposal27-Oct-105 0005 250Acções Banif SGPS, SADisposal27-Oct-102 9393 086Acções Banif SGPS, SADisposal28-Oct-101 1461 203Acções Banif SGPS, SADisposal28-Oct-101 3541 422Acções Banif SGPS, SAAcquisition2-Nov-10103108Acções Banif SGPS, SAAcquisition2-Nov-102 3972 517Acções Banif SGPS, SAAcquisition2-Nov-101 0001 040Acções Banif SGPS, SAAcquisition2-Nov-101 5001 560Acções Banif SGPS, SAAcquisition10-Nov-102 1342 049Acções Banif SGPS, SAAcquisition10-Nov-10366351Acções Banif SGPS, SADisposal17-Nov-102 5002 475(continued)_232Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Acções Banif SGPS, SADisposal15-Dec-102 5002 450Acções Banif SGPS, SAAcquisition23-Dec-102 5002 275Acções Banif SGPS, SAAcquisition31-Dec-102 5002 17510 000Banif 2005 /2010 Eur MultiactivosReimbursement26-Feb-10509 000509 000Banif 2005 /2010 Eur MultiactivosReimbursement26-Feb-101 750 0001 750 0000Banif - Banco de Investimento 2007-2049Buy1-Apr-102 805 0002 816 220Banif - Banco de Investimento 2007-2049Sell1-Apr-102 805 0002 816 220Banif - Banco de Investimento 2007-2049Sell30-Apr-102 805 0002 806 122Banif - Banco de Investimento 2007-2049Buy30-Apr-102 805 0002 806 122Banif - Banco de Investimento 2007-2049Sell30-Apr-102 805 0002 806 403Banif - Banco de Investimento 2007-2049Buy3-May-102 805 0002 806 403Banif - Banco de Investimento 2007-2049Sell28-May-101 000 000800 000Banif - Banco de Investimento 2007-2049Sell31-May-103 805 0003 785 975Banif - Banco de Investimento 2007-2049Buy31-May-103 805 0003 785 975Banif - Banco de Investimento 2007-2049Buy1-Jun-103 805 0003 786 356Banif - Banco de Investimento 2007-2049Sell1-Jun-103 805 0003 786 356Banif - Banco de Investimento 2007-2049Sell14-Jun-1010 0008 000Banif - Banco de Investimento 2007-2049Sell24-Jun-1010 0008 000Banif - Banco de Investimento 2007-2049Buy24-Jun-103 825 0003 802 352Banif - Banco de Investimento 2007-2049Sell24-Jun-103 825 0003 802 352Banif - Banco de Investimento 2007-2049Sell5-Jul-103 825 0003 802 352Banif - Banco de Investimento 2007-2049Buy5-Jul-103 825 0003 802 352Banif - Banco de Investimento 2007-2049Buy23-Jul-103 825 0003 786 750Banif - Banco de Investimento 2007-2049Sell26-Jul-103 825 0003 786 7500Banif Finance Cayman 2006-2010Sell18-Mar-10125 000123 138Banif Finance Cayman 2006-2010Sell18-Mar-10125 000123 125Banif Finance Cayman 2006-2010Sell28-Oct-101 000 000999 500Banif Finance Cayman 2006-2010Reimbursement3-Nov-1012 00012 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-101 093 0001 093 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10605 000605 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10174 000174 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-1010 00010 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-106 0006 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10207 000207 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10126 000126 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10225 000225 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-102 0002 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10100 000100 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-10525 000525 000Banif Finance Cayman 2006-2010Reimbursement3-Nov-108 0008 0000Banif Finance 2006-2016Buy19-Feb-103 000 0002 250 000Banif Finance 2006-2016Sell26-Feb-103 000 0002 400 000Banif Finance 2006-2016Sell29-Apr-105 000 0004 000 000Banif Finance 2006-2016Buy30-Apr-105 000 0004 100 000Banif Finance 2006-2016Sell20-Aug-1018 400 00013 064 000(continued)_233Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Finance 2006-2016Sell25-Aug-1018 400 00013 064 000Banif Finance 2006-2016Buy8-Dec-10500 000315 000Banif Finance 2006-2016Sell13-Dec-10500 000317 5000Banif Finance Cayman 2004-2014Buy18-Jan-10400 000354 200Banif Finance Cayman 2004-2014Sell29-Jan-10400 000360 000Banif Finance Cayman 2004-2014Buy12-Mar-1020 00017 600Banif Finance Cayman 2004-2014Sell31-Mar-1020 00018 000Banif Finance Cayman 2004-2014Buy21-Apr-1050 00044 000Banif Finance Cayman 2004-2014Sell30-Apr-1050 00044 000Banif Finance Cayman 2004-2014Buy8-Dec-10800 000536 000Banif Finance Cayman 2004-2014Sell13-Dec-10800 000540 000Banif Finance Cayman 2004-2014Buy15-Dec-101 473 000994 275Banif Finance Cayman 2004-2014Buy20-Dec-10750 000510 000Banif Finance Cayman 2004-2014Buy23-Dec-102 000 0001 300 000Banif Finance Cayman 2004-2014Sell30-Dec-104 223 0002 821 8090Banif Finance Cayman 2004-2049Buy16-Nov-1066 00031 680Banif Finance Cayman 2004-2049Buy16-Dec-10154 00077 000Banif Finance Cayman 2004-2049Buy16-Dec-10284 000142 000Banif Finance Cayman 2004-2049Buy20-Dec-102 050 0001 096 750Banif Finance Cayman 2004-2049Sell30-Dec-102 754 0001 450 532Banif Finance Cayman 2004-2049Buy29-Dec-10200 000100 0000Banif Finance Cayman 2006-2049Buy19-Jan-1090 00063 000Banif Finance Cayman 2006-2049Sell28-Jan-1090 00063 000Banif Finance Cayman 2006-2049Buy30-Mar-105 600 0003 808 000Banif Finance Cayman 2006-2049Sell30-Mar-105 600 0003 920 000Banif Finance Cayman 2006-2049Buy17-Set-10100 00048 000Banif Finance Cayman 2006-2049Buy11-Oct-1050 00024 000Banif Finance Cayman 2006-2049Buy19-Oct-1050 00024 000Banif Finance Cayman 2006-2049Buy17-Nov-1030 00014 400Banif Finance Cayman 2006-2049Buy13-Dec-1030 00016 941Banif Finance Cayman 2006-2049Sell13-Dec-108 160 0004 630 800Banif Finance Cayman 2006-2049Buy13-Dec-107 900 0004 461 106Banif Finance Cayman 2006-2049Buy22-Dec-101 255 000709 075Banif Finance Cayman 2006-2049Sell30-Dec-101 765 0001 006 050Banif Finance Cayman 2006-2049Buy30-Dec-10510 000288 1500Banif SA 2005-2010Buy12-Mar-1030 00025 650Banif SA 2005-2010Sell31-Mar-1030 00025 950Banif SA 2005-2010Buy21-Apr-1040 00034 000Banif SA 2005-2010Buy27-Apr-10200 000160 000Banif SA 2005-2010Sell30-Apr-10240 000199 200Banif SA 2005-2010Buy15-Dec-101 100 000737 000Banif SA 2005-2010Buy15-Dec-102 576 0001 687 280Banif SA 2005-2010Buy20-Dec-104 000 0002 680 000Banif SA 2005-2010Buy23-Dec-1060 00040 200Banif SA 2005-2010Sell30-Dec-107 736 0005 183 1200(continued)_234Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Investimento Brasil 2009-2010Buy7-Jan-10151 500149 985Banif Investimento Brasil 2009-2010Sell7-Jan-10151 500149 985Banif Investimento Brasil 2009-2010Sell15-Feb-1021 00020 877Banif Investimento Brasil 2009-2010Sell15-Feb-1020 50020 442Banif Investimento Brasil 2009-2010Sell15-Feb-1082 00081 911Banif Investimento Brasil 2009-2010Sell15-Feb-107 0006 985Banif Investimento Brasil 2009-2010Sell15-Feb-1099 50099 404Banif Investimento Brasil 2009-2010Sell15-Feb-1014 00013 917Banif Investimento Brasil 2009-2010Sell15-Feb-1085 50085 407Banif Investimento Brasil 2009-2010Sell15-Feb-1025 50025 402Banif Investimento Brasil 2009-2010Sell15-Feb-1079 00078 857Banif Investimento Brasil 2009-2010Sell15-Feb-1018 00017 881Banif Investimento Brasil 2009-2010Sell15-Feb-1080 00079 902Banif Investimento Brasil 2009-2010Sell15-Feb-10109 000108 472Banif Investimento Brasil 2009-2010Sell15-Feb-1041 00040 912Banif Investimento Brasil 2009-2010Sell15-Feb-10291 000290 605Banif Investimento Brasil 2009-2010Sell15-Feb-10259 000258 024Banif Investimento Brasil 2009-2010Sell15-Feb-10520 000517 832Banif Investimento Brasil 2009-2010Sell15-Feb-10102 500102 382Banif Investimento Brasil 2009-2010Sell15-Feb-10101 000100 858Banif Investimento Brasil 2009-2010Buy15-Feb-1087 00086 691Banif Investimento Brasil 2009-2010Sell15-Feb-10209 000208 035Banif Investimento Brasil 2009-2010Buy15-Feb-10109 000108 472Banif Investimento Brasil 2009-2010Buy15-Feb-10520 000517 832Banif Investimento Brasil 2009-2010Buy15-Feb-10156 000155 318Banif Investimento Brasil 2009-2010Buy15-Feb-1036 00035 854Banif Investimento Brasil 2009-2010Buy15-Feb-10209 000208 035Banif Investimento Brasil 2009-2010Buy15-Feb-10107 500106 986Banif Investimento Brasil 2009-2010Buy15-Feb-10308 000307 165Banif Investimento Brasil 2009-2010Buy15-Feb-10101 000100 858Banif Investimento Brasil 2009-2010Buy15-Feb-1035 00034 841Banif Investimento Brasil 2009-2010Sell15-Feb-1037 50037 338Banif Investimento Brasil 2009-2010Buy15-Feb-1052 50052 189Banif Investimento Brasil 2009-2010Buy15-Feb-10105 000104 858Banif Investimento Brasil 2009-2010Buy15-Feb-1051 50051 306Banif Investimento Brasil 2009-2010Buy15-Feb-1051 00050 945Banif Investimento Brasil 2009-2010Buy15-Feb-1020 00019 867Banif Investimento Brasil 2009-2010Buy15-Feb-1067 50067 164Banif Investimento Brasil 2009-2010Buy15-Feb-1050 00049 668Banif Investimento Brasil 2009-2010Sell15-Feb-1012 50012 455Banif Investimento Brasil 2009-2010Buy15-Feb-1052 50052 189Banif Investimento Brasil 2009-2010Sell15-Feb-1067 50067 164Banif Investimento Brasil 2009-2010Sell15-Feb-10156 000155 318Banif Investimento Brasil 2009-2010Sell15-Feb-1052 50052 189Banif Investimento Brasil 2009-2010Sell15-Feb-1035 00034 841(continued)_235Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Investimento Brasil 2009-2010Sell15-Feb-1087 00086 691Banif Investimento Brasil 2009-2010Sell15-Feb-1052 50052 189Banif Investimento Brasil 2009-2010Sell15-Feb-10105 000104 858Banif Investimento Brasil 2009-2010Sell15-Feb-1051 50051 306Banif Investimento Brasil 2009-2010Sell15-Feb-10107 500106 986Banif Investimento Brasil 2009-2010Sell15-Feb-1020 00019 867Banif Investimento Brasil 2009-2010Buy15-Feb-1080 00079 902Banif Investimento Brasil 2009-2010Sell15-Feb-10254 500253 979Banif Investimento Brasil 2009-2010Buy15-Feb-1052 50052 235Banif Investimento Brasil 2009-2010Sell15-Feb-1052 50052 235Banif Investimento Brasil 2009-2010Sell15-Feb-1051 00050 945Banif Investimento Brasil 2009-2010Sell15-Feb-1055 00054 771Banif Investimento Brasil 2009-2010Sell15-Feb-1050 00049 668Banif Investimento Brasil 2009-2010Sell15-Feb-1042 00041 751Banif Investimento Brasil 2009-2010Sell15-Feb-1029 00028 948Banif Investimento Brasil 2009-2010Sell15-Feb-1038 00037 775Banif Investimento Brasil 2009-2010Sell15-Feb-1023 00022 864Banif Investimento Brasil 2009-2010Sell15-Feb-10110 000109 541Banif Investimento Brasil 2009-2010Sell15-Feb-1044 00043 739Banif Investimento Brasil 2009-2010Sell15-Feb-10308 000307 165Banif Investimento Brasil 2009-2010Sell15-Feb-1090 50090 053Banif Investimento Brasil 2009-2010Sell15-Feb-10205 000204 468Banif Investimento Brasil 2009-2010Sell15-Feb-1052 00051 758Banif Investimento Brasil 2009-2010Sell15-Feb-10158 000157 705Banif Investimento Brasil 2009-2010Sell15-Feb-1082 50082 363Banif Investimento Brasil 2009-2010Sell15-Feb-10179 500178 474Banif Investimento Brasil 2009-2010Sell15-Feb-10104 000103 557Banif Investimento Brasil 2009-2010Sell15-Feb-108 0007 960Banif Investimento Brasil 2009-2010Sell15-Feb-10209 000208 003Banif Investimento Brasil 2009-2010Sell15-Feb-1036 00035 854Banif Investimento Brasil 2009-2010Sell15-Feb-1025 00024 953Banif Investimento Brasil 2009-2010Buy12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Buy12-Feb-10205 000204 423Banif Investimento Brasil 2009-2010Buy12-Feb-10303 000302 593Banif Investimento Brasil 2009-2010Buy12-Feb-10186 000185 238Banif Investimento Brasil 2009-2010Buy12-Feb-10197 500196 513Banif Investimento Brasil 2009-2010Buy12-Feb-1050 50050 398Banif Investimento Brasil 2009-2010Buy12-Feb-10432 000429 248Banif Investimento Brasil 2009-2010Buy12-Feb-1097 50097 283Banif Investimento Brasil 2009-2010Buy12-Feb-1047 50047 378Banif Investimento Brasil 2009-2010Buy12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Sell12-Feb-10101 500101 304Banif Investimento Brasil 2009-2010Buy12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Buy12-Feb-10175 500174 558Banif Investimento Brasil 2009-2010Buy12-Feb-1036 50036 318(continued)_236Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Investimento Brasil 2009-2010Buy12-Feb-1023 50023 374Banif Investimento Brasil 2009-2010Buy12-Feb-10101 500101304Banif Investimento Brasil 2009-2010Buy12-Feb-10426 000423 243Banif Investimento Brasil 2009-2010Buy12-Feb-10110 500110 376Banif Investimento Brasil 2009-2010Buy12-Feb-10153 500153 068Banif Investimento Brasil 2009-2010Sell12-Feb-1097 50097 283Banif Investimento Brasil 2009-2010Buy15-Feb-1018 00017 881Banif Investimento Brasil 2009-2010Sell12-Feb-10107 500107 223Banif Investimento Brasil 2009-2010Sell12-Feb-1047 50047 378Banif Investimento Brasil 2009-2010Sell12-Feb-1041 00040 891Banif Investimento Brasil 2009-2010Sell12-Feb-10147 000146 831Banif Investimento Brasil 2009-2010Sell12-Feb-1050 00049 668Banif Investimento Brasil 2009-2010Sell12-Feb-10197 500196 513Banif Investimento Brasil 2009-2010Sell12-Feb-10110 500110 376Banif Investimento Brasil 2009-2010Sell12-Feb-10432 000429 248Banif Investimento Brasil 2009-2010Sell12-Feb-10426 000423 243Banif Investimento Brasil 2009-2010Sell12-Feb-10153 500153 068Banif Investimento Brasil 2009-2010Sell12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Sell12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Sell12-Feb-10204 000203 471Banif Investimento Brasil 2009-2010Sell12-Feb-10175 500174 558Banif Investimento Brasil 2009-2010Sell12-Feb-1036 50036 318Banif Investimento Brasil 2009-2010Sell12-Feb-1023 50023 374Banif Investimento Brasil 2009-2010Buy12-Feb-1041 00040 891Banif Investimento Brasil 2009-2010Sell12-Feb-1050 50050 398Banif Investimento Brasil 2009-2010Buy15-Feb-10158 000157705Banif Investimento Brasil 2009-2010Buy15-Feb-1042 00041 751Banif Investimento Brasil 2009-2010Buy12-Feb-10107 500107 223Banif Investimento Brasil 2009-2010Buy15-Feb-1038 00037 775Banif Investimento Brasil 2009-2010Buy15-Feb-1023 00022 864Banif Investimento Brasil 2009-2010Buy15-Feb-10110 000109 541Banif Investimento Brasil 2009-2010Buy15-Feb-1044 00043 739Banif Investimento Brasil 2009-2010Buy15-Feb-1025 00024 953Banif Investimento Brasil 2009-2010Buy15-Feb-1090 50090 053Banif Investimento Brasil 2009-2010Buy12-Feb-10147 000146 831Banif Investimento Brasil 2009-2010Buy15-Feb-1052 00051 758Banif Investimento Brasil 2009-2010Buy15-Feb-1050 00049 668Banif Investimento Brasil 2009-2010Buy15-Feb-1082 50082 363Banif Investimento Brasil 2009-2010Buy15-Feb-10179 500178 474Banif Investimento Brasil 2009-2010Buy15-Feb-10104 000103 557Banif Investimento Brasil 2009-2010Buy15-Feb-108 0007 960Banif Investimento Brasil 2009-2010Buy15-Feb-10209 000208 003Banif Investimento Brasil 2009-2010Buy15-Feb-1037 50037 338Banif Investimento Brasil 2009-2010Buy15-Feb-1085 50085407Banif Investimento Brasil 2009-2010Buy15-Feb-1021 00020 877(continued)_237Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Investimento Brasil 2009-2010Buy15-Feb-1055 00054 771Banif Investimento Brasil 2009-2010Buy15-Feb-1020 50020 442Banif Investimento Brasil 2009-2010Sell15-Feb-1052 00051 782Banif Investimento Brasil 2009-2010Buy15-Feb-10291 000290 605Banif Investimento Brasil 2009-2010Buy15-Feb-1052 00051 782Banif Investimento Brasil 2009-2010Buy15-Feb-1029 00028 948Banif Investimento Brasil 2009-2010Buy15-Feb-1079 00078 857Banif Investimento Brasil 2009-2010Buy15-Feb-10205 000204 468Banif Investimento Brasil 2009-2010Buy15-Feb-1082 00081 911Banif Investimento Brasil 2009-2010Buy15-Feb-1099 50099 404Banif Investimento Brasil 2009-2010Buy15-Feb-1014 00013 917Banif Investimento Brasil 2009-2010Buy15-Feb-1025 50025 402Banif Investimento Brasil 2009-2010Buy15-Feb-1041 00040 912Banif Investimento Brasil 2009-2010Buy15-Feb-10259 000258 024Banif Investimento Brasil 2009-2010Buy15-Feb-10254 500253 979Banif Investimento Brasil 2009-2010Buy15-Feb-107 0006 985Banif Investimento Brasil 2009-2010Buy15-Feb-10102 500102 382Banif Investimento Brasil 2009-2010Buy15-Feb-1012 50012 455Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1050 00050 000Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1050 00050 000Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1020 50020 500Banif Investimento Brasil 2009-2010Reimbursement17-Feb-10155 500155 500Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1075 50075 500Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1056 00056 000Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1040 50040 500Banif Investimento Brasil 2009-2010Reimbursement17-Feb-108 862 5008 862 500Banif Investimento Brasil 2009-2010Reimbursement17-Feb-106 0006 000Banif Investimento Brasil 2009-2010Reimbursement17-Feb-10303 000303 000Banif Investimento Brasil 2009-2010Reimbursement17-Feb-1015 00015 000Banif SA 2009-2019Sell18-Jan-1015 00015 000Banif SA 2009-2019Sell20-Jan-10115 000115 000Banif SA 2009-2019Sell20-Jan-1065 00065 000Banif SA 2009-2019Sell22-Jan-10131 000131 000Banif SA 2009-2019Sell22-Jan-1015 00015 000Banif SA 2009-2019Sell22-Jan-1051 00051 000Banif SA 2009-2019Sell21-Jan-10124 000124 000Banif SA 2009-2019Sell22-Jan-1027 00027 000Banif SA 2009-2019Sell22-Jan-10111 000111 000Banif SA 2009-2019Sell25-Jan-1011 00011 000Banif SA 2009-2019Sell26-Jan-1066 00066 000Banif SA 2009-2019Sell27-Jan-1012 00012 000Banif SA 2009-2019Sell27-Jan-1012 00012 000Banif SA 2009-2019Sell28-Jan-1015 00015 000Banif SA 2009-2019Sell28-Jan-1060 00060 000Banif SA 2009-2019Sell28-Jan-1024 00024 000(continued)_238Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif SA 2009-2019Sell29-Jan-1013 00013 000Banif SA 2009-2019Sell29-Jan-106 0006 000Banif SA 2009-2019Sell29-Jan-1030 00030 000Banif SA 2009-2019Sell1-Feb-1013 00013 000Banif SA 2009-2019Sell1-Feb-1053 00053 000Banif SA 2009-2019Sell1-Feb-1026 00026 000Banif SA 2009-2019Sell4-Feb-104 0004 000Banif SA 2009-2019Sell18-Feb-1025 00025 000Banif SA 2009-2019Sell19-Feb-10141 000141 000Banif SA 2009-2019Sell23-Feb-1020 00020 000Banif SA 2009-2019Sell2-Mar-105 0005 000Banif SA 2009-2019Sell3-Mar-1050 00050 000Banif SA 2009-2019Sell12-Mar-104 0004 000Banif SA 2009-2019Sell16-Mar-101 0001 000Banif SA 2009-2019Sell22-Mar-1020 00020 0000Banif Cayman - Acções Sector Financeiro2008/2010Buy17-Feb-1030 00028 800Banif Cayman - Acções Sector Financeiro2008/2010Buy22-Apr-1040 00038 980Banif Cayman - Acções Sector Financeiro2008/2010Reimbursement28-Oct-10210 000210 0000Banif SGPS 2009-2012Buy10-Feb-1018 400 00018 694 400Banif SGPS 2009-2012Buy11-Feb-1018 400 00018 699 920Banif SGPS 2009-2012Sell26-Mar-10300 000306 150Banif SGPS 2009-2012Sell30-Mar-101 000 0001 021 160Banif SGPS 2009-2012Buy29-Apr-101 000 000955 400Banif SGPS 2009-2012Buy30-Apr-1010 000 0009 880 000Banif SGPS 2009-2012Buy30-Apr-101 000 000988 500Banif SGPS 2009-2012Buy30-Apr-101 000 000974 800Banif SGPS 2009-2012Buy5-May-102 000 0001 906 800Banif SGPS 2009-2012Sell6-May-1020 000 00019 550 000Banif SGPS 2009-2012Buy6-May-101 000 000969 410Banif SGPS 2009-2012Buy6-May-102 000 0001 926 000Banif SGPS 2009-2012Buy6-May-102 000 0001 938 820Banif SGPS 2009-2012Buy4-Jun-1020 000 00019 550 000Banif SGPS 2009-2012Buy11-Nov-1011 086 00010 587 13048 186 000Banif Finance 2009-2019Sell20-Jan-1030 00022 500Banif Finance 2009-2019Buy20-Jan-101 330 000997 500Banif Finance 2009-2019Sell19-Jan-101 300 000975 000Banif Finance 2009-2019Buy20-Jan-1030 00022 500Banif Finance 2009-2019Buy29-Jan-1010 0007 500Banif Finance 2009-2019Sell29-Jan-1010 0007 500Banif Finance 2009-2019Buy29-Jan-1010 0007 500Banif Finance 2009-2019Sell28-May-101 000 000800 000Banif Finance 2009-2019Buy28-May-101 000 000750 000(continued)_239Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(continued)Banif - Banco de Investimento, SASecuritiesTransactionMovementsDate Quantity ValueQuantity/Nominal Value at31/12/10Banif Finance 2009-2019Sell13-Sep-1092 00069 000Banif Finance 2009-2019Buy13-Sep-1092 00069 000Banif Finance 2009-2019Sell13-Sep-1010 0007 500Banif Finance 2009-2019Buy13-Sep-1010 0007 500Banif Finance 2009-2019Sell13-Sep-1010 0007 5500Banif Cayman - USD creditos Brasil2008/2010Sell18-Jan-1020 00020 0000Banif SA 2008-2018Buy31-Dec-105 0005 000Banif SA 2008-2018Buy31-Dec-105 0005 00010 000Euro Invest Ltd Euro I 5 12/29/49Sell18-Jan-1060 00060 000Euro Invest Ltd Euro I 5 12/29/49Buy7-May-1025 00024 225Euro Invest Ltd Euro I 5 12/29/49Buy13-Aug-10200 000194 000Euro Invest Ltd Euro I 5 12/29/49Sell30-Aug-10180 000180 000Euro Invest Ltd Euro I 5 12/29/49Buy29-Dec-10250 000232 500USD 296 000Trade Invest LTD Var 06/11Buy19-Feb-102 0001 934Trade Invest LTD Var 06/11Buy12-Mar-1055 00053 350Trade Invest LTD Var 06/11Sell16-Mar-10430 000417 323Trade Invest LTD Var 06/11Buy25-Mar-10430 000417 219Trade Invest LTD Var 06/11Sell26-Mar-10430 000417 219Trade Invest LTD Var 06/11Buy15-Apr-1015 00014 550Trade Invest LTD Var 06/11Sell6-May-1075 00072 885Trade Invest LTD Var 06/11Buy20-May-105 0004 843Trade Invest LTD Var 06/11Buy17-Jun-1075 00072 742Trade Invest LTD Var 06/11Sell17-Jun-1075 00072 742Trade Invest LTD Var 06/11Sell22-Jun-10250 000245 000Trade Invest LTD Var 06/11Buy24-Jun-1060 00058 050Trade Invest LTD Var 06/11Buy25-Jun-1016 00015 480Trade Invest LTD Var 06/11Buy21-Jul-1040 00038 700Trade Invest LTD Var 06/11Buy6-Aug-1020 00019 300Trade Invest LTD Var 06/11Buy9-Aug-105 0004 825Trade Invest LTD Var 06/11Buy13-Aug-105 0004 825Trade Invest LTD Var 06/11Buy28-Oct-1025 00024 250Trade Invest LTD Var 06/11Buy28-Oct-102 0001 940742 000_240Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.3. management positions in other companies heldby MEMBERS of the BOARD OF DIRECTORS as at 31/12/10Joaquim Filipe Marques dos SantosChairman of the Board of Directors– Banif – Banco Internacional do Funchal (Cayman), Ltd.,– Banif GO, Instituição Financeira de Crédito, SA,– Banif Rent – Aluguer, Gestão e Comércio de veículos Automóveis, SA– Banif International Bank, Ltd.– Banif – SGPS, SA (2)– Banif - Banco de Investimento (Brasil), SA– Banif – Corretora de valores e Câmbio, SA– Banco Mais, SA– Companhia de Seguros Açoreana, SA– Global – Companhia de Seguros, SA– Global vida – Companhia de Seguros de vida, SA– Banif – Banco Internacional do Funchal (Brasil), SA– Banif (Açores) - Company Gestora de Participações Sociais, SA– Banif – Banco Internacional do Funchal, SA (2)– Banif Comercial, SGPS, SA– Banif – Investimentos - SGPS, SA– Banif International holdings, Ltd. (Grand Cayman)Chairman of the Audit Board– Banif Plus Bank Co, Ltd. (previously Bank Plus Bank Close Inc.) – Budapest, HungaryChairman of the General Meeting of Shareholders and member of the RemunerationsCommittee in representation of BANIF-SGPS, SA:– BCN - BANCO CABOVERDIANO DE NEGÓCIOS, SA,Member of the Remunerations Committee of the following companies, inrepresentation of Banif – Banco Internacional do Funchal SA:– Banif Açor Pensões – Company Gestora de Fundos de Pensões SA– Banif Gestão de Activos – SGFIM SA– Banif Capital – Sociedade de Capital de Risco, SAPositions held with other entities:– Chairman of the Board of Directors of CENTAURUS REALTY GROUP – InvestimentosImobiliários, S.A.– Member of CONSELHO ECONÓMICO E SOCIAL (CES), in representation of AssociaçãoPortuguesa de Bancos– Member of the Council of Governors of St. Dominic’s International School._241Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Artur Manuel da Silva FernandesChairman of the Board of Directors– Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banif Capital – Sociedade de Capital de Risco, S.A.– Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A.– Gamma – Sociedade de Titularização de Créditos, S.A.– Banif Multifund, Ltd.– Banif International Asset Management, Ltd.– Banif Securities, Inc.– Banif Securities holdings, Ltd.– Econofinance, S.A.– Banif Gestão de Ativos (Brasil), S.A.– Inverpyme SCR de Regimen Comun, S.A.– Banif Ecoprogresso Trading, S.A. - Beta Securitizadora SAVice-Chairman of the Board of Directors– Centro venture – Sociedade de Capital de Risco, S.A.– Banco de la Pequeña y Mediana Empresa, S.A.– Centauros Realty Group Investimentos Imobiliários S.A.– Banif - Banco de Investimento (Brasil), S.A.Member of the Board of Directors– Banif – Banco Internacional do Funchal (Brasil), S.A.– Banif Corretora de valores e Câmbio, S.A.– Banif S.G.P.S., S.A.– Banif Investimentos – S.G.P.S., S.A.– Banif Financial Services Inc.– Fomentinvest – S.G.P.S., S.A.– Banif Bank (Malta) PLCAs at 31 December 2010, in representation of Banif - Banco de Investimento S.A., he wasalso a member of the Board of Câmara de Comércio e Industria Luso – Brasileira.Nuno José Roquette TeixeiraMember of the Board of Directors– Banif SGPS SA– Banif – Banco Internacional do Funchal SA– Banif Securities, Inc.– Banif - Banco de Investimento (Brasil), S.A.– Banif – Corretora de valores e Câmbio, S.A.– Banieuropa holding, S.L., Sociedade unipessoal– Banif Finance, Ltd._242Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

José Paulo Baptista FontesChairman of the General Meeting– Sociedade Ponta Oeste, S.A.Raul Manuel Nunes da Costa Simões MarquesChairman of the Board of Directors– GestArquipark - Sociedade Imobiliária, S.A.Vice-Chairman of the Board of Directors– Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A.– Banif Capital – Sociedade de Capital de Risco, S.A.– Aplicação urbana xIII Investimento Imobiliário S.A.– GCC Lisboa – Gestão de Centros Comerciais, S.A.– Aplicação urbana xIv – Investimento Imobiliário, S.A.Vice-Chairman of the Executive Board and Member of the Board of Directors– Banco de la Pequeña y Mediana Empresa, S.A.– Banif - Banco de Investimento, S.A.Member of the Board of Directors:– Banif MultiFund, Ltd.– Banif International Asset Management, Ltd.– Banif - Banco de Investimento (Brasil), S.A.– Banif Corretora de valores e Câmbio, S.A.– Banif Gestão de Ativos (Brasil), S.A.– Inverpyme SCR de Regimen Comum, S.A.As at 31 December 2010, in his own name, he was also Chairman of AssociaçãoPortuguesa de Analistas Financeiros.Maria da Conceição Rodrigues LealMember of the Board of Directors– Centro venture – Sociedade de Capital de Risco, S.A.– Companhia das Quintas, S.G.P.S., S.A.– Banco de la Pequeña y Mediana Empresa, S.A.Carlos Eduardo Pais e JorgeMember of the Board of Directors– Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A.– Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banif Capital – Sociedade de Capital de Risco, SA– Gamma – Sociedade de Titularização de Créditos, S.A.– Banif - Banco de Investimento (Brasil), S.A.– Banif Corretora de valores e Câmbio, S.A._243Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

– Banif Securities Inc.– Banif Multifund, Ltd.– Banif International Asset Management, Ltd.– Banif Ecoprogresso Trading, S.A.– Banif Securities holdings Ltd– GestArquipark - Sociedade Imobiliária, S.AVasco Clara Pinto FerreiraMember of the Board of Directors– Banif Capital – Sociedade de Capital de Risco, S.A.– Centro Venture – Sociedade de Capital de Risco, S.A.– MCO2 – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banco de la Pequeña y Mediana Empresa, S.A.– Banif - Banco de Investimento (Brasil), S.A.– Banif – Corretora de Valores e Câmbio, S.A.– GED SUR Capital – SGECR, SAAlexandre Jaime Boa-Nova e Moreira dos SantosMember of the Board of Directors– Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A.– Gamma – Sociedade de Titularização de Créditos SA– Banif Multifund, Ltd.– Banif International Asset Management, Ltd.João Manuel Mora de Ibérico NogueiraMember of the Board of Directors– Banif Mais, S.G.P.S., S.A.– Banif Mais, S.A.– Tecnicrédito ALD – Aluguer de Automóveis, S.A.– Bank Plus Bank Zartkoruen Mukodo Reszvenytarsasag– TCC Investments Luxembourg, S.A.R.L.Sole Director– Iberpaticipa, S.G.P.S., S.A.Council Executive– Margem – Mediação de Seguros, Lda.Carlos Alberto Ballesteros Amaral FirmeMember of the Board of Directors– Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, S.A.– Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.– Banif Capital – Sociedade de Capital de Risco, SA– Banif Securities Inc._244Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

– Banif Ecoprogresso Trading, S.A.– Bankpime SGIICMANAGEMENT POSITIONS IN OTHER COMPANIES HELD BY31/12/10 MEMBERS OF THE BOARD OF DIRECTORS AS AT31/12/10Fernando Mário Teixeira de AlmeidaChairman of the Audit Board– Banif S.G.P.S., S.A.– Banif – Banco Internacional do Funchal, S.A.– Banif Comercial S.G.P.S., S.A.– CSA - Companhia de Seguros Açoreana, S.A.José Luís Pereira de MacedoMember of the Board of Directors– Empresa Madeirense de Tabacos, S.A.– Sociedade Imobiliária de Empreendimentos Turísticos Savoi, S.A.– Dismade – Distribuição da Madeira, S.A.– Aviatlântico – Avicultura, S.A.– Vitecaf – Fábrica de Rações da Madeira, S.A.– Rama – Rações para Animais, S.A.Rui Manuel Braga de AlmeidaMember of the Audit Board– Gamma – Sociedade Titularização de Créditos, S.A.– Banif Go – Instituição Financeira de Crédito, S.A.– CSA - Companhia de Seguros Açoreana, S.A. (Suplente)Sérgio António do Rosário Vaz MonteiroMember of the Audit Board– Gamma – Sociedade Titularização de Créditos, S.A.7.4 INFORMATION pursuant to Article 3 of law28/2009 of 19 JUNEPursuant to Law 28/2009 of 19 June, an annual statement on remuneration policy forthe members of the management and supervisory bodies will be submitted to the nextOrdinary General Meeting of Shareholders of the Company.In compliance with Article 3 of Law 28/2009, in accordance with the remuneration policyapproved by the Company’s AGM on 30/03/2010, in 2010 the members of the Board ofDirectors of Banif - Banco de Investimento, S.A., for their duties received remunerationtotalling 1,766,514.75€ and individually:_245Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

€38,500.00 - Joaquim Filipe Marques dos Santos€331,304.18 - Artur Manuel da Silva Fernandes€201,785.40 - Nuno José Roquette Teixeira€72,500.00 - José Paulo Baptista Fontes€195,459.18 - Raul Manuel Nunes da Costa Simões Marques€184,459.18 - Maria da Conceição Rodrigues Leal€184,459.18 - Carlos Eduardo Pais Jorge€184,459.18 - Vasco Clara Pinto Ferreira€184,459.18 - Alexandre J, Boa-Nova e Moreira dos Santos€ 52,000.00 - João Manuel Mora de Ibérico Nogueira€ 137,129.27- Carlos Alberto Ballesteros Amaral FirmeThe members of the company’s supervisory body, the Audit Board, in 2010 receivedremuneration based exclusively on attendance slips totalling €69,600 and individually:€ 57,600.00 - Fernando Mário Teixeira de Almeida€ 6,000.00 - José Luís Pereira Macedo€ 6,000.00 - Rui Manuel Braga de AlmeidaThe AGM of 30 March 2010, in accordance with Article 2 of Law 28/2009 of 19 June,approved a statement on the remuneration policy of the management and supervisorybodies submitted by the Remunerations Committee, as follows:Whereas:1. Pursuant to Article 2 of Law 28/2009 of 19 June, the Remunerations Committeeof Banif - Banco de Investimento SA must submit to the General Meeting of Shareholdersannually a statement on the remuneration policy of the management and supervisorybodies;2. Pursuant to Article 29 of the Articles of Association, the RemunerationsCommittee of Banif - Banco de Investimento SA has the power to fix the remunerationsof the members of the company’s corporate bodies, without prejudice to therecommendation of the supervisory authorities and guidelines for all companies inBanif – Grupo Financeiro;3. The Remunerations Committee exercises said power under a mandate fromthe General Meeting of Shareholders; The Remunerations Committee of Banif - Banco deInvestimento SA hereby submits for the approval of the General Meeting of Shareholdersthe following statement on remuneration policy of the management and supervisorybodies:1. The purpose of the remuneration policy of the management and supervisorybodies of Banif - Banco de Investimento SA is:- to permanently allow the Bank to attract, motivate and retain top-level seniormanagers with high potential while taking account of the competitive environment inwhich it operates- to encourage the achievement of performance goals that coincide with the interestsof the Bank and its shareholders, at short, medium and long term;- to stimulate and reward relevant individual contributions and good collectiveperformance and its aim is to establish:- The levels and structure of remuneration of the members of the management andsupervisory bodies;- The mechanisms for aligning the interests of the members of the corporate bodieswith those of the company._246Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

2. The competitive positioning of the remuneration levels and structure shouldbe analysed regularly by the Remunerations Committee. In this analysis, it will takeaccount of the remuneration practices of companies in general and of the financialsector and other Portuguese banks operating in the domestic and internationalmarkets.The remuneration levels and structure of the members of the management andsupervisory bodies maybe reviewed annually.3. The remuneration policy of the Board of Directors may use as a reference aconcept of overall remuneration consisting of three key elements:A fixed componentBasic remuneration(basic salary)A variable componentBasic remuneration(basic salary)A mechanism to align the interests of themembers of the management body withthe long-term interests of the companyDeferral of the variable componentLimitation of the variable component4. The fixed component of remuneration should constitute the most significantpart of overall remuneration and it is estimated that it should, in a situation of fullcompliance with goals set, account for around 70% of the remuneration of the membersof the Board of Directors.The variable component of remuneration, which is related to performance, shouldconstitute the smallest part of overall remuneration, and it is estimated that it should, ina situation of full compliance with goals set, account for around 30% of the remunerationof the members of the Board of Directors, depending on each member’s duties.5. The variable remuneration allocated to the executive members of the Bank’sBoard of Directors should be a percentage of the individual net profit for the year andnever exceed 5 percent thereof.6. The executive members of the Board of Directors who have executive positionsin other Group companies will only be remunerated by Banif - Banco de Investimento, SA,pursuant to its remuneration policy, if it is the company where their duties are the mostimportant – “criterion of relevance”. However, these members may also be remuneratedby the other Group companies for which they work in cases in which the levels andcomplexity of their work, market practices or other circumstances so warrant._247Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7. The overall remuneration of the members of the Board of Directors shall includeamounts paid for any reason (1) by other companies dominated or in the same group.8. The aforementioned overall remuneration may be formalised for each executivemember of the Board of Directors in an agreement covering the remuneration leveland structure (fixed and variable components), duration and rules on rescission,confidentiality, no-competition and exclusivity clauses and limitations on compensationpayable for dismissal without due cause and its relationship with the variableremuneration component.9. Basic remuneration (basic salary) should be paid to the executive membersof the Board of Directors for their responsibilities and their specific skills. This basicremuneration should be fixed in accordance with market levels for equivalent dutiesand may be reviewed annually. There are no automatic adjustment mechanisms for saidmarket levels.10. The performance bonus (referring to annual performance) is based on thegoal of recognising and rewarding the individual contribution of each member of theBoard of Directors and its performance as the collective manager of the Bank. Theamounts awarded as performance bonuses must depend directly on actual performancemeasured against predefined qualitative and quantitative goals. These goals are set onthe basis of strategies (Group’s overall strategy and specific strategies for Banif - Bancode Investimento, SA).The performance bonus will be calculated on the basis of the following criteria usingpreferably similar weighting, adjusted to the duties performed by each member in theBank’s Board of Directors:a criterion appraising the performance of the Board of Directors as the collective managerof the Bank based on the achievement of its and the Group’s goals, if they have commongoals;a criterion based on the achievement of individual goals specific to each member of theBoard of Directors and pertaining to his/her individual responsibilities and departments;The variable remuneration component, the performance bonus, must consist only of anamount in cash, as Banif - Banco de Investimento SA does not have shares admitted totrading and therefore it is not considered appropriate to implement share plans of sharepurchase options for members of the Board of Directors.11. Alignment of the interests of the members of the Board of Directors with thecompany’s long-term interests may also be ensured by mechanisms that defer and limitthe variable remuneration component, the performance bonus.The implementation of these mechanisms should only considered when the variablecomponent of remuneration is considered significant and if i) the materiality of the risksassociated with the common and individual goals underlying the performance bonusand ii) the relevance of the risks of the Bank’s activities under the responsibility of eachexecutive member of the Board of Directors so warrant.( 1 ) This includes amounts by way of payment for attendance of and participation in meetings of theBoard of Directors, commonly known as attendance slips._248Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

At present, taking account of the materially insignificant expression of variableremuneration components in the Bank’s remuneration policy and the significant lengthof the relationship that most of the members of the Board of Directors have maintainedwith the institution, there is not expected to be a need to defer all or part of the variablecomponent of their remuneration until after the calculation of the accounts of thefinancial years for their entire term of office.Nonetheless, if the company’s performance exceeds the goals set and the variablecomponent surpasses 30% of overall remuneration, the payment of the surplus shouldbe deferred to after the calculation of the accounts of the financial years for their entireterm of office.For the same reasons, there is not expected to be any need to create mechanisms forlimiting variable remuneration if profits show a relevant deterioration in the company’sperformance in the last financial year or if this can be expected in the current financialyear.12. Remuneration policy of the non-executive members of the Board of DirectorsThe remuneration of the non-executive members of the Board of Directors consistsexclusively of attendance slips and/or a fixed sum.13. Remuneration policy of the members of the supervisory body In order toguarantee the impartiality and integrity of the Audit Board’s work, the remuneration ofits members will be based exclusively on their attendance of its meetings and will notdepend on or be related to the company’s profits in any way.7.5 INFORMATION PURSUANT TO ARTICLE 448 OF THECOMPANY CODE– PREVIOUS TABLE OF CONTENTS PAGE 261In fulfilment of Article 448(4) of the Company Code, the following were the entitiesowning qualifying holdings in the Company’s share capital, as at the end of thefinancial year:Entity% Share CapitalBanif Investimentos – Sociedade Gestora de Participações Sociais, S.A.100%7.6 INFORMATION PURSUANT TO ARTICLE 324 OF THECOMPANY CODEUnder the terms of Article 324(2) of the Company Code, there were no movements inown shares during the year, and the Company does not hold any of its own shares asat 31.12.10._249Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.7 INFORMATION pursuant to article 486 of theCOMPANY CODESee the Shareholding Chart included in this Appendix._250Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.8 FSF AND CEBS RECOMMENDATIONS ON TRANSPARENCYOF INFORMATION AND VALUATION OF ASSETSThe following information concerning transparency of information and valuation ofassets is provided in compliance with the provisions of Circular Letters nos. 46/08/DSBDRdated 15/7/2008 and 97/2008/DSB dated 3/12/2008, issued by the Bank of Portugal on“Adoption of the FSF and CEBS recommendations on transparency of information andthe valuation of assets”.I. Business model1. Description of business model (i.e. reasons for business activities and theircontribution to the creation of value) and, if applicable, any changes made (e.g. as aresult of the period of turmoil).The Group’s business model is described in “2. ACTIVITY UNDERTAKEN BY BANIF - BANCODE INVESTIMENTO SA AND SUBSIDIARIES IN 2010” in the Annual Report. BANIF, Bancode Investimento (BBI) maintained its central role in the architecture of BANIF, GrupoFinanceiro, and directly undertook capital market (sales, own portfolio, structuring andsecuritisation), advisory & structured finance, corporate banking, credit and privatebanking activities and indirectly, through its subsidiaries, it performed investmentfund management (equity, property and pension funds) and risk capital, while keepingits strategic focus in Portugal, Spain and Brasil.2. Strategies and objectives (including strategies and objectives specifically related tosecuritisation operations and structured products).Banif - Banco de Investimento in Portugal is an institution designed to serve mainlythe country’s second and third tiers and reinforces its clear geographical focus on theIberian Peninsula and Brazil. It will continue to centre its operations on satisfying theneeds of clients in the institutional, corporate and private segments using productsand services developed in its specialised sectors: capital market, asset management,including investment fund and pension fund management, advisory services, corporatefinance and M&A, project & leverage finance and venture capital seeking to maximisesynergies and the potential for cross-selling.The Bank’s strategy, which has been updated in response to the recent financialcrisis that erupted in the markets – resulting in an unprecedented crisis in valueand liquidity and a dramatic rise in financial deleveraging that has now become aneconomic recession expected to be severe and long-lasting – now includes a “dynamicrightsizing” element that optimises existing resources and a focus element aimed atcreating value in circumstances that are particularly difficult in terms of liquidity andcapital.There is no concrete pipeline for structuring new operations for the Banif Group andBBI will continue to manage existing ones, though it will also be receptive to newopportunities within and outside the Group.3. The importance of activities carried out and their respective contribution to business(including a quantitative outline)_251Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

Activities and their contribution to the business are described in “2 ACTIVITY UNDERTAKENBY BANIF - BANCO DE INVESTIMENTO SA AND SUBSIDIARIES IN 2010” in the Annual Report.The notes to the accounts included in this Report cover the importance of thecontributions of the various activities under Point 4 (Segmented Reporting).4. Type of activities carried out, including a description of the instruments used, theirfunctioning and the qualifying criteria to be met by products/investments.In the area of asset management, the prime instruments used are investment funds,which are usually divided into securities, mutual, real estate and special funds. Theseare regulated products closely supervised by local authorities in a business environmentwith ample information about the positioning and market share of the different players.The capital markets business can be divided into its various component parts: fixedrent and sales, variable rent, research & brokerage, structuring and securitisation.In relation to the first of these, the management of bonds portfolios and other debtinstruments, including ABS and derivatives is particularly important. In the second, weare currently focusing on Brokerage Research. In terms of structuring, we expect tomaintain a reasonable pipeline of work, despite market conditions, and, with respect tosecuritisation, as previously stated, certain concrete objectives have been establishedwith regard to arranging and managing BANIF Group portfolio securitisation operations.Capital market products include, under fixed income products, structured products,which, under the new accounting standards, can now be registered in the “Loans &Receivables” accounts.New products and services are approved in a multi-disciplinary way by the Bank’s NewProduct Committee5. Objective and extent of the institution’s involvement (i.e. its commitments andobligations) in each activityThe institution’s objectives and involvement in each activity are generically describedin “2. ACTIVITY UNDERTAKEN BY BANIF - BANCO DE INVESTIMENTO SA AND SUBSIDIARIESIN 2010” in the Annual Report. As far as risk weighted assets are concerned, theinvolvement of the institution focuses on credit and fixed income and, in terms of equityholdings, on investment funds, reflecting the current allocation of bank capital. Interms of human resources and materials, the capital markets and asset managementareas are of particular importance.II. Risks and Risk Management6. Nature and scope of risks incurred in activities undertaken and instrumentsused.The nature and range of risks incurred in relation to activities developed andinstruments used are described in detail in “Note 35. Financial Instrument Risks” inthe notes to the Financial Statements in this report.7. Description of risk management practices (including, particularly in the currenteconomic climate, liquidity risk) relevant to activities, and description of any fragilities/weaknesses identified and the corrective measures adopted._252Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

The nature and range of risks incurred in relation to activities developed andinstruments used are described in detail in “Note 35. Financial Instrument Risks” inthe notes to the Financial Statements in this report.III. Impact of the financial crisis on results8. Qualitative and quantitative description of profits and losses, with emphasis on losses(when applicable) and impact of write-downs on profit and loss.Description included in the following point.9. Breakdown of write-downs/losses by product type and instruments affected by therecent financial crisis, specifically the following: commercial mortgage-backed securities(CMBS), residential mortgage-backed securities (RMBS), collateralised debt obligations(CDO), asset-backed securities (ABS).The following table shows the (potential and actual) figures recorded in profit or loss andin reserves by defined product type, namely: commercial mortgage-backed securities(CMBS), residential mortgage-backed securities (RMBS), collateralised debt obligations(CDOs) and asset-backed securities (ABS) for the periods in question.31/12/09 31/12/10ProductPotential capitalActual capitalReservesPotential capitalActual capitalReservesgain/lossgain/lossgain/lossgain/lossABS306 930785 927-817 2681 023 318566 554-70 778CDO-466 35005416 015-881 5000CLO3 094 5950-636 0981 897 7160-115 571CMBS-6 0260-263 97816 375138 445-6 460RMBS-254 92486 700-373 916269 738219 0001 298 740Total2 674 224872 627-2 091 2063 223 16242 4981 105 930(amounts in euros)10. Reasons and factors responsible for this impact.The losses in the US sub-prime mortgage market were the main factor triggering thecrisis in the summer of 2007, which resulted in an accentuated broadening of spreads,a general reduction in market liquidity and high losses, particularly in complex assetstructures. Investor risk aversion increased substantially and became evident in anenormous reluctance to trade in any type of structured instrument – the market in factdried up – leading to increased pressure on respective market prices. The collapse ofLehman Brothers in September 2008 further exacerbated the situation and triggeredan unprecedented crisis in the financial sector, with particular impact on liquidity. Thiswas reflected by an ongoing increase in spreads and record levels of aversion to risk onthe part of investors, with a special impact on financial sector assets and more complexassets, such as structured products and securitisation of assets.At Banif - Banco de Investimento (BBI), one of the main impacts resulting from theturmoil in the financial markets was therefore the market risk inherent in exposurein structured products, which totally revalued marked to market until the first half of2008, thus resulting in considerable devaluations of this class of asset and a negativeimpact on the bank’s profits and equity._253Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

In 2009, there was a strong general recovery in the structured product market,especially in the CDO segment. Despite the sluggish first four months of the year, therewas considerable growth in the transaction volume for CDOs in the secondary market forthe year as a whole, with a pronounced drop in spreads from May onwards. Default rateson CLOs, which had risen continually from 2008 to early 2009, then gradually went down.Most assets resulting from securitisation offered a much higher return than investmentin investment grade bonds in 2009 as a result of an impressive rally during the year,especially in the second half.2010 was also a year of recovery for all classes of securitisation assets in absolute andrelative terms, although at different paces for different types of product. In US ABS forconsumer finance, the markets returned almost to pre-crisis levels in terms of spreadsand new issues, RMBS prices appreciated substantially and European CMBS, CLOsand ABS occupied a mid-level position in terms of performance. In general, a copious,accommodative policy in terms of injection of liquidity by central banks contributed topositive returns on risk assets, though securitisation assets (asset-backed securities, inthe broad sense) showed a better performance superior in terms of total return, aboveinvestment grade (IG) credit and even high yield (HY).An analysis of the year showed that the first half witnessed a continuation of the positivetrend that began in 2009, reflected by shrinking spreads on structured products and acorresponding increase in price. This market improvement was also clear in the growthplacing of new transactions with third-party investors by international issuers. Theamount issued in March 2010 was the highest since December 2007. According to theEuropean Central Bank (ECB), the sustainable recovery of this market should entail somefundamental changes in the transparency and simplicity of products, which is alreadyhappening (in Financial Stability Review June 2010, ECB).Market data, such as the RMBS spread interval, point to greater differentiation betweenissuers, showing that the casuistic analysis of risk and return for each issue is moreand more a decisive factor in terms of investment rather than the market’s generalperformance. However, the spreads of structured products, particularly RMBS, fromsome European issuers deteriorated due to investors’ concerns about sovereign debtquestions after the beginning of May.In the CMBS class, in spite of relatively high spreads compared to the general decreasein risk in structured products, in mid-May some credit market indexes returned topre-Lehman-collapse levels, while the CDO market also rose. However, regardingthe commercial property market, although most Euro Area countries showed someimprovements, prices are likely to remain below the levels of previous years for sometime yet, which places some risks in property-backed loans, including CMBS (commercialmortgage-backed securities).In the second half of the year, ABS spreads remained constant and fairly stable, exceptfor the shrinking of CMBS spreads, in contrast to the volatility in company bonds and CDSmarkets. However, this stability is merely a reflection of reduced liquidity and inactivity ofthe secondary market. At the end of the year, RMBS spreads in some peripheral Euro Areacountries with higher budgetary imbalances remained higher than the levels reachedafter the collapse of Lehman Brothers in September 2008.The securitisation market is therefore low, reflecting in small issues on the ABS market,which fell to its lowest level since 2003. Insufficient transparency as to the composition_254Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

of pools of assets has been identified as one of the obstacles to sustainable recovery ofthe securitisation markets. In order to partially solve this problem and considering thatthe Eurosystem is one of the main granters of loans against ABS collateral, the workbegun in April on establishing information requirements should mitigate this limitationand will be applicable to new issues. These new requirements will clearly increase thismarket’s transparency, thereby contributing to better risk assessments and helping torestore confidence in the ABS markets.The good situation in this class of assets once again made it possible to cancel out lossesfrom previous years and in 2010 there was a reversal in potential results in BBI’s portfolioof structured products, particularly reserves, which went up to positive figures for thefirst time since the post-Lehman crisis. As a result, as at 31 December 2010, the Bank hada positive balance in terms of potential capital gains of €3.2 million, a 21% increase on2009 and its reserves went from a negative balance of €2 million in 2009 to a positive oneof €1.1 million in 2010. The balance for capital gains made was positive (€42,000), withgains in the ABS, CMBS and RMBS segments more than offsetting losses on CDOs.11. Comparison of i) impacts between (relevant) periods and ii) financial statementsbefore and after the financial crisisA comparison of the impact between (relevant) periods is presented in Point 9 of thisAppendix. Balance sheet and income statement items reflecting the said impact duringthe period of turbulence are as follows:10/12/31Balance SheetNet ValueNet Value withoutimpact of period ofturmoilOther financial assets at fair value through profit or loss192 265194 156Total assets1 322 6661 324 557Current tax liabilities2 6463 147Total Liabilities1 261 6971 262 198Profit for period5 8367 225Total equity60 96962 358Total equity and liabilities1 322 6661 324 557Income statementNet ValueNet Value withoutimpact of period ofturmoilProfit/loss on assets and liabilities at fair value through profit or loss(2 793)(902)Banking income28 51230 403TaxCurrent(2 992)(3 493)Net profit for Period5 8367 225(Thousand euros)_255Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

12. Breakdown of write-downs according to realised and unrealised amounts.Information presented in Point 9 of this Appendix.13. Description of the influence of the financial turmoil on the entity’s share priceBanif - Banco de Investimento is not a listed entity.14. Disclosure of maximum loss risk and description of how the institution’s situationcould be affected by a continuation or aggravation of the market turmoil or by marketrecovery.As at 31 December 2010, BBI’s portfolio of structured products totalled €48.1 million,measured in terms of market value, reflected in a 6% reduction in exposure to riskagainst 2009. However, excluding the Banif Group’s securitisation positions to theamount of almost €10 million acquired in 2010, the actual reduction in risk was greaterand represented a 24% fall to €38.3 million.At the same time, the portfolio’s nominal value excluding the Banif Group’s ownsecuritisations fell 25% from €58 to €43 million, essentially due to amortisations andreimbursements in structures and also the sale of some assets. Mitigating the risk isa protection purchase (credit default swap) corresponding to around one third of theportfolio nominal value of structured products, in which the credit risk is transferredto third parties and the outstanding amount is around €12 million. See details in point17.As structured products ceased to have an active market, reflected by an extremeshortage of liquidity, and in view of the amendments to IAS 39 issued by the IASBin October 2008 – “Amendments to IAS 39 Financial Instruments: Recognition” – theBank reclassified the vast majority of structured products held to the LaR (loans andreceivables) portfolio, with the aim of keeping them in a foreseeable future portfolioand maintaining their credit quality, enjoying accounting treatment similar to a creditportfolio.There was therefore a significant change in the impacts of this portfolio and the Bankceased to be subject to variations in price of these securities. It was not affected bythe market risk but only by the credit risk, i.e. the possibility of losses due to defaultson securities.An analysis of credit quality of the portfolio (see point 18) shows that, as at as at 31December 2010, almost 70% of the BBI structured product portfolio received investmentgrade ratings from the three leading international rating agencies: Moody’s, S&Pand Fitch. In general, in the six months, there was a trend towards a downgrade inthe different classes of risk, especially a deterioration in sovereign ratings, whichalso influenced securitisation ratings, particularly RMBS. In 2010, there was anotherreduction in BBI’s exposure to structured products as some securities in the portfolioreached maturity, in several situations earlier than scheduled, and they were repaid attheir nominal value (no credit events), reflecting the portfolio’s credit quality.In spite of its accounting treatment, the Bank’s allocation of capital to its structuredproduct portfolio has been based on prudential capital requirements to hedge thecredit risk, specific to this type of asset, pursuant to current Basel II rules. This is amore conservative position than allocation of capital based on capital requirements_256Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

to hedge the market risk and is in line with the FSF recommendations published inthe April 2008 report. Recently, in June 2010, the Basel Committee announced someadjustments to the Basel II agreement, including treatment of securitisation positionsheld in the trading portfolio similar to that of other portfolios, i.e. uniform treatment ofallocation of capital to securitisation positions. This measure will not have an impact onthe allocation of capital of positions held by BBI in its portfolio.15. Disclosure of the impact of the evolution of spreads for own liabilities on profit orloss and the methods used to determine that impact.This information is included in note “36. Fair value of financial instruments” attachedto the financial statements.IV. Levels and types of exposure affected by the financial market crisis16. Nominal value (or amortised cost) and fair value of “live” exposures Detail of nominal(outstanding) and fair value of “live” positions in the above instruments.31/12/09 31/12/10ProductMarket ValueNominal ValueMarket ValueNominal ValueABS17 146 40018 242 7617 357 7147 633 620CDO2 506 7005 000 0001 372 2152 000 000CLO16 493 81720 927 40518 576 04423 000 000CMBS6 873 7207 019 5784 130 1164 042 743RMBS8 108 4908 761 61016 668 76217 478 616Grand Total51 129 12759 951 35348 104 85054 154 978(amounts in euros)17. Information on credit risk mitigation (e.g. credit default swaps) and their effect onexposure.The table below shows details of the credit default swap in which a protective purchasewas made for some instruments in the portfolio in question.31/12/09 31/12/10ProductABSCDOCLOCMBSRMBSGrand TotalCDS Outstanding5 000 00001 977 09204 932 04911 909 141CDS capital gain/loss-912 434-149 955-65 341-452 369-3 217 958-4 798 057(amounts in euros)_257Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

18. Detailed disclosure of exposure, broken down into:- Level of seniority of exposures /tranches;- Level of credit quality (e.g. ratings, vintages);- Geographic origin;- Activity sector;- Origin of exposure (issued, retained or acquired);- Product characteristics: e.g. ratings, weight / parcel of associated sub-prime assets,discount rates, spreads, financing;- Characteristics of underlying assets: e.g. vintages, loan-to-value ratio, credit privilegesaverage weighted life of underlying asset, assumptions of developments in pre-paymentsituations and expected losses.As at 31 December 2010, BBI’s exposure to structured products totalled around €48.1million in terms of market value and there was a reduction in exposure in all classesof securitisation, especially ABS. Indeed, for the second year running, exposure tothis fell significantly following the repayments (around €12.5 million in 2010), and soexposure to market values went from €17 to €7 million (-60%) and was also reflected ina reduction in their weight in BBI’s portfolio of structured products from 34%, in 2009to 15% in 2010.There was also a reduction in actual exposure in CMBS and CDOs due to repaymentsand sales and its weight went from 9% to 3% by the end of the year. As a result, therewas an increase in the relative weight of other classes of assets, CLOs and RMBS, to39% and 35% of the portfolio respectively, the latter also reflecting acquisitions in 2010regarding the Banif Group’s securitisations. In the mortgage loan segment, exposureto CMBS (commercial mortgage backed securities) and RMBS (residential mortgagebacked securities) did not entail any exposure to sub-prime credit. In CDOs and CLOs(collateralised debt and collateralised loan obligations), exposure to sub-prime ismarginal.In terms of seniority of positions held, as a rule, the Bank invested in the most seniortranches of operations. at the end of the year, BBI was only exposed to the first lossposition to a market value of €1.4 million, representing 3% of the portfolio.In terms of credit quality, approximately 70% of the total structured product portfolio,as at as at 31 December 2010 was Investment Grade and more than half had been givena rating of A- or higher by the leading international rating agencies, Moody’s, S&P andFitch (average ratings) – see Table 18.2. There was no exposure below B- or without arating in the Bank’s portfolio. There was, however, a downgrade in the average ratingsof structured products in portfolios against 2009, in line with the general downturnin the credit ratings of the different types of asset, particularly the sovereign debtof peripheral European countries, and also because of changes in methods used tovalue these instruments. The assets underlying BBI’s portfolio of structured productsare all from investment grade countries, mainly those in the European Union, whichrepresent 95%. Exposure to Portugal arises from the Banif Group’s securitisationsecurities acquired by BBI. The United States’ weight is small at only 5%.All exposures were acquired on the primary market, with the exception of positionsreferring to the Banif Group’s securitisations, such as Azor Mortgage and AtlantesMortgage, which are cancelled out in terms of the Banif Group’s consolidated position_258Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

(consolidation with SPEs / securitisation vehicles), which totalled almost €10 million atyear end and represented 20% of BBI’s total portfolio of structured products.In terms of vintage analysis, most of the positions were acquired prior to 2005 and therewere no new acquisitions after 2007, year of the sub-prime crisis, with the exception ofsecuritisation assets of the Banif Group itself. Regarding the oldest tranche, from 2003,around €8 million in securitisation securities from third parties were repaid in 2010.In the remaining portfolio, by year of acquisition, around 57% is from 2004-2005 andaround 22% from 2006. Only 4% of portfolio, representing a market value of €1.9 million,was acquired in 2007 at the high point of the bubble in these markets.BBI’s portfolio of structured products had a medium-term investment profile withan average WAL (weighted average life) of 4.4 years as at 31 December 2010, whichreceived a favourable contribution from the ABS and CMBS segments with shortermaturities of securities (average WAL of 2.5 and 1.8 years respectively). Indeed, therehas been a natural reduction in the Bank’s portfolio of structured products due tosecurities reaching maturity. They exceeded €15 million and were partially offset bythe acquisition of RMBS from Banif Group securitisation operations. This resulted inan increase in the average life of the remaining portfolio due to growth in the relativeweight of classes of assets with a longer WAL, such as CLOs and RMBS. As at 31 December2010, around 1.2% of the portfolio had an estimated residual average life of less thanone year and around 10% from one to two years.18.1 - BREAKDOWN OF PORTFOLIO BY TYPE OR SECTORProductABSCDOCMBSRMBSTransaction TypeReimbursementSaleReimbursementBUYReimbursementSale31/12/0921 017 17831/12/1012 500 000685 0002 766 0479 577 5331 500 0001 780 000(amounts in euros)_259Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

18.2 - BREAKDOWN OF PORTFOLIO BY ISSUE RATING MARKET VALUERatingsabscdoCLOCMBSRMBSTOTALSHAREAAA9 823 9319 823 93120.4%AA+532 8221 075 2561 608 07833%AA-1 361 6661 361 6662.8%A+2 997 4852 362 3733 626 8483 626 8487.5%A1 546 5515 359 85811.1%A-2 048 4701 546 5513.2%BBB+1 734 0561 761 171781 0614 590 7029.5%BBB3 744 9171 734 0563.6%BBB-6 780 0117 653 8413 744 9177.8%Investment Grade577 7031 372 2152 821 8322 293 99316 668 76233 396 60769.4%BB+6 997 4164 771 7509.9%BB6 997 41614.5%B1 102 9541 836 1231 836 1233.8%B-577 7031 372 21510 922 2031 102 9542.3%Non Investment Grade7 357 7141 372 21518 576 0441 836 12314 708 24330.6%TOTAL4 130 11616 668 76248 104 850100.0%Amounts in euros. Average ratings of issues awarded by Moody’s, S&P and Fitch raing agencies.18.3 - BREAKDOWN OF PORTFOLIO BY MARKET VALUE PER REGION/COUNTRY OF ORIGINRegion/Country of OriginabscdoCLOCMBSRMBSTOTALSHAREGermany1 734 0561 761 1712 593 2526 088 47912.7%USA2 424 1172 424 1175.0%Europe1 372 21516 151 927532 82218 056 96437.5%Netherlands1 836 1231 836 1233.8%Italy2 997 4852 997 4856.2%Portugal9 823 9319 823 93120.4%United Kingdom2 048 4704 251 5796 300 04913.1%Russia577 703577 7031.2%TOTAL7 357 7141 372 21518 576 0444 130 11616 668 76248 104 850100.0%Amounts in euros.18.4 - BREAKDOWN OF THE PORTFOLIO BY MARKET VALUE/VINTAGEVintageabscdoCLOCMBSRMBSTOTALPESO20038 262 2398 262 23917.2%20042 997 4851 372 2154 928 391532 8225 813 27015 644 18332.5%20052 048 4705 184 6271 836 1232 593 25211 662 47124.2%20062 311 7586 598 9171 761 17110 671 84722.2%20071 864 1091 864 1093.9%TOTAL7 357 7141 372 21518 576 0444 130 11616 668 76248 104 850100.0%Amounts in euros._260Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

18.5 – average WAL AND BREAKDOWN BY BUCKETBuckets< 6 months6 months to 11 to 2 years2 to 3 years3 to 5 years>= 5 yearsTOTALSHAREyearABS75 073502 6302 997 4851 734 0562 048 4701 372 2157 357 7142.5CDO1 903 9121 372 2155.5CLO16 672 13218 576 0444.2CMBS1 836 1232 293 9937 331 2664 130 1161.8RMBS1 075 2568 262 23910 607 39316 668 7626.0TOTAL75 073502 6304 833 6085 103 30526 982 84122,1%48 104 8504.4Peso0,2%1,0%10,0%10,6%56,1%100,0%Amounts in euros. Weighted average life (WAL) of structures based on data provided by investors’ reports and Bloomberg.19. Movements in exposures between relevant reporting periods and the underlyingreasons for the changes (sales, write-downs, purchases, etc.).The movements that took place during the aforementioned periods were as follows:ProductTransaction Type31/12/0931/12/10ABSReimbursement21 017 17812 500 000CDOSale685 000CMBSReimbursement2 766 047RMBSBuy9 577 533Reimbursement1 500 000Sale1 780 000(amounts in euros)20. Explanations of exposure (including vehicles and their activities) not consolidated(or recognised during the) and their reasons.There was no such exposure.21. Exposure to monoline insurers and quality of insured assets:nominal value (or depreciated cost) of insured exposure and amount of creditprotection acquiredFair value of outstanding exposures, together with the respective creditprotection;value of write-downs and losses, differentiating between realised and unrealisedamountsBreakdown of exposures by rating or counterpartyThere was no such exposure.V. Accounting policies and valuation methods22. Classification of transactions and structured products for accounting-purposesand their accounting treatment.The Bank’s financial instrument classification policy is described in note “3.7 Financialinstruments” in the point attached to the financial statements.23. Consolidation of special purpose entities (SPEs) and other vehicles and theirreconciliation with the structured products affected by the period of turmoil. Therewas no such exposure._261Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

24. Detailed disclosure of information on the fair value of financial instruments:Financial instruments to which fair value is applied;Hierarchy of fair value (breakdown of all exposures measured at fair value inthe fair value hierarchy, breakdown between cash and derivatives and disclosure ofmigration between hierarchy levels;Treatment of day 1 profits (including quantitative information);use of the fair value option (including conditions of use) and their amounts (withappropriate breakdown)The criteria for determining the fair value of financial instruments and the otherinformation requested are described in note “3.7 financial instruments” in the pointattached to the financial statements.25. Description of the modelling techniques used for valuation of financial instruments,including information on:Modelling techniques and the instruments to which they are applied;Valuation processes (particularly including assumptions and inputs on whichthe models are based)Types of adjustment made to reflect the modelling risk and other uncertaintiesin valuationSensitivity of fair value (such as variations in assumptions and Key inputs)Stress scenariosInformation included in the previous point.VI. Other relevant aspects of disclosure26. Disclosure policies and principles used in reporting disclosures and financialreporting.The policies, principles and procedures for the disclosure of financial information aredescribed in point “III.12. Reference to an Investor Relations Office or similar service” inpart “VII CORPORATE GOVERNANCE REPORT” in the Annual Report and Accounts of BanifSGPS, SA and Banif Grupo Financeiro Consolidado._262Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.9 ORGANisation chartcorporate STRUCTURE of BANIF - BANCO DE INVESTIMENTO, S.A._263Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

7.10 MANAGEMENT AS AT 31/12/2010*COORDINATING DIRECTORSArmando José Vale Avelar BandeiraFátima Carlos Domingos FrazãoJaquelina Maria de Almeida Rodrigues MiguensLuis Filipe Saramago CaritaManuel Jorge Raminhos PereiraMiguel Salgado Valadão ValeNuno da Rocha Hermida Baeta CorreiaPedro Brandão Mello e CastroDIRECTORSAmérico Jorge Pereira AbrantesÂngela Maria Simões Cardoso Seabra LourençoAntónio Alberto Gordo MonteiroAntónio Cohen SerraAntónio José de Caíres AndradeAntónio Manuel Gouveia Ribeiro HenriquesAntónio Maria Daun e Lorena Ribeiro FilipeDavid Alberto Morais Sousa RibeiroFilipe Antunes de Paula CardosoFrancisco Santos Marques Pires MarquesHelena Maria Ravara Carvalho LimaHorácio António Moutinho da CruzJoão Maria Magalhães Felgas Gama LourençoJoão Nuno Alves Moreira e MenéresJosé Carlos Vila PeixotoJosé Fernando Resende GomesJosé Joaquim Paulino AfonsoLuis Fernão de Moura Torres SoutoLuís Filipe Ramos Ferreira de GouveiaLuís Magalhães Correia LeiteLuis Miguel Pereira ChavesM.ª Cristina B. M. Vilhena de Freitas de AthaydeMaria Cristina Garcia GilMário Alexandre Bagarrão BaptistaMarta Dourado Fonseca de Moura RangelNuno Miguel Belchior FigueirinhasPaulo Miguel Nogueira da Costa BoaventuraRicardo Filipe Barata Gouveia PedrosaRui Joaquim Costa VitórioSusana Helena Gomes de Figueiredo Ribeiro ReisTeresa Maria Silva MartinhoTiago dos Santos Matias* Permanent staff of Banif - Banco de Investimento S.A. and companies with a majority holding_264Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

deputy DIRECTORSAna Marisa da Silva JustinoCláudia Alexandra Duarte CardosoGabriela Alexandra Torres Pereira RamosJoão Nuno de Almeida ChavesJorge André Horta GuimarãesJorge Manuel Macedo Lopes CarvalhoLuís Beltrão Coelho TribunaMarcelo Ferreira ChucrePedro Manuel Marreiros Cruz Dias CorreiaPedro Miguel Oliveira da Silva LauRui da Silva PiresRui Manuel dos Santos CorreiaRui Manuel Sequeira Vieira_265Banif – Banco de Investimento, SA – Annual Report and Accounts 2010

AUDIT BOARD REPORT AND OPINIONSenhores Accionistas,Dear Shareholders,As required by law and the Articles of Association, we hereby submit for yourconsideration our report and opinion on the individual and consolidated accounts forthe year ended on 31 December 2010, which were presented by the Board of Directorsof Banif - Banco de Investimento, S.A.In performing its duties, the Audit Board always received the necessary clarificationsand collaboration from the Board of Directors to perform its duties fully.The measurement criteria used are set out in the Appendix to the Accounts andcorrespond to the correct evaluation of the assets.We consider that Board of Directors’ Report explains the business carried out duringthe year and the performance expected for the Bank for 2011.We have examined the Legal Certification of the Individual and Consolidated Accounts.We are in agreement with it and it is reproduced in full here.Therefore, taking account of the accounting documents and considering that they givea true picture of the economic and financial situation of Banif - Banco de Investimento,S.A. we are of the opinion that you should approve:1. The Annual Report, individual and consolidated accounts and their notesregarding the financial year ended on 31 December 2010; and2. The proposal for the appropriation of profits set out in the Annual Report.Lisbon, 23 March 2011THE AUDIT BOARDFernando Mário Teixeira de Almeida - ChairmanRui Manuel Braga de AlmeidaJosé Luís Pereira de Macedo

Ernst & YoungAudit & Associados - SROC, S.A.Avenida da República, 90-6º1600-206 LisboaPortugalTel: +351 217 912 000Fax: +351 217 957 586www.ey.comLegal Certification of Individual AccountsIntroduction1. We examined the attached financial statements of Banif – Banco de Investimento S.A., which include the balance sheet asat 31 December 2010 (which shows a total of 1,322,666,000 euros and total equity of 60,969,000 euros, including a net profitof 5,836,000 euros), the income statement, the comprehensive income statement, statement of variations in equity and cashflow statement of the year ended on that date and their notes.Responsibilities2. It is the responsibility of the Board of Directors to prepare financial statements that give a true, appropriate picture ofthe Company’s financial position, the profit/loss and comprehensive income of its operations, changes in its equity and itscash flows and its adoption of adequate accounting policies and criteria and the maintenance of a suitable internal controlsystem.3. It is our responsibility to express a professional and independent opinion on those financial statements, based on our audit.Basis of Opinion4. Our examination was conducted in accordance with the Auditing Guidelines and Technical Standards of the Associationof Certified Auditors, which require it to be planned and performed in such a way as to achieve an acceptable degree ofcertainty of whether the financial statements are free of any materially relevant distortions. Accordingly, the audit includedthe following:- using sampling to check the supporting documents for the amounts and disclosures set out in the financialstatements and evaluating the estimates based on judgements and criteria defined by the Board of Directors thatwere used in their preparation,- considering whether the accounting policies followed and their disclosure were appropriate in thecircumstances,- checking the applicability of the principle of continuity, and- considering whether the overall presentation of the financial statements is appropriate.5. Our examination also included checking that the financial information in the Annual Report tallied with the financialstatements.Sociedade Anónima - Capital Social 1.105.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 9011 na CMVMContribuinte 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número – A member firm of Ernst & Young Global Limited

Ernst & YoungAudit & Associados - SROC, S.A.Avenida da República, 90-6º1600-206 LisboaPortugalTel: +351 217 912 000Fax: +351 217 957 586www.ey.com6. We believe that our audit provides reasonable basis for expressing our opinion on the financial statements.Opinion7. In our opinion, the above-mentioned financial statements give a true, appropriate picture in all materially relevant aspectsof the financial position of Banif- Banco de Investimento, S.A. as at 31 December 2010, the profit/loss and comprehensiveincome of its operations, variations in its equity and its cash flows in the year ended on that date, in accordance with theAdjusted Accounting Standards (NCA) as defined by Banco de Portugal Notice 1/2005.Report on other legal requirements8. It is also our opinion that the financial information in the Annual Report tallies with the financial statements for the year.Lisbon, 23 March 2011Ernst & Young Audit & Associados – SROC, S.A. Sociedade de Revisores Oficiais de Contas (no. 178) Represented by:João Carlos Miguel Alves (Certified Auditor no. 896)Sociedade Anónima - Capital Social 1.105.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 9011 na CMVMContribuinte 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número – A member firm of Ernst & Young Global Limited

Ernst & YoungAudit & Associados - SROC, S.A.Avenida da República, 90-6º1600-206 LisboaPortugalTel: +351 217 912 000Fax: +351 217 957 586www.ey.comLegal Certification of Consolidated AccountsIntroduction1. We examined the attached consolidated financial statements of Banif – Banco de Investimento S.A., which include thebalance sheet as at 31 December 2010 (which shows a total of 1,339,229,000 euros and total equity of 75,290,000 euros,including a net profit of 8,182,000 euros), the consolidated income statement, the comprehensive consolidated incomestatement, the consolidated statement of variations in equity and the consolidated cash flow statement of the year endedon that date and their notes.Responsibilities2. It is the responsibility of the Board of Directors to prepare consolidated financial statements that give a true, appropriatepicture of the financial position of the companies included in the consolidation, the consolidated profit/loss and comprehensiveincome of their operations, changes in their equity and their cash flows and the adoption of adequate accounting policiesand criteria and the maintenance of a suitable internal control system.3. It is our responsibility to express a professional and independent opinion on those financial statements, based on our audit.Basis of Opinion4. Our examination was conducted in accordance with the Auditing Guidelines and Technical Standards of the Associationof Certified Auditors, which require it to be planned and performed in such a way as to achieve an acceptable degree ofcertainty of whether the consolidated financial statements are free of any materially relevant distortions. Accordingly, theaudit included the following:- checking that the financial statements of the companies included in the consolidation had been properly examinedand, in the case in which they had not been, using sampling to check the supporting documents for the amounts anddisclosures set out in them and evaluating the estimates based on judgements and criteria defined by the Board ofDirectors that were used in their preparation,- checking consolidation operations,- considering whether the accounting policies followed and their disclosure were appropriate in theconsidering the circumstances;- checking the applicability of the principle of continuity, and- considering whether the overall presentation of the consolidated financial statements is appropriate.Sociedade Anónima - Capital Social 1.105.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 9011 na CMVMContribuinte 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número – A member firm of Ernst & Young Global Limited

Ernst & YoungAudit & Associados - SROC, S.A.Avenida da República, 90-6º1600-206 LisboaPortugalTel: +351 217 912 000Fax: +351 217 957 586www.ey.com5. Our examination also included checking that the financial information in the consolidated Annual Report tallied with theconsolidated financial statements.6. We believe that our audit provides reasonable basis for expressing our opinion on the financial statements.Opinion7. In our opinion, the above-mentioned consolidated financial statements give a true, appropriate picture in all materiallyrelevant aspects of the consolidated financial position of Banif- Banco de Investimento, S.A. as at 31 December 2010, theprofit/loss and comprehensive consolidated income of its operations, variations in its consolidated equity and its consolidatedcash flows in the year ended on that date, in accordance with the International Financial Reporting Standards as adoptedin the European Union.Report on other legal requirements8. It is also our opinion that the financial information in the consolidated Annual Report tallies with the consolidated financialstatements for the year.Lisbon, 23 March 2011+Ernst & Young Audit & Associados – SROC, S.A. Sociedade de Revisores Oficiais de Contas (no. 178) Represented by:João Carlos Miguel Alves (Certified Auditor no. 896)Sociedade Anónima - Capital Social 1.105.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 9011 na CMVMContribuinte 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número – A member firm of Ernst & Young Global Limited

environmental note on the PRODUction of this reportBanif - Banco de Investimento S.A. is aware of the considerable challenges caused byclimate change worldwide and undertakes to take concrete steps that contribute tobetter carbon management.In order to reduce greenhouse gas emissions related to its activities, Banif - Banco deInvestimento S.A. neutralised the carbon footprint of the entire life cycle of its 2010Annual Report and Accounts.The drafting, production and distribution of this Annual Report and Accounts usedenergy and materials that had an environmental impact. In order to offset the impactof these activities on the planet, Banif - Banco de Investimento S.A. neutralised fivetonnes of equivalent carbon dioxide (CO2e) by measn of carbon credits of highestinternational quality standards.The 2010 Annual Report and Accounts of Banif - Banco de Investimento S.A. is thereforecarbon neutral.