Brazil - Exame

4 th in Internet UsersMillionChina 390USA 245Japan 100Brazil 778

5 th Largest Holder in InternationalReservesUS$ BillionChina 3,197.5Japan 1,137.8Russia 524.5Saudi Arabia 456.2Brazil 335.89

6 th in Vehicle ProductionMillionChina 18.3Japan 9.6USA 7.8Germany 5.9South Korea 4.3Brazil 3.610

Brazilian Exports by CountryIn %China 15.3USA 9.6Argentina 9.2Netherlands 5.1Germany 4.0Japan 3.5UK 2.3Chile 2.1Italy 2.1Russia 2.1Spain 1.9Venezuela 1.9Korea 1.9Mexico 1.811

InflationRate ‘11%Russia 9.2India 8.1Brazil 6.5Turkey 5.8South Africa 5.2China 5.0Israel 4.4Keeping inflation under controlHow much internationalinflation should Brazilaccommodate ?Risks of second ¡V hand effectsin a buoyant economyMacro- prudential measurescomplement traditionalmonetary policy to ensuresound credit growth andreduce demand ¡V supply gapHow distortive can macroprudential regulations be?(e.g. Sending financial marketsoff-shore)Supply side and labor marketmeasures can increaseeconomic efficiency andlower the tax burden© Emerson de Pieriemerson.pieri@haliwellbank.com

Pré-sal‒ US$ 240 billion, of which US$ 60 billion funds external to Petrobras Electricity‒ Hydropower & Transmission: $ 50 bi; Nuclear: $ 15 bi Roads‒ Federal Government $ 20 bi + private sector (3500+ km for co concessions) Railroads Valec/Cargo‒ ($ 10 bi + private sector) + High speed train Ports Dredging/Building‒ $ 10 bi + private sector (terminals) Airports‒ 3 on the block + GIG Homebuilding‒ Minha Casa Minha Vida $ 150 bi (popular) + private sector Sanitation‒ $ 10 billion (Sabesp, Copasa, Cedae) Broadband‒ $ 15 billion (popular broad band) + $ 30 bi (4G etc.) World Cup 2014‒ sport venues $ 30 bi13

Traditional steel producer World # 6 in textiles/apparel and 2nd inleather Leading car, auto parts, machinery, airplaneand rig builder14

Oil‒ Petrobras succeeded in the largest stock issuance in the world after discovery of pré-sal;new players help diversify investor choices in the sectorMining and Petrochemicals‒ Vale becomes the largest company in the country, and a major global player; Braskem isthe world 8th largest in the fieldFinancial Sector‒ Brazilian banks have strong capitalization, and sophisticated risk controls— 2 amongglobal top 20 in market capEducation‒ Strong demand and gains from scale have made the sector a target to private andpublic equity, with strong results from consolidationHealth‒ Cash flow rich companies are consolidating the sector, boosting quality by using moderntechnology and management techniquesIndustry‒ New global brands and diversification have opened new opportunities to the sectorTransportation‒ Lleaders in rail transportation in South America and strong listed toll-road companies worthUS$ 20 billion 15

The largest Latin American Stock Exchange A large mid-cap market, with 45% of listedcompanies in the range of US$ 500 million -US$ 5 billion market cap Close to 20% of companies with market capabove US$ 5 billion Daily liquidity around US$ 5 billion16

Foreign Direct Investments‒ US$ 20.3 billion from Jan to Sep ‘10‒ US$ 50.4 billion from Jan to Sep ‘11 Investment in Companies‒ US$ 20.1 billion from Jan to Sep ‘10‒ US$ 40.2 billion from Jan to Sep ‘11 US$ 76.8 billion was the total Foreign flow fromSep ‘10 to Sep ‘1118

US$ 481 billion in assets More than 2,500 funds 812 funds are DEBT with total assets US$ 320billion 1,688 funds are EQUITY or DERIVATIVES withtotal assets US$ 125 billion19

We used our client’s base, 16 bankers and 6partners (asset management and law firms) We also used public information released byThe Boston Consulting Group, CapGemini ,Folha de São Paulo, Estado de Sao Paulo andThe Economist We studied the Brazilian Market of“millionaires” during October ‘10 until October‘1121

350 questionnaires was distributed to allofficers with direct access to the millionairesor their representatives. Each questionnaire with 45 direct questions. We received back 317 questionnaires “fully”answered.22

Latin Bankers Association NPG Research Central Bank of Brazil Internal Revenue Service of Brazil Merrill Lynch UHNI study ’09, ‘10, ‘11 Capgemini - Merril Lynch, World WealthReport 2010 and 2011 Euromoney – Latin Finance The Boston Consulting Group23

Total investments in financial institutions onand off-shore Total investments in stocks on and off-shore Local real state being part of a wealth orgenerating revenue Local and international ownership(companies, trusts, foundations or similar) andparticipations24

US$ billion191215239 2412003 2006 2007 201025

Around 137,000 is the estimated number ofmillionaires in Brazil80129.0 90219.0 100219.0 110881.0 132001.0 137678.02003 2004 2005 2006 2007 201026

RankNameAssets8Eike Batista55 Jorge Paulo Lemann68Joseph Safra158 Marcel Herrman Telles173 Dorothea Steinbruch185Carlos Sicupira193 A. Ermirio de Moraes247Aloysio Faria323Abilio Diniz347Alfredo Villela347 Ana Lucia Veillela376 Antonio Seabra376Andre Esteves440 Fernando Moreira Salles440 Joao Moreira Salles440 Pedro Moreila Salles440 Walther Moreira Salles459 Rubens Ometto Mello488Moise Safra564 Elie Horn30.013.311.46.25.85.55.34.33.43.23.23.03.02.62.62.62.62.52.42.127

The Brazilians Billionaires now are 30compared to 18 in 2009 (Forbes) The sum of all Brazilians assets at Forbes is US$131.6 billion Brazil produced in the last 4 years 19 newmillionaires daily (The Economist) From the BRIC’s Brazil is the second country inbillionaires after China (Forbes)28

Roraima28 Amapá476Amazonas399Pará182Acre35Rondonia32Tocantins7030

Mato Grosso1.435Brasília2.800Goiás2.233Mato Grosso do Sul1.21131

Maranhão504Piauí224Ceará1.309Rio Grande do Norte 427Paraíba 252Pernambuco 1.743Bahia2.471Alagoas 658Sergipe 43432

Minas Gerais7.980Espírito Santo1.575São Paulo63.398Rio de Janeiro20.72733

Paraná7.329Santa Catarina4.123Rio Grande do Sul7.81234

Fortunes up toUS$ 30 millionsAlagoasAmazonasBahiaBrasíliaCearáEspírito SantoGoiásMinas GeraisParáParaíbaParanáPernambucoRio de JaneiroRio Grande do NorteRio Grande do SulSanta CatarinaSão PauloSergipeTocantins35

Fortunes up toUS$ 50 millionsParanáRio Grande do SulSanta CatarinaMinas GeraisSão PauloRio de JaneiroEspírito SantoBahiaPernambucoMaranhãoPiauíBrasíliaGoiás36

Fortunes withmore thanUS$ 50 millionsCearáEspírito SantoMato Grosso do SulMinas GeraisParáPerbambucoRio de JaneiroRio Grande do SulSanta CatarinaSão Paulo37

Center‒ Mato Grosso do Sul 41%‒ Mato Grosso 39%‒ Goiás 31%Northeast‒ Alagoas 61%‒ Maranhão 33%‒ Rio Grande do Norte 55%North‒ Rondônia 33%‒ Tocantins 46%South‒ Santa Catarina 76%South East‒ Espírito Santo 61%38

North/Northeast‒ Manaus 45%‒ Recife 37% Center‒ Brasília 33% Southeast‒ Uberlândia 22%‒ Rio Preto 17%‒ Macaé 15%‒ Santos 15% South‒ Florianópolis 63%‒ Curitiba 45%‒ Porto Alegre 36% 39

CharacteristicsProduct/Service NeedsCompetitorsMarketingApproachPredominantly EuropeanCapital preservation Swiss Banks ReferralsLand-richEstate planning JP Morgan ReferralsNationalistDiscretionaryManaged AccountGoldman SachsSocial ClubsConservativePersonalized ServicesJewish BanksHighlight InvestmentBank strengths forlarge business ownersNot as wealthy as in the pastConfidentialityCouttsBanks specialproducts/servicesGetting SmallerFixed incomeCitibankProfessionalism, notaggressivenessBased more in Sao Paulo & RioLoans against assetsCrédit Suisse, UBSIntroduce tomanagementAmerican & Canadianconsidered “brokerage” house,not up market like Swiss banksFixed incomeCitibankProfessionalism, notaggressiveness40

CharacteristicsProduct/Service NeedsCompetitorsMarketingApproachEthnic diversity: Jewish, Lebanese,Syrian, Armenian, Japanese, Korean, ChineseProduct diversity Swiss Banks ReferralsGeographic diversity throughoutBrazil but large presence in SP,Rio Southern StatesService/AttentionCitibank, Chase,Lloyds TSBCold CallsNew money made thiscentury; getting wealthierConfidentialityJewish Banks andGerman BanksSocial ClubsHighly entrepreneurialEstate Planning Morgan Stanley Pictet Social/ethnic clubsAssets predominantly investedlocallyNon-purpose loans Local Banks “x” Products/ServicesGood referrers butopportunisticBrazil productsEspirito Santo,SantanderCost conscious, chase yieldLeverageSantander, BES, SafraMore speculative, travel more toNY and Miami than to EuropeActive AccountManagementLloyds Bank, Coutts41

RankEntityPrevious1Citigroup2Santander3JPMorgan4HSBC5Banco Itaú6Credit Suisse7Merrill Lynch8Julius Baer9UBS10BBVA11 Banco do Brasil12Bradesco13BNP Paribas14 Goldman Sachs15Pictet16Lloyds TSB17 Morgan Stanley18Haliwell Bank19RBC20 State Capital1543687132151210119222014-23-43

Yes Do you have tax planning ?NoYes43%57%NoNo answer20%6%74%45

(in percentage)From 0 to 25%From 26% to 40%From 41% to 75%From 75% to 100%22%37%21%30%46

(in percentage)SwissAmericanEuropean9%8% 3%37%Canadian21%BrazilianOthers22%47

YesNo22%78%48

YesNoNot sure10%1%89%49

YesNoNot sure10%2%88%50

EqualSomewhat differentNot sure9%30%61%51

YesNoNot sure10%23%67%52

YesNoSomewhat Yes16%45%39%53

YesNo11%89%54

YesNo3%97%55

YesNo31%69%56

TrustFoundationsMixDonation6% 3%Insurance31%40%20%57

UBSCrédit SuisseCitibankMerril LynchDeutscheJP MorganOthers19%6%2% 1%27%20%25%58

UBSCrédit SuisseCitibankHSBCDeutsche BankLloyds TSB19%1%6%10%PictetOthers10%22%12%20%59

ControlNo ControlMix18%40%42%60

More than 20 yearsBetween 10 and 20Between 5 to 10Less than 5 years24%20%19%37%61

YesNoPartial15%20%65%62

YesNoPartial34%52%14%63

USA: 5%Luxemburg: 8%Jersey: 11%Andorra: 7%Panama: 30%Uruguay: 29%Others/No Answer: 10%64

28%21%16%15%10%5%3%2%Cayman Switzerland Jersey Uruguay Bahamas Panama USA OthersRankPrevious200701 02 03 04 05 06 0703 02 10 08 01 11 0465

YesNo13%Partial20%67%66

No trust in regulators“Weird” legal systemNo clear rules17%3%Others24%56%67

Structured Products International Insurance668US$ MM101209122003 20102003 201069

Local Investments‒ 97% of the interviewed millionaires wants to increase theirassets locally transferring money from abroad Local Real State‒ With the local interest rates dropping real state became theinvestment of the “smart people” Equities‒ More than 200 new companies at Sao Paulo’s StockExchange and return exceeding almost all investmentsaround the globe, most of the interviewed people investlocally Private Equity‒ Seed funds and Private equity funds invested around US$1,670 billion in Brazil in 2010 (until August).70

Local‒ Itaú‒ BTG Pactual‒ Hedging-Grifo‒ BNY Mellon‒ UBS‒ Safra‒ HSBC‒ Santander‒ Votorantim‒ Bradesco Off-Shore‒ Crédit Suisse‒ UBS‒ Citibank‒ Deutsche‒ HSBC‒ Lloyds‒ Itaú‒ Safra‒ Merril Lynch‒ SantanderSource: Brazil Central Bank (Not in relevance order); Estimated total by LBA & NPG Research© Emerson de Pieriemerson.pieri@haliwellbank.com 72

Family Offices & Boutiques74

PiguetSarasinVontobelCredit AgricoleCalyonABN AmroEspirito SantoMerrill LynchLloyds TSBSociete GeneraleHapoalimBarclaysINGLGTMorgan StanleyDexiaRBCBanque HeritageCitibankJP ChaseHSBCUBSCredit SuisseJulius BaerGoldman SachsDeutsche BankIsrael DiscountLehmanSantanderPictetWells FargoBCP MilleniumCouttsEFG BankCommerzbankANZ Bank© Emerson de Pieriemerson.pieri@haliwellbank.com 75

Credit and Banking Services‒ Provide introductions to banks and brokerage groups for credit needs.‒ Arrange mortgages, lines of credit, secured lending, etc.‒ Manage and monitor all banking relationships.Insurance Needs‒ Review current insurance.‒ Provide introduction to insurance brokers.‒ Create comprehensive insurance programs.‒ Monitor and update all insurance requirements working with experts.Non-Financial Assets‒ Provide introductions to experts for the acquisition of assets such as boats, art, realestate, horses and collectibles.‒ Manage the insurance and investment aspects of collectibles.Security Needs‒ Provide introductions to professionals who can assess the current level of familysecurity.‒ Provide introductions to experts in the areas of personal, home and travel security.‒ Arrange for appropriate insurance to cover kidnap and ransom risks.77

Emerson de PieriEmerson.pieri@haliwellbank.com78

Private banking is my passion and I believe in mycountry (Brazil) as the best place to do business inthis area.Excellence in Private Banking must be the Standardnot the goal.Emerson de PieriEmerson.pieri@haliwellbank.com+ 1 786 228 8335++ 55 11 9127 177779