As filed with the Securities and Exchange Commission on June 30, 2008

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

FORM 20-F

Registration Statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

OR

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended: December 31, 2007

OR

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____  to _____

Shell Company Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Commission file number: 1-14640-1

UNIBANCO-UNIÃO DE BANCOS BRASILEIROS S.A. 
  & UNIBANCO HOLDINGS S.A.
(Exact name of Registrant as specified in its charter)

UNIBANCO-UNION OF BRAZILIAN BANKS S.A. 
  & UNIBANCO HOLDINGS S.A.
(Translation of Registrants names into English)

Federative Republic of Brazil 
(Jurisdiction of incorporation or organization)

|                            |  |                           
|--------------------------- |  | --------------------------
|UNIBANCO-UNIÃO DE BANCOS    |  | UNIBANCO HOLDINGS, S.A.   
|BRASILEIROS S.A.            |  | Avenida Eusébio Matoso 891
|Avenida Eusébio Matoso, 891 |  | 22nd Floor                
|05423-901 São Paulo, SP     |  | 05423-901 São Paulo, SP   

(Address of principal executive offices)

Geraldo Travaglia Filho 
Avenida Eusébio Matoso, 891 
investor.relations@unibanco.com 
(Registrants Contact Person)

Securities registered pursuant to Section 12(b) of the Act:

|                                                            |  |                                            
|----------------------------------------------------------- |  | -------------------------------------------
|Title of each Class                                         |  | (Name of each exchange on which registered)
|                                                            |  |                                            
|Global Depositary Shares, each representing ten Units, each |  | New York Stock Exchange                    
|Unit consisting of one Unibanco Preferred Share and one     |  |                                            
|Unibanco Holdings Preferred Share                           |  |                                            
|Unibanco Preferred Shares, without par value                |  | New York Stock Exchange*                   
|Unibanco Holdings Preferred Shares, without par value       |  | New York Stock Exchange*                   

Securities registered pursuant to Section 12(g) of the Act: 
None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 
None.

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.

1,511,316,336 Unibanco Common Shares, no par value per share
1,296,439,472 Unibanco Preferred Shares, no par value per share
553,735,904 Unibanco Holdings Common Shares, no par value per share
1,089,851,783 Unibanco
Holdings Preferred Shares, no par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Unibanco:
      
      Yes
      
      NoUnibanco Holdings:
      
      Yes
      
      No


If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

|                   |  |     |  |   
|------------------ |  | --- |  | --
|Unibanco:          |  | Yes |  | No
|Unibanco Holdings: |  | Yes |  | No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements for the past 90 days:

|                   |  |     |  |   
|------------------ |  | --- |  | --
|Unibanco:          |  | Yes |  | No
|Unibanco Holdings: |  | Yes |  | No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check One):

|                   |  |                         |  |                   |  |                      
|------------------ |  | ----------------------- |  | ----------------- |  | ---------------------
|Unibanco:          |  | Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer
|Unibanco Holdings: |  | Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

|          |  |      |  |      
|--------- |  | ---- |  | -----
|U.S. GAAP |  | IFRS |  | Other

If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

|        |  |        
|------- |  | -------
|Item 17 |  | Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

|                   |  |     |  |   
|------------------ |  | --- |  | --
|Unibanco:          |  | Yes |  | No
|Unibanco Holdings: |  | Yes |  | No

*Not for trading purposes, but only in connection with the registration of Global Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

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TABLE OF CONTENTS

|                                                              |  |     
|------------------------------------------------------------- |  | ----
|                                                              |  | Page
|                                                             
|                                                             
|NOTE ON JOINT FILING                                          |  | 3   
|PRESENTATION OF FINANCIAL INFORMATION                         |  | 3   
|FORWARD-LOOKING STATEMENTS                                    |  | 4   
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |  | 6   
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE               |  | 6   
|ITEM 3. KEY INFORMATION                                       |  | 6   
|3.A Selected Financial Data                                   |  | 6   
|3.B Capitalization and Indebtedness                           |  | 10  
|3.C Reasons for the Offer and Use of Proceeds                 |  | 10  
|3.D Risk Factors                                              |  | 10  
|ITEM 4. INFORMATION ON THE COMPANY                            |  | 19  
|4.A History and Development of the Company                    |  | 19  
|4.B Business Overview                                         |  | 23  
|4.C Organizational Structure                                  |  | 69  
|4.D Property, Plants and Equipment                            |  | 70  
|4.E Unresolved Staff Comments                                 |  | 70  
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS          |  | 70  
|5.A Operating Results                                         |  | 80  
|5.B Liquidity and Capital Resources                           |  | 99  
|5.C Research and Development, Patents and Licences, Etc       |  | 113 
|5.D Trend Information                                         |  | 113 
|5.E Off-Balance Sheet Arrangements                            |  | 114 
|5.F Tabular Disclosure of Contractual Obligations             |  | 116 
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            |  | 134 
|6.A Directors and Senior Management                           |  | 134 
|6.B Compensation                                              |  | 141 
|6.C Board Practices                                           |  | 143 
|6.D Employees                                                 |  | 145 
|6.E Share Ownership                                           |  | 148 
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     |  | 148 
|7.A Major Shareholders                                        |  | 148 
|7.B Related Party Transactions                                |  | 150 
|7.C Interests of Experts and Counsel                          |  | 151 
|ITEM 8. FINANCIAL INFORMATION                                 |  | 151 
|8.A Consolidated Statements and Other Financial Information   |  | 151 
|8.B Significant Changes                                       |  | 154 
|ITEM 9. THE OFFER AND LISTING                                 |  | 154 
|9.A Offer and Listing Details                                 |  | 154 
|9.B Plan of Distribution                                      |  | 156 
|9.C Markets                                                   |  | 156 
|9.D Selling Shareholders                                      |  | 156 
|9.E Dilution                                                  |  | 156 
|ITEM 10. ADDITIONAL INFORMATION                               |  | 156 
|10.A Share capital                                            |  | 156 
|10.B Memorandum and Articles of Association                   |  | 156 
|10.C Material Contracts                                       |  | 170 
|10.D Exchange Controls                                        |  | 170 
|10.E Taxation                                                 |  | 173 
|10.F Dividends and Paying Agents                              |  | 180 
|10.G Statement by Experts                                     |  | 180 
|10.H Documents on Display                                     |  | 180 
|10.I Subsidiary Information                                   |  | 181 

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|                                                                                      |  |    
|------------------------------------------------------------------------------------- |  | ---
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 181
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 189
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 189
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 190
|ITEM 15. CONTROLS AND PROCEDURES                                                      |  | 190
|16.A Audit Committee Financial Expert                                                 |  | 191
|16.B Code of Ethics                                                                   |  | 191
|16.C Principal Accountants Fees And Services                                         |  | 191
|16.D Exemptions From the Listing Standards for Audit Committees                       |  | 193
|16.E Purchases of Equity Securities by the Issuer and Affiliated Purchasers           |  | 193
|ITEM 17. FINANCIAL STATEMENTS                                                         |  | 195
|ITEM 18. FINANCIAL STATEMENTS                                                         |  | 195
|ITEM 19. EXHIBITS                                                                     |  | 196
|1.1 Exhibit 1.1                                                                       |  |    
|1.2 Exhibit 1.2                                                                       |  |    
|8.1 Exhibit 8.1                                                                       |  |    
|12.1 Exhibit 12.1                                                                     |  |    
|12.2 Exhibit 12.2                                                                     |  |    
|13.1 Exhibit 13.1                                                                     |  |    
|SIGNATURES                                                                            |  | 197

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NOTE ON JOINT FILING

This annual report on Form 20-F has been jointly filed, with the permission of the Securities and Exchange Commission, by UnibancoUnião de Bancos Brasileiros S.A. and our parent company, Unibanco Holdings
S.A.  As of May 31, 2008, Unibanco Holdings holds 97.1% of our outstanding common shares and 12.1% of our outstanding preferred shares. Unibanco Holdings substantially engages in no activities other than holding our shares. (See Note 32 to the
Consolidated Financial Statements to this annual report).

PRESENTATION OF FINANCIAL INFORMATION

In this annual report, we refer to Unibanco-União de Bancos Brasileiros S.A. and, unless the context otherwise requires, its consolidated subsidiaries as Unibanco, the Company,
we or us.  We refer to Unibanco Holdings S.A. as Unibanco Holdings. All references in this annual report to a Unit or Units are to our units that are traded on the New York Stock Exchange.
Each Unit represents one Unibanco preferred share and one Unibanco Holdings preferred share.

All references in this annual report to the real, reais, or R$ are to the Brazilian real, the official currency of the Federative Republic of Brazil since July 1, 1994. All references to U.S. dollars, dollars or
US$ are to United States dollars.

On May 31, 2008, the exchange rate for reais into U.S. dollars was R$1.6294 to US$1.00, based on the commercial selling exchange rate as reported by the Banco Central do Brasil, the Central Bank of Brazil
(Central Bank). The commercial selling exchange rate was R$1.7713 to US$1.00 as of December 31, 2007.

Our audited consolidated financial statements are included in Item 18 of this annual report. These financial statements include the assets, liabilities, results of operations and cash flows of our subsidiaries, as well
as our branches outside Brazil. Unibanco Holdings, a corporation organized under the laws of Brazil, controls us through its ownership, as of May 31, 2008, of 97.1% of our outstanding common shares and 12.1% of our outstanding preferred shares.
Unibanco Holdings engages in no material activities other than holding our shares. As a result, the financial statements of Unibanco Holdings are similar to ours in all material respects, except for other assets and liabilities, time deposits and
the minority interest lines of the balance sheet and income statement and the financing activities section of the cash flow statement. References herein to our consolidated financial statements also refer to the financial statements of Unibanco
Holdings.

Our audited consolidated balance sheets as of December 31, 2006 and 2007 and consolidated statements of income, changes in shareholders equity and cash flows for each of the three-years ended December 31, 2007,
including the notes thereto, included in this annual report have been prepared in accordance with U.S. GAAP. For certain purposes, such as providing reports to our Brazilian shareholders, filing financial statements with the Comissão de
Valores Mobiliários, the Brazilian Securities Commission (CVM), and determining dividend payments and tax liabilities in Brazil, we have prepared and will continue to be required to prepare financial statements in accordance with
applicable Brazilian accounting practices (Accounting Practices Adopted in Brazil) and the Brazilian Corporate Law.

Our segment financial information is based on how our operations are managed. Our senior management utilizes this segment information to assess segment performance and to allocate resources. Such information is prepared
based on management criteria defined by our executive committee and is duly reconciled with our financial statements prepared in accordance with Brazilian GAAP.

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Throughout this annual report, we present financial information by operating segment, with respect to our five business segments: Retail, Wholesale, Treasury, Insurance and Pension Plans and Wealth Management; and one
non-operating Corporation segment.

The measurement methods used to segment our net income by business segment consider: (i) interest paid to the non-operating Corporation Segment on capital allocated on each business; and (ii) full cost allocation, including direct and overhead costs. In the Adjustments and Reclassifications column, we disclose the differences between the management reporting basis and the USGAAP criteria.

Beginning 2007, operational changes in the measurement methods enabled us to describe our non-operating Corporation Segment, which captures (i) the interest earned on the capital allocated to the operating segments; (ii) temporary
differences between management criteria and Accounting Practices Adopted in Brazil; and (iii) the effects of certain corporate matters, which occur as a result of management decisions, such as the sale of an investment. Additionally, beginning in
2007, the treasury activities currently performed by recently created Treasury segment were performed before 2007 by our Wholesale segment.

For comparison purposes, we have also presented all segment financial information for the years ended December 31, 2005 and 2006 based on the current methodology. For further information, see note 31 to our audited
consolidated financial statements.

Certain amounts (including percentages and totals) appearing herein have been rounded.

Unless the context otherwise requires, all references to loans include leases.  Certain industry data presented herein have been derived from sources that we believe to be reliable, however, we have not independently
verified this data and we assume no responsibility for its accuracy or completeness. Sources include Sistema do Banco Central, a database of information provided by financial institutions to the Central Bank (SISBACEN);
Federação Nacional das Empresas de Seguros Privados e de Capitalização, the National Federation of Private Insurance and Capitalization Companies (FENASEG); Superintendência de Seguros Privados, the
Brazilian government insurance regulatory body (SUSEP); Associação Nacional de Bancos de Investimento e Distribuidoras, the National Association of Investment Banks and Security Dealers (ANBID);
Fundação Getúlio Vargas, a leading Brazilian independent economic research organization (FGV); and Associação de Empresas de Cartão de Crédito e Serviços, the Brazilian Credit Cards
Companies Association (ABECS).

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements relating to our business that are based on managements current expectations, estimates and projections. Words such as believes,
expects, intends, plans, projects, estimates, anticipates and similar expressions are used to identify such forward-looking statements. These statements are not guarantees of
future performance and involve risks and uncertainties that are difficult to predict.  Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and
results may differ materially from those expressed or implied in such forwardlooking statements.

Factors that could cause actual results to differ materially include, but are not limited to, those discussed under Item 3.  Key Information-Risk Factors, and under Item 5. Operating and Financial
Review and Prospects and elsewhere in this annual report. These factors include:

- increases in defaults by our borrowers and other loan delinquencies;
- increases in our provision for loan losses;
- deposit attrition, customer loss or revenue loss;
- changes in foreign exchange rates and/or interest rates which may, among other things, adversely affect margins;

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- competition in the banking, financial services, credit card services, insurance, asset management and other industries in which we operate;
- government regulation and tax matters;
- adverse legal or regulatory disputes or proceedings;
- credit and other risks of lending and investment activities; and
- changes in regional, national and international business and economic conditions and inflation.

We do not assume, and specifically disclaim, any obligation to update any forward-looking statements, which speak only as of the date made.

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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A Selected Financial Data

Our consolidated financial statements are presented in reais. For more details related to the latest, high and low exchange rates for reais into U.S. dollars, including the high and low exchange rates for
  each month during the previous eight months and for the five most recent financial years, see Item 10.D  Additional Information  Exchange Controls.

Our selected historical financial data as of December 31, 2006 and 2007 and for each of the three years in the period ended December 31, 2007 have been derived from, and should be read in conjunction with, our audited
  consolidated financial statements included in this annual report.  The selected financial data as of December 31, 2003, 2004 and 2005 and for each of the two years in the period ended December 31, 2004 are derived from our audited consolidated
  financial statements, which are not included in this annual report. Our consolidated financial statements as of and for the years ended December 31, 2004, 2005, 2006 and 2007 have been audited by PricewaterhouseCoopers Auditores Independentes,
  São Paulo, Brazil.  Our consolidated financial statements as of and for the year ended December 31, 2003 have been audited by Deloitte Touche Tohmatsu Auditores Independentes, São Paulo, Brazil. The reports of the
  independent registered public accounting firms as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007 are filed as part of this annual report.

In addition, our selected historical financial data that is prepared in accordance with the Accounting Practices Adopted in Brazil as of December 31, 2003 to 2007 and for the five years ended December 31, 2007 are
  derived from, and should be read in conjunction with our audited consolidated financial statements not included in this annual report, but filed at the CVM.

Because the consolidated financial statements of Unibanco are substantially similar in all material respects to those of Unibanco Holdings except for other assets and liabilities, minority interest, earnings per share
  and the cash flow statement, separate selected financial data for Unibanco Holdings have not been presented.

The following selected financial data should be read in conjunction with Presentation of Financial Information and Item 5. Operating and Financial Review and Prospects.

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|                                                    |  |                                 |  |          |  |          |  |          |  |          
|--------------------------------------------------- |  | ------------------------------- |  | -------- |  | -------- |  | -------- |  | ---------
|                                                    |  | For the Year Ended December 31,
|                                                    |  |                                 |  |         
|                                                    |  | 2003                            |  | 2004     |  | 2005     |  | 2006     |  | 2007     
|                                                    |  |                                 |  |          |  |          |  |          |  |          
|USGAAP:                                             |  | (in millions of R$)            
|Unibanco Consolidated Income Statement Data:        |  |                                 |  |          |  |          |  |          |  |          
|Net interest income(17)                             |  | R$ 4,950                        |  | R$ 5,717 |  | R$ 8,577 |  | R$ 9,575 |  | R$ 10,501
|Provision for loan losses                           |  | (881)                           |  | (948)    |  | (1,870)  |  | (2,030)  |  | (1,935)  
|                                                    |  |                                 |  |          |  |          |  |          |  |          
|Net interest income after provision for loan losses |  | 4,069                           |  | 4,769    |  | 6,707    |  | 7,545    |  | 8,566    
|Fee and commission income(17)                       |  | 2,151                           |  | 2,381    |  | 2,712    |  | 3,008    |  | 3,084    
|Equity in results of unconsolidated companies (1)   |  | 199                             |  | 220      |  | 158      |  | 195      |  | 261      
|Other non-interest income (2)                       |  | 3,152                           |  | 4,239    |  | 3,712    |  | 4,384    |  | 8,508    
|Operating expenses (3)(17)(18)                      |  | (4,459)                         |  | (5,040)  |  | (5,756)  |  | (6,145)  |  | (6,496)  
|Other non-interest expense (4)(18)                  |  | (3,731)                         |  | (4,055)  |  | (5,265)  |  | (6,345)  |  | (8,290)  
|                                                    |  |                                 |  |          |  |          |  |          |  |          
|Income before income taxes and minority interest    |  | 1,381                           |  | 2,514    |  | 2,268    |  | 2,642    |  | 5,633    
|Income taxes                                        |  | (354)                           |  | (295)    |  | (460)    |  | (532)    |  | (1,346)  
|Minority interest                                   |  | (154)                           |  | (156)    |  | (158)    |  | (149)    |  | (727)    
|Change in accounting principle                      |  | -                               |  | -        |  | -        |  | (10)     |  | -        
|                                                    |  |                                 |  |          |  |          |  |          |  |          
|Net income                                          |  | R$ 873                          |  | R$ 2,063 |  | R$ 1,650 |  | R$ 1,951 |  | R$ 3,560 
|                                                    |  |                                 |  |          |  |          |  |          |  |          

|                                                              |  |                                 |  |           |  |           |  |           |  |          
|------------------------------------------------------------- |  | ------------------------------- |  | --------- |  | --------- |  | --------- |  | ---------
|                                                              |  | For the Year Ended December 31,
|                                                              |  |                                 |  |          
|                                                              |  | 2003                            |  | 2004      |  | 2005      |  | 2006      |  | 2007     
|                                                              |  |                                 |  |           |  |           |  |           |  |          
|                                                              |  | (in R$, except per share data) 
|Unibanco Earnings and Dividends Information:(16)              |  |                                 |  |           |  |           |  |           |  |          
|Basic and diluted earnings per shares:                        |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | R$ 0.31                         |  | R$ 0.71   |  | R$ 0.57   |  | R$ 0.66   |  | R$ 1.22  
|Preferred                                                     |  | 0.34                            |  | 0.78      |  | 0.62      |  | 0.73      |  | 1.34     
|Distributed earnings (dividends) per shares:                  |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 0.15                            |  | 0.18      |  | 0.25      |  | 0.30      |  | 0.46     
|Preferred                                                     |  | 0.17                            |  | 0.20      |  | 0.27      |  | 0.33      |  | 0.51     
|Weighted average shares outstanding (in thousands)  Basic:   |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 1,511,356                       |  | 1,511,316 |  | 1,511,316 |  | 1,511,316 |  | 1,511,316
|Preferred                                                     |  | 1,245,662                       |  | 1,262,448 |  | 1,282,354 |  | 1,291,496 |  | 1,289,541
|Weighted average shares outstanding (in thousands)  Diluted: |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 1,511,356                       |  | 1,511,316 |  | 1,511,316 |  | 1,511,316 |  | 1,511,316
|Preferred                                                     |  | 1,246,070                       |  | 1,263,286 |  | 1,284,400 |  | 1,295,478 |  | 1,295,621
|Unibanco Holdings Earnings and Dividends Information:(16)     |  |                                 |  |           |  |           |  |           |  |          
|Basic and diluted earnings per shares:                        |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 0.30                            |  | 0.71      |  | 0.56      |  | 0.65      |  | 1.19     
|Preferred A                                                 |  | 0.07                            |  | -         |  | -         |  | -         |  | -        
|Preferred                                                     |  | 0.30                            |  | 0.71      |  | 0.56      |  | 0.65      |  | 1.19     
|Distributed earnings (dividends) per shares:                  |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 0.14                            |  | 0.16      |  | 0.21      |  | 0.28      |  | 0.40     
|Preferred A                                                 |  | 0.07                            |  | -         |  | -         |  | -         |  | -        
|Preferred                                                     |  | 0.14                            |  | 0.16      |  | 0.21      |  | 0.28      |  | 0.40     
|Weighted average shares outstanding (in thousands)  Basic:   |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 699,508                         |  | 630,292   |  | 600,846   |  | 553,736   |  | 553,736  
|Preferred A                                                 |  | 47,306                          |  | -         |  | -         |  | -         |  | -        
|Preferred                                                     |  | 908,424                         |  | 1,020,200 |  | 1,046,090 |  | 1,080,865 |  | 1,074,303
|Weighted average shares outstanding (in thousands)  Diluted: |  |                                 |  |           |  |           |  |           |  |          
|Common                                                        |  | 699,508                         |  | 630,292   |  | 600,846   |  | 553,736   |  | 553,736  
|Preferred A                                                 |  | 47,306                          |  | -         |  | -         |  | -         |  | -        
|Preferred                                                     |  | 908,830                         |  | 1,021,036 |  | 1,048,134 |  | 1,084,847 |  | 1,080,383

|                                                          |  |                                 |  |      |  |      |  |      |  |     
|--------------------------------------------------------- |  | ------------------------------- |  | ---- |  | ---- |  | ---- |  | ----
|                                                          |  | For the Year Ended December 31,
|                                                          |  |                                 |  |     
|                                                          |  | 2003                            |  | 2004 |  | 2005 |  | 2006 |  | 2007
|                                                          |  |                                 |  |      |  |      |  |      |  |     
|                                                          |  | (in U.S. dollars)              
|Unibanco Earnings and Dividends Information:(16)          |  |                                 |  |      |  |      |  |      |  |     
|Distributed earnings (dividends) per shares:              |  |                                 |  |      |  |      |  |      |  |     
|Common                                                    |  | 0.08                            |  | 0.10 |  | 0.14 |  | 0.17 |  | 0.26
|Preferred                                                 |  | 0.10                            |  | 0.11 |  | 0.15 |  | 0.19 |  | 0.29
|                                                         
|                                                         
|                                                          |  | For the Year Ended December 31,
|                                                          |  |                                 |  |     
|                                                          |  | 2003                            |  | 2004 |  | 2005 |  | 2006 |  | 2007
|                                                          |  |                                 |  |      |  |      |  |      |  |     
|                                                          |  | (in U.S. dollars)              
|Unibanco Holdings Earnings and Dividends Information:(16) |  |                                 |  |      |  |      |  |      |  |     
|Distributed earnings (dividends) per shares:              |  |                                 |  |      |  |      |  |      |  |     
|Common                                                    |  | 0.08                            |  | 0.09 |  | 0.12 |  | 0.16 |  | 0.23
|Preferred A                                             |  | 0.04                            |  | -    |  | -    |  | -    |  | -   
|Preferred                                                 |  | 0.08                            |  | 0.09 |  | 0.12 |  | 0.16 |  | 0.23

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|                                                                        |  |                     |  |           |  |           |  |           |  |          
|----------------------------------------------------------------------- |  | ------------------- |  | --------- |  | --------- |  | --------- |  | ---------
|                                                                        |  | As of December 31, 
|                                                                        |  |                     |  |           | 
|                                                                        |  | 2003                |  | 2004      |  | 2005      |  | 2006      |  | 2007     
|                                                                        |  |                     |  |           |  |           |  |           |  |          
|                                                                        |  | (in millions of R$)
|Unibanco Consolidated Balance Sheet Data:                               |  |                     |  |           |  |           |  |           |  |          
|Assets                                                                  |  |                     |  |           |  |           |  |           |  |          
|Cash and due from banks                                                 |  | R$ 812              |  | R$ 1,575  |  | R$ 1,158  |  | R$ 1,304  |  | R$ 4,444 
|Interest-bearing deposits in other banks                                |  | 2,886               |  | 3,579     |  | 5,107     |  | 7,632     |  | 8,592    
|Federal funds sold and securities purchased under resale agreements     |  | 8,874               |  | 11,679    |  | 10,014    |  | 14,513    |  | 31,068   
|Trading, available for sale and held to maturity                        |  | 14,666              |  | 14,875    |  | 19,580    |  | 18,766    |  | 24,790   
|Loans                                                                   |  | 26,039              |  | 31,377    |  | 39,237    |  | 44,654    |  | 60,348   
|Allowance for loan losses                                               |  | (1,317)             |  | (1,560)   |  | (2,107)   |  | (2,577)   |  | (2,712)  
|Investments in unconsolidated companies                                 |  | 616                 |  | 536       |  | 623       |  | 802       |  | 905      
|Goodwill and intangibles, net(18)                                       |  | 1,248               |  | 1,630     |  | 1,620     |  | 2,143     |  | 2,130    
|Total assets                                                            |  | 66,047              |  | 77,858    |  | 89,818    |  | 102,563   |  | 148,271  
|Average assets                                                          |  | 64,579              |  | 74,383    |  | 80,628    |  | 99,302    |  | 122,144  
|                                                                       
|Liabilities and Shareholders Equity                                    |  |                     |  |           |  |           |  |           |  |          
|Deposits                                                                |  | R$ 25,700           |  | R$ 33,775 |  | R$ 35,936 |  | R$ 36,201 |  | R$ 46,495
|Federal funds purchased and securities sold under repurchase agreements |  | 6,750               |  | 6,687     |  | 10,721    |  | 16,991    |  | 27,197   
|Short-term borrowings                                                   |  | 3,113               |  | 2,677     |  | 3,239     |  | 3,045     |  | 7,627    
|Long-term debt                                                          |  | 13,348              |  | 11,700    |  | 12,850    |  | 14,638    |  | 21,714   
|Shareholders equity                                                    |  | 6,754               |  | 8,572     |  | 9,534     |  | 10,439    |  | 13,037   
|Average liabilities                                                     |  | 58,085              |  | 66,723    |  | 71,605    |  | 89,301    |  | 110,111  
|Average shareholders equity                                            |  | 6,494               |  | 7,660     |  | 9,023     |  | 10,001    |  | 12,033   

|                                                                            |  |                    |  |       |  |       |  |       |  |      
|--------------------------------------------------------------------------- |  | ------------------ |  | ----- |  | ----- |  | ----- |  | -----
|                                                                            |  | As of December 31,
|                                                                            |  |                    |  |       |  |      
|                                                                            |  | 2003               |  | 2004  |  | 2005  |  | 2006  |  | 2007 
|                                                                            |  |                    |  |       |  |       |  |       |  |      
|Selected Consolidated Ratios:                                               |  |                    |  |       |  |       |  |       |  |      
|Profitability and Performance                                               |  |                    |  |       |  |       |  |       |  |      
|Net Interest margin (5)                                                     |  | 9.2%               |  | 9.3%  |  | 12.8% |  | 11.5% |  | 10.0%
|Return on average assets (6)                                                |  | 1.4                |  | 2.8   |  | 2.0   |  | 2.0   |  | 2.9  
|Return on average equity (7)                                                |  | 13.4               |  | 26.9  |  | 18.3  |  | 19.5  |  | 29.6 
|Efficiency ratio (8)                                                        |  | 68.4               |  | 60.9  |  | 59.1  |  | 57.9  |  | 47.1 
|Dividends payout ratio common and preferred                                 |  | 49.2               |  | 25.4  |  | 44.0  |  | 45.6  |  | 37.9 
|                                                                           
|Liquidity                                                                   |  |                    |  |       |  |       |  |       |  |      
|Loans as a percentage of total deposits                                     |  | 101.3              |  | 92.9  |  | 109.2 |  | 123.4 |  | 129.8
|                                                                           
|Capital                                                                     |  |                    |  |       |  |       |  |       |  |      
|Average shareholders equity as a percentage of average total assets        |  | 10.1               |  | 10.3  |  | 11.2  |  | 10.1  |  | 9.9  
|Total equity as a percentage of total assets                                |  | 10.2               |  | 11.0  |  | 10.6  |  | 10.2  |  | 8.8  
|Total capital to risk-weighted assets (9)                                   |  | 18.6               |  | 16.3  |  | 15.6  |  | 16.0  |  | 14.7 
|                                                                           
|Asset Quality                                                               |  |                    |  |       |  |       |  |       |  |      
|Allowance for loan losses as a percentage of total loans                    |  | 5.1                |  | 5.0   |  | 5.4   |  | 5.8   |  | 4.5  
|Nonperforming loans as a percentage of total loans (10)                     |  | 4.5                |  | 4.1   |  | 4.3   |  | 5.1   |  | 3.6  
|Allowance for loan losses as a percentage of total nonperforming loans (10) |  | 113.4              |  | 122.4 |  | 124.4 |  | 113.1 |  | 125.1
|Net charge-offs as a percentage of average loans outstanding (11)           |  | 3.8                |  | 2.5   |  | 3.8   |  | 3.8   |  | 3.5  

8

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|                                                   |  |                                               |  |          |  |          |  |          |  |         
|-------------------------------------------------- |  | --------------------------------------------- |  | -------- |  | -------- |  | -------- |  | --------
|                                                   |  | As of December 31,                           
|                                                   |  |                                               |  |          | 
|                                                   |  | 2003                                          |  | 2004     |  | 2005     |  | 2006     |  | 2007    
|                                                   |  |                                               |  |          |  |          |  |          |  |         
|                                                   |  | (in millions of R$, except per share amounts)
|Accounting Practices Adopted in Brazil:(12)        |  |                                               |  |          |  |          |  |          |  |         
|Consolidated Income Statement Data:                |  |                                               |  |          |  |          |  |          |  |         
|Profit from financial intermediation               |  | R$ 5,198                                      |  | R$ 5,194 |  | R$ 6,493 |  | R$ 7,319 |  | R$ 8,354
|Net income                                         |  | 1,052                                         |  | 1,283    |  | 1,838    |  | 1,750    |  | 3,448   
|Unibanco Earnings and Dividends Information:       |  |                                               |  |          |  |          |  |          |  |         
|Earnings per 1,000 shares:                         |  |                                               |  |          |  |          |  |          |  |         
|Common                                             |  | 3.83                                          |  | 459.57   |  | 657.73   |  | 624.96   |  | 1,233.90
|Preferred                                          |  | 3.83                                          |  | 459.57   |  | 657.73   |  | 624.96   |  | 1,233.90
|Distributed earnings (dividends) per 1,000 shares: |  |                                               |  |          |  |          |  |          |  |         
|Common                                             |  | 1.48                                          |  | 180.94   |  | 249.66   |  | 302.06   |  | 461.11  
|Preferred                                          |  | 1.63                                          |  | 197.59   |  | 271.58   |  | 336.02   |  | 505.47  

|                                            |  |                                          |  |           |  |           |  |         |  |           
|------------------------------------------- |  | ---------------------------------------- |  | --------- |  | --------- |  | ------- |  | ----------
|                                            |  | As of December 31,                      
|                                            |  |                                          |  |           | 
|                                            |  | 2003                                     |  | 2004      |  | 2005      |  | 2006    |  | 2007      
|                                            |  |                                          |  |           |  |           |  |         |  |           
|                                            |  | ( in millions of R$, except percentages)
|Accounting Practices Adopted in Brazil:(12) |  |                                          |  |           |  |           |  |         |  |           
|Consolidated Balance Sheet Data:            |  |                                          |  |           |  |           |  |         |  |           
|Total assets                                |  | R$ 69,632                                |  | R$ 79,350 |  | R$ 91,831 |  | 103,778 |  | R$ 149,597
|Total loans                                 |  | 27,678                                   |  | 31,796    |  | 39,875    |  | 45,361  |  | 61,435    
|Total deposits                              |  | 25,357                                   |  | 33,530    |  | 35,499    |  | 35,633  |  | 45,643    
|Shareholders equity                        |  | 7,156                                    |  | 8,106     |  | 9,324     |  | 9,921   |  | 11,837    
|Selected Consolidated Ratios:               |  |                                          |  |           |  |           |  |         |  |           
|Return on average assets (13)               |  | 1.5%                                     |  | 1.7%      |  | 2.1%      |  | 1.8%    |  | 2.7%      
|Return on average equity (14)               |  | 15.3                                     |  | 16.8      |  | 21.1      |  | 18.2    |  | 31.7      
|Efficiency ratio (15)                       |  | 57.7                                     |  | 60.9      |  | 51.5      |  | 49.7    |  | 48.2      
|Total capital to risk weighted assets (9)   |  | 18.6                                     |  | 16.3      |  | 15.6      |  | 16.0    |  | 14.7      

|(1)  | For more information on our equity in results of unconsolidated companies, see Item 5. Operating and Financial Review and Prospects - Accounting for results of unconsolidated affiliates and Item 5.A. Operating Results and
      note 11 to our consolidated financial statements.                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  | Other non-interest income consists of trading income, net, net gains (losses) on foreign currency transactions, net gains (losses) on securities and non-trading derivatives, insurance, private retirement plan and pension investment contracts and
      other non-interest income.
      For more information see note 23 to our consolidated financial statements and Item 5.A. Operating Results.
|    
|(3)  | Operating expenses consist of salaries and benefits and administrative expenses.                                                                                                                                                                                                                                                                                                                         
|    
|(4)  | Other non-interest expense consists of amortization of intangibles and impairment on goodwill, insurance, private retirement plan and pension investment contracts and other non-interest expenses.                                                                                                                                                                                                      
|    
|(5)  | Net interest income as a percentage of average interest-bearing assets.                                                                                                                                                                                                                                                                                                                                  
|    
|(6)  | Net income as a percentage of total average assets.                                                                                                                                                                                                                                                                                                                                                      
|    
|(7)  | Net income as a percentage of average shareholders equity.                                                                                                                                                                                                                                                                                                                                              
|    
|(8)  | Operating expenses as a percentage of the aggregate of net interest income, fee and commission income, other non-interest income and other non-interest expense.                                                                                                                                                                                                                                         
|    
|(9)  | Based on the Central Bank guidelines. See Item 4.B. Business Overview.                                                                                                                                                                                                                                                                                                                                 
|    
|(10) | Nonperforming loans consist of loans 60 days or more overdue.                                                                                                                                                                                                                                                                                                                                            
|    
|(11) | Charge-offs net of loan recoveries during the period as a percentage of average loans outstanding.                                                                                                                                                                                                                                                                                                       
|    
|(12) | Our Brazilian financial statements are prepared in accordance with the requirements of Brazilian Corporate Law and the regulations of the Central Bank, SUSEP and CMV. We did not consider the reverse share split (1:100 shares), on August 30, 2004, for the year of 2003, and the share bonus (2:1 shares), implemented on July 17, 2006, for the years of 2003 to 2006.                              
|    
|(13) | Net income as a percentage of average total assets.                                                                                                                                                                                                                                                                                                                                                      
|    
|(14) | Net income as a percentage of average shareholders equity.                                                                                                                                                                                                                                                                                                                                              
|    
|(15) | Operating expenses as a percentage of the aggregate profit from financial intermediation and other income.                                                                                                                                                                                                                                                                                               
|    
|(16) | Earnings per share have been adjusted for all periods presented to reflect the new number of shares that resulted from the reverse share split (1:100 shares), on August 30, 2004 and to reflect share bonus (2:1 shares) implemented on
      July 17,2006, in accordance with SFAS 128 Earnings per share (see Note 19 to our consolidated financial statements).                                    
|    
|(17) | The amounts of R$1 for 2003 and 2004, R$102 for 2005 and R$132 for 2006, related to fees on loans, were reclassified from Fee and commission income to Net interest income, and the amounts of R$75 for 2003,
      R$58 for 2004, R$91 for 2005 and R$87 for 2006, related to costs associated with fees on loans, were reclassified from Operating expenses to Net interest income.            
|     |                                                                                                                                                                                                                                                                                                                                                                                                          
|(18) | The amount of R$ 120 for 2006, were reclassified from Other assets to Goodwill and intangibles, net, and the amounts of R$4 for 2005 and R$19 for 2006 were reclassified from Operating expenses to
      Other non-interest expense. These amounts are related to payroll management and financial resource administration services.                                                            

9

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3.B Capitalization and Indebtedness

Not applicable.

3.C Reasons for the Offer and Use of Proceeds

Not applicable.

3.D Risk Factors

Set forth below is certain risk factors that could have a material adverse effect on our future business, operating results or financial condition. You should consider these risk factors and the other information in
this document before making investment decisions involving our Units.  Additional risks not currently known to us, or which we deem to be immaterial now, may also have a material adverse effect on our business, financial condition, results of
operations and your investment.

Risks Relating to Brazil

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, could adversely affect our business and the market
price of our Units.

During certain periods, the Brazilian government has intervened in the Brazilian economy and, it may occasionally make changes in economic policy and regulations. The Brazilian governments actions to control
inflation and implement macroeconomic policies and regulations have involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results of operations may be
adversely affected by changes in government policies or regulations, including such factors as:

- inflation rates;
- interest rates;
- monetary policy;
- liquidity of domestic capital and lending markets;
- domestic economic growth;
- changes in the tax regime, including charges applicable to the banking industry;
- exchange rates and exchange control policies; and
- other political, diplomatic, social and economic developments in or affecting Brazil.

Devaluation of the real against the U.S. dollar may harm our and our Brazilian borrowers ability to pay dollar-denominated or dollar-indexed obligations.

Our financial condition and results of operations have been affected in the past, and will likely continue to be affected, by the devaluation of the real that has followed the Brazilian governments decision
in January 1999 to allow the real to float freely.

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The exchange rate between the real and the U.S. dollar has varied in recent years. The realhas appreciated against the U.S. dollar, by 18.3%, 8.1%, 11.8%, 8.7% and 17.2% in 2003, 2004, 2005, 2006 and
2007, respectively, and the Brazilian economic scenario was favorable to the Brazilian currency during such period. In Brazils recent history, the realhas at times devalued in value against the U.S. dollar, such as the 52.3%
devaluation that occurred in 2002. When we refer to a specific percentage devaluation or appreciation of the real against the U.S. dollar in any year, we have derived such percentage by comparing the number of reais exchangeable for
one U.S. dollar at the end of the given year to the number of reais exchangeable for one U.S. dollar at the end of the previous year, as reported by the Central Bank.

Devaluation of the real against the U.S. dollar and other foreign currencies may impair our ability to pay our dollar-denominated or dollar-indexed liabilities by making it more costly for us to obtain the
foreign currency required to pay such obligations.

Devaluation of the realmay affect us by impairing the ability of our Brazilian corporate borrowers to repay dollar-denominated or dollar-indexed liabilities to us.  When the realis devalued, we incur
losses on our liabilities denominated in or indexed to foreign currencies, and experience gains on our monetary assets denominated in or indexed to foreign currencies, as the liabilities and assets are translated into reais.

If a devaluation occurs when our payment obligations with respect to liabilities denominated in or indexed to U.S. dollars significantly exceed the amount receivable in respect of assets denominated in or indexed to
U.S. dollars, including any financial instruments entered into for hedging purposes, we could incur losses, even if the value of such financial instruments has not changed in their original currency.

In addition, our lending and leasing operations depend significantly on our capacity to match the cost of funds indexed to the U.S. dollar with the rates charged to our customers. A significant devaluation of the
real against the U.S. dollar will increase our cost of funds and require us to raise our rates on our loans, which, as a result, may affect our ability to attract new customers who might be deterred from paying such higher rates.

Appreciation of the real against the U.S. dollar may adversely affect our income tax liability.

During periods when the real appreciates against the currencies in which we hold our investments in our non-Brazilian subsidiaries and branches, we may experience an increase in our income tax liability.  This
increase may occur because losses in realterms on our overseas investments are not deductible for Brazilian tax purposes, whereas gains in the value of the related real-denominated hedges we maintain are generally taxable. At the end
of 2007, our material foreign investments were economically hedged in order to mitigate any effects arising out of foreign exchange volatility, including the potential fiscal impact of such investments.

Volatility of currency exchange rates may lead to an uncertain economic climate in Brazil that could negatively affect our ability to finance our operations through the international capital markets.

Devaluation of the real relative to the U.S. dollar could create inflationary pressures in Brazil by increasing the price of imported products and instigating governmental policies to curb aggregate demand. On
the other hand, appreciation of the realagainst the U.S. dollar may lead to a deterioration of the Brazilian current account and balance of payments, as well as dampening export-driven growth. The potential impact of the floating exchange
rate and of potential measures taken by the Brazilian government to stabilize the real is uncertain.

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Imposition of exchange controls could restrict our access to the international capital markets and limit our ability to service our obligations that are denominated in foreign currencies.

The purchase and sale of foreign currency in Brazil is subject to governmental control. In the past, the Brazilian government has implemented a number of policies affecting exchange rates and the servicing of external
debt by Brazilian borrowers. These policies have included sudden devaluation, periodic mini-devaluation (with the frequency of adjustments ranging from daily to monthly), floating exchange rate systems, exchange controls and the creation of a
commercial rate exchange market and a floating rate exchange market, which were combined into a single exchange rate market in March 2005.

We cannot be sure that the Brazilian government will maintain the exchange control policy currently in force or that it will not adopt a more restrictive exchange control policy. Such a policy could impede our access to
the international capital markets by making non-Brazilian lenders and investors reluctant to commit funds to Brazilian borrowers.  Such a policy could also negatively affect the ability of Brazilian debtors (including us) to make payments outside of
Brazil to meet their obligations under foreign currency-denominated liabilities. Many factors beyond our control might affect the likelihood that the government will impose exchange control restrictions. Among these factors are:

- the extent of Brazils foreign currency reserves;
- the availability of sufficient foreign exchange on the date a payment is due;
- the size of Brazils debt service burden relative to the economy as a whole; and
- political constraints to which Brazil may be subject.

See Item 10.D  Exchange Controls for further discussion of these regulations.

Substantial inflation in Brazil in the future may negatively affect our results of operations.

In the last four years, the inflation rates in Brazil have been under control. For instance, in 2004, 2005, 2006 and 2007 the Brazilian inflation rates were 12.1%, 1.2%, 3.8%, and 7.9% respectively, and in the first
five months of 2008 the aggregate inflation amount, measured by the general price index (IGP-DI), was 5.2% .  Inflation itself and governmental measures to combat inflation have, in the past, had negative effects on the Brazilian economy. Inflation,
actions taken to combat inflation, and public speculation about possible future actions have in the past also contributed to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets.  If Brazil experiences
substantial inflation in the future, our costs may increase and our operating and net margins may decrease (if not accompanied by an increase in interest rates). Inflationary pressures may curtail our ability to access foreign financial markets and
may lead to further government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Brazilian economy, which in turn could adversely affect our operations.

The market value of securities issued by Brazilian companies is influenced by the perception of risk in Brazil and other emerging economies, which may have a negative effect on the market price of our Units and may restrict our access to
international capital markets.

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Economic and market conditions in other emerging market countries, especially those in Latin America, may influence the market for securities issued by Brazilian companies. Although economic conditions in such countries
may differ significantly from economic conditions in Brazil, investors reactions to developments in these other countries may have an adverse impact on the market value of Brazilian securities. In the wake of economic problems in various emerging market countries in recent years (such as the Asian financial crisis of 1997, the Russian financial crisis of 1998 and the Argentine
financial crisis that began in 2001), investors view investments in emerging markets with heightened caution. Crises like those may produce a significant outflow of U.S. dollars from Brazil, negatively affecting the price of securities issued by
Brazilian companies, and may cause Brazilian companies to face higher costs for raising funds, both domestically and abroad, which could impede the access of Brazilian companies to international capital markets. Furthermore, crises in other emerging
market countries could hamper investor enthusiasm for securities of Brazilian issuers, including ours, which could adversely affect the market price of our Units.

Risks Relating to the Brazilian Banking Industry

Changes in regulation may negatively affect us.

Brazilian banks and insurance companies, including our banking and insurance operations, are subject to extensive and continuous regulatory review by the Brazilian government. We have no control over government
regulations, which govern all facets of our operations, including, among others, regulations that impose:

- minimum capital requirements;
- compulsory reserve requirements;
- lending limits and other credit restrictions;
- investment requirements in fixed assets;
- accounting and statistical requirements; and
- corporate governance requirements.

The regulatory structure governing Brazilian financial institutions, including banks, broker-dealers, leasing companies, and insurance companies is continuously evolving. Existing laws and regulations could be amended,
the manner in which laws and regulations are enforced or interpreted could be changed, and new laws or regulations could be adopted. Such changes could materially adversely affect our operations and our revenues.

Changes in reserve and compulsory deposit requirements may affect our profitability.

The Central Bank has, from time to time, changed the level of reserves and compulsory deposits that financial institutions in Brazil are required to maintain with the Central Bank.  The Central Bank may increase the
reserve requirements in the future or impose new reserve or compulsory deposit requirements.

Reserve and compulsory deposit requirements reduce our liquidity to make loans and other investments. In addition, compulsory deposits generally do not yield the same return as our other investments and deposits because
(i) a portion of such deposits does not bear interest, (ii) we are obligated to hold some of our compulsory deposits in Brazilian government securities and (iii) a portion of the deposits must be used to finance government programs, including a
federal housing program and rural sector subsidies.

In early 2008, the Central Bank created a compulsory deposit requirement on interbank deposits from leasing companies. Since our leasing company invests most of its available cash in interbank deposits with us, this
could have an adverse effect on our cost of funding. If the Central Bank increases the reserve or compulsory deposit requirements in the
future or imposes new reserve or compulsory deposit requirements, this could have an adverse effect on our business, financial condition and results of operations.

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Changes in minimum levels for federal housing and rural sector loans may adversely affect our profitability.

Brazilian banking regulations require that we allocate a specified percentage of our savings deposits to a federal mortgage program and a minimum percentage of our demand deposits to rural sector loans. If we do not
allocate the minimum amounts required by these programs, we must make up the difference by allocating the difference in the form of compulsory deposits with the Central Bank. Such compulsory deposits generally do not yield the same returns as our
other investments and deposits.  In addition, obligatory loans to these sectors entail more risk and are often less profitable than other lending opportunities that might be available to us. If the Central Bank increases the minimum amounts that we
must allocate to such programs, this could have an adverse effect on our business, financial condition and results of operations.

Changes in tax regulation may adversely affect our operations.

To support its fiscal policies, the Brazilian government regularly enacts reforms to tax and other assessment regimes that affect our customers and us.  Such reforms include changes in the rate of assessments and,
occasionally, enactment of temporary taxes, the proceeds of which are earmarked for designated governmental purposes.  The effects of these changes and any other changes that result from enactment of additional tax reforms have not been, and cannot
be, quantified. There can be no assurance that these reforms will not, once implemented, have an adverse effect upon our business and results of operations. Furthermore, such changes have produced uncertainty in the financial system, may increase
the cost of borrowing and may contribute to an increase in our non-performing loan portfolio.

Effective as of May 1, 2008, the tax rate of the Social Contribution on Net Income (CSLL), applicable, specifically, to financial institutions, private insurance companies, capitalization companies and any
other similar entities, increased from 9% to 15%. This increase in the CSLL rate may have a material adverse effect on our profitability and/or operating results.

See Item 5.  Operating and Financial Review and Prospects  Macroeconomic Factors Affecting Our Financial Condition and Results of Operations  Effects of Government Regulation-Effects on our Financial
Condition and Results or Operations  Other Taxes.

Changes in base interest rates by the Central Bank could adversely affect our results of operations and profitability.

The Central Bank establishes the base interest rate for the Brazilian banking system, and uses this rate as an instrument of monetary policy.  The base interest rate is the benchmark interest rate payable to holders of
some securities issued by the Brazilian government and traded at the Sistema Especial de Liquidação e Custódia, the Special System for Settlement and Custody (SELIC).

Since 2001, the Central Bank has frequently adjusted the base interest rate.  The Central Bank reduced the base interest rate during the second half of 2003 and the first half of 2004.  In order to control inflation,
the Central Bank increased the base interest rate several times from 16.0% per annum on August 18, 2004 to 19.75% per annum on May 18, 2005. During the past two years, favorable macroeconomic figures and controlled inflation within the Central Bank
target range led the Central Bank to lower the base interest rate several times from 18% in December of 2005 to 11.25% in September of 2007.

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In April and June of 2008, however, the Central Bank increased the base interest rate by 0.5% respectively, resulting in a current base interest rate of 12.25%, due to the recent macroeconomic scenario and the
expectations of inflation in 2008.

Although increases in the base interest rate typically enable us to increase financial margins, such increases could adversely affect our results of operations by, among other effects, reducing demand for our credit and
investment products, increasing our cost of funds and increasing the risk of customer default. Decreases in the base interest rate could also adversely affect our results of operations by, among other effects, decreasing the interest income we earn
on our interest-earning assets and lowering margins.  See Item 5. Operating and Financial Review and Prospects Macroeconomic Factors Affecting Our Financial Condition and Results of Operations  Effects of Government
Regulation-Effects on our Financial Condition and Results or Operations  Effects of Interest Rates on Our Financial Condition and Results of Operations.

The increasingly competitive environment and recent consolidations in the Brazilian financial services market may adversely affect our business prospects.

The Brazilian financial markets, including the banking, insurance and asset management sectors, are highly competitive. We face significant competition in all of our principal areas of operation from other large
Brazilian and international banks, both public and private, and insurance companies.

In recent years, the presence of foreign banks and insurance companies in Brazil has grown and competition in the banking and insurance sectors and in markets for specific products has increased.

The acquisition of an insurance company or of a bank by one of our competitors would likely increase such competitors market share and client base, and, as a result, we may face heightened competition.  An
increase in competition may negatively affect our business results and prospects by, among other things:

- limiting our ability to increase our client base and expand our operations;
- reducing our profit margins on the banking, insurance, leasing and other services and products we offer; and
- increasing competition for investment opportunities.

New regulations focused on increasing the competitiveness in the banking sector may adversely affect our competitiveness.

Since September 2006, the Conselho Monetário Nacional, National Monetary Council (CMN) has been enacting new regulations to foster competitiveness among Brazilian commercial banks.

Among the key aspects of these new regulations are:

- banks are prohibited from charging their clients fees for services in connection with salary, pension and other income payment accounts that such clients are required to maintain with a bank that is designated by such clients employer, pension
fund or income payer;
- financial institutions and leasing companies must accept the prepayment of loans and leasing transactions by clients who have elected to refinance such debt with other financial institutions; and

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- clients will have the right to request that a financial institution disclose their credit history to another financial institution.

These new regulations aim to increase competition among financial institutions by creating mechanisms that facilitate a clients ability to transfer their business from one financial institution to another.

In response to these regulations and in anticipation of others, we have taken several commercial and strategic measures, such as developing retention policies that exempt our clients from certain fees or decrease
certain fees in accordance to the clients profile. These strategies help us to maintain our competitive position within the banking sector and to continue charging our clients competitive interest rates without harming our profitability.

See Item 4.B Business Overview  Regulation and Supervision  Regulations  Regulations to Foster Competition for additional information with respect to these regulations.

New regulation focused on the control of the charging of commissions by financial institutions

In December 2007, the Central Bank issued a new regulation limiting the charging of commissions by financial institutions for services offered and rendered to their retail clients. This regulation standardizes the
commissions applicable to current and savings accounts and requires the authorization of the Central Bank prior to the imposition of additional commission charges.

We cannot determine at this time how this new regulation may affect our revenue derived from bank services rendered to our clients. See Item 4.B  Business Overview  Regulation and Supervision 
Restrictions and Limitations  Restrictions on Fees and Interest Ratesfor more detailed information about this new regulation.

Risks Relating to Unibanco and Unibanco Holdings

The profile of our loan portfolio may be adversely affected due to changes in Brazilian or international economic conditions.

As of December 31, 2007, our loan portfolio was R$ 60,348 million, compared to R$44,654 million as of December 31, 2006.  Our allowance for loan losses was R$ 2,712 million, representing 4.5 % of our total
loan portfolio, as of December 31, 2007, compared to R$2,577 million, representing 5.8% of our total loan portfolio, as of December 31, 2006. See Item 5. Operating and Financial Review and Prospects  Results of Operations for Year
Ended December 31, 2007 Compared to Year Ended December 31, 2006. The quality of our loan portfolio is subject to changes in the profile of our business resulting from organic growth or acquisitions that we make and is dependent on domestic
and, to a lesser extent, international, economic conditions. Some acquisitions and joint-ventures, in particular within the consumer finance arena, have affected the quality of our loan portfolio by significantly increasing our exposure to the lower
income segment of the retail market.  This sector generally features a higher volume of transactions, higher margins and higher default rates than other income brackets. Adverse changes affecting any of the sectors to which we have significant
lending exposure, political events within and external to Brazil or the variability of economic activity may have an adverse impact on our business and our results of operations. Furthermore, our historic loan loss experience may not be indicative
of our future loan losses.

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Our securities portfolio is subject to market fluctuations due to changes in Brazilian or international economic conditions.

As of December 31, 2007, investment securities represented R$24,790 million, or 16.7% of our assets, and realized and unrealized investment gains and losses have had and will continue to have a significant impact on
our results of operations. These gains and losses, which we record when investments in securities are sold or are marked to market (in the case of trading securities), may fluctuate considerably from period to period and are impacted by domestic and
international economic conditions. We cannot predict the amount of realized or unrealized gains or losses for any future period, and variations from period to period have no practical analytical value in helping us to make such a prediction. Gains
or losses on our investment portfolio may not continue to contribute to net income at levels consistent with recent periods or at all, and we may not successfully realize the appreciation or depreciation now existing in our consolidated investment
portfolio or any portion thereof.

In addition, since August 2007, there has been significant volatility in worldwide financial markets due to the announcement, by several U.S. and international banks and financial institutions, of significant
write-downs related to exposure to mortgage-backed securities and other financial instruments. Although we, and our subsidiaries, are not directly exposed to the U.S. housing credit market and do not directly hold any assets related to such
financial instruments, these write-downs, combined with other factors, have led to a tightening in the credit markets and may lead to a downturn in the U.S. economy, which could impact the Brazilian economy as well as adversely affect the market
price of our Units.

Acquisitions or divestitures, which we may make from time to time, may affect our costs, revenues, profitability and financial position.

Our business strategy includes evaluating the various components of our investment and business portfolio and, as a result, buying or selling different investments or businesses. These acquisitions or divestitures
affect our costs, revenues, profitability and financial position. In recent years, we have made a number of acquisitions and we may engage in future acquisitions as we seek to continue our growth in the consolidating Brazilian financial services
industry.  The integration of the businesses we have recently acquired and may acquire in the future entails significant risks, including the risks that:

- integrating new branch networks, information systems, personnel, products and customer bases into our existing business may place unexpectedly significant demands on our senior management, information systems, back office operations and marketing
resources;
- our current information systems may be incompatible with the information systems of the companies we acquire, with the result that we may be unable to integrate the acquired systems at a reasonable cost or in a timely manner;
- we may lose key employees and customers of the acquired businesses;
- we may incur unexpected liabilities or contingencies relating to the acquired businesses; and
- delays in the integration process may cause us to incur greater operating expenses than expected with respect to our acquired businesses.

Divestitures also have inherent risks including possible delays in closing transactions; the risk of lower-than-expected proceeds from the sale of the divested businesses or assets and the appreciation of the divested
businesses assets after the divestiture.

During 2007, we concluded partial or complete divestures of our investments in BWU Comércio e Entretenimento S.A. (BWU), Serasa S.A. (Serasa), Redecard S.A.
(Redecard), Bovespa Holding S.A. (Bovespa Holding) and BM&F S.A (BM&F). For additional information, please see Item 4.A  History and Development of the Company 
Divestures.

If our pricing expectations are incorrect or our reserves for future policyholder benefits and claims are inadequate, the profitability of our insurance products or our results of operations and financial condition may be adversely
affected.

Unibanco AIG Seguros S.A.  (UASEG), our insurance company, sets prices and establishes reserves for many of our insurance products based upon actuarial or statistical estimates. The pricing of our insurance products and the reserves
  carried to pay future policyholder benefits and claims are each based on models that include many assumptions and projections which are inherently uncertain and involve the exercise of significant judgment, including as to the levels of and/or
  timing of receipt or payment of premiums, benefits, claims, expenses, interest credits, investment results, retirement, mortality, morbidity and persistency. Although UASEG annually reviews the pricing of our insurance products and the adequacy of
  its reserves, we cannot determine with precision the ultimate amounts that UASEG will pay for, or the timing of payment of, actual benefits, claims and expenses or whether the assets supporting our policy liabilities, together with future premiums,
  will be sufficient for payment of benefits and claims. Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our insurance products. In addition, if we conclude that our
  reserves, together with future premiums, are insufficient to cover future policy benefits and claims, UASEG would be required to increase its reserves and incur income statement charges for the period in which the determination is made, which may
adversely affect UASEGs and, consequently, our results of operations and financial condition. For further information about insurance reserves and related matters, please see "Item 5. Operating and Financial Review and Prospects  Critical Accounting Estimates  Insurance Reserves."

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Risks Relating to the Global Depositary Shares and Units

Cancellation of Global Depositary Shares in exchange for Units could adversely affect the public market and value of Global Depositary Shares and impose further restrictions on Unit holders.

Under our Global Depositary Shares, or GDSs Program, GDS holders are entitled to cancel their GDSs and receive the underlying Units in Brazil. In this case:

- if a significant number of GDSs are cancelled, the public market and prices for GDSs could be adversely affected; and
- the proceeds and gains related to the Units are earned by their holders in Brazil. Foreign investors may not be able to remit the proceeds of the Units to investors outside Brazil. See Restrictions on Overseas Remittances could adversely
affect Holders of Units and GDS below.

Restrictions on overseas remittances could adversely affect holders of Units and GDSs.

Brazilian law provides that, whenever there is a significant imbalance in Brazils balance of payments or reasons to foresee such an imbalance, the Brazilian Government may impose temporary restrictions on the
remittance to foreign investors of the proceeds of their investment in Brazil, as it did for approximately six months in 1989 and early 1990, and on the conversion of Brazilian currency into foreign currencies.  In addition, if the Brazilian
government determines that the Brazilian foreign currency reserves need to be maintained, it may impose temporary charges on any overseas remittance of up to 50% of the value of the remittance. Such restrictions could hinder or prevent foreign
investors from converting dividends, distributions or the proceeds from any sale of Units into U.S. dollars and remitting such U.S. dollars abroad.  Holders of Units and GDSs who reside outside Brazil could be adversely affected by delays in, or
refusals to grant, any required governmental approvals for conversion of Brazilian currency payments and remittances abroad in respect of the Units and GDSs.  For further information, see Item 10.D Additional Information  Exchange
Controls.

Absence of voting rights for the Units.

In accordance with Brazilian Corporate Law, our bylaws and the bylaws of Unibanco Holdings, holders of our preferred shares and Unibanco Holdings preferred shares have no voting rights except under certain limited
circumstances set forth under Brazilian Corporate Law, and holders of Units, therefore, are not entitled to vote either at meetings of our, or Unibanco Holdings, shareholders.

Shares eligible for future sale may adversely affect the market value of our Units and GDSs.

Certain of our principal shareholders and the principal shareholders of Unibanco Holdings have the ability, subject to applicable Brazilian laws and regulations and applicable securities laws in the relevant
jurisdictions, to sell our shares, Unibanco Holdings common shares, and Units. No prediction can be made as to the effect, if any, that future sales of the shares represented by Units or GDSs may have on the market price of the Units and GDSs.
Future sales of substantial amounts of such shares, or the perception that such sales could occur, could adversely affect the market prices of the Units and GDSs.

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Limitations on exercise of preemptive rights by foreign shareholders.

Under Brazilian Corporate Law, except in the case of shares offered through a stock exchange or a public offering, a Brazilian company must offer its shareholders preemptive rights to purchase, by means of capital
subscription in a private placement, a sufficient number of shares to maintain their existing ownership percentages prior to the offering and issuance of any new shares. However, the participation of foreign investors in the capital of financial
institutions is subject to prior authorization by the Brazilian government, except for participation in non-voting capital, once a general authorization has already been granted for this purpose. Therefore, in the event voting securities are being
offered, our foreign shareholders could be prevented from exercising their preemptive rights. In addition, foreign shareholders may not be able to exercise preemptive rights with respect to our shares represented by the Units, or with respect to any
securities issued by us or by Unibanco Holdings as to which the holders of Units have preemptive rights, unless a registration statement under the Securities Act is effective with respect to the shares relating to such rights or an exemption from
the registration requirements thereunder is available. We, and Unibanco Holdings, are under no obligation to file a registration statement with respect to such preemptive rights and there can be no assurance that either we, or Unibanco Holdings,
will file any such registration statement.

ITEM 4. INFORMATION ON THE COMPANY

4.A History and Development of the Company

Overview

We were founded in 1924 and are Brazils oldest non-state owned bank. From our longstanding position as one of the nations leading wholesale banks, we have expanded our operations to become a full service
financial institution providing a wide range of financial products and services to a diversified individual and corporate customer base throughout Brazil. Our business is comprised of the following operating segments:  Retail, Wholesale, Treasury,
Wealth Management and Insurance and Pension Plans. See Note 31 to our consolidated financial statements for additional information on our five reportable segments.

We are one of the largest financial institutions in Brazil and have grown substantially both organically and through acquisitions. Our economic group consists of Unibanco Holdings and its subsidiaries, which include
both financial and non-financial companies. Our financial subsidiaries are those that are authorized to intermediate financial transactions as a result of the approval of Brazil's Central Bank.  Our non-financial subsidiaries are those companies
that have not been established for financial intermediation, such as our holding companies. Our equity securities have been publicly traded on the São Paulo Stock Exchange (Bolsa de Valores de São Paulo), or BOVESPA, since 1968. In
1997, we became the first Brazilian bank to list its equity securities on the New York Stock Exchange, or NYSE. As of December 31, 2007, the total market value of our equity securities, based on the closing price of our GDSs, was R$34.6
billion. Our legal name is Unibanco  União de Bancos Brasileiros S.A. Our address is Avenida Eusébio Matoso, 891, 05423-901, São Paulo, SP, Brazil. Our telephone number is +55-11-3905-1980. Our Investor Relations web site
is www.ir.unibanco.com. We are a corporation (sociedade anônima) and were incorporated on May 27, 1967 in accordance with Brazilian law. Our agent in the United States of America is our representative office in New York, which is
located at 65 East 55th Street, 29th Floor, 10022, New York, NY U.S.A.; telephone number +1-212-207-9422.

Unibanco Holdings legal name is Unibanco Holdings S.A. Its address and telephone number are the same as ours. Unibanco Holdings is a corporation (sociedade anônima) and was incorporated on June 20, 1994 in
accordance with Brazilian law. Unibanco Holdings agent in the United States of America is also our representative office in New York.

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Recent Developments

Acquisitions

Unibanco AIG Warrant

In June 2006, UASEG acquired the remaining 30% of the capital stock of Unibanco AIG Warrant S.A. (UAW) from Whirlpool S.A. for R$66 million. Through this
transaction, UAW became a wholly owned subsidiary of UASEG.

IRB  Instituto de Resseguros do Brasil

In December 2007, Unibanco AIG Seguros S.A. (Unibanco AIG), a company controlled by us, entered into an agreement with Vanguarda Companhia de Seguros Gerais, IH Cia de Seguros e Previdência and Icatu
Hartford Seguros S.A., for the acquisition of 5,571 preferred shares issued by IRB  Brasil Resseguros S.A. (IRB), increasing Unibanco AIGs interest from 11.166% to 11.723% of IRBs total capital stock.

Divestitures

BWU

On January 24, 2007, our subsidiary Unibanco Empreendimentos e Participações S.A. entered into an agreement with Lojas Americanas S.A. to sell 99.99% of the capital of BWU for a total sale price of
R$181 million.  BWU had focused on the development and subfranchising of renting and retailing DVD and VHS tapes under the BLOCKBUSTER® trademark in Brazil.

Serasa

On June 25, 2007, we announced the sale of a portion of our interest in Serasa. We sold a total of 489,195 of Serasas common shares to a Brazilian affiliate of Experian Solutions, Inc., a worldwide leader in
credit analysis. The gross profit of the transaction was R$429 million. After the partial sale of our stake in Serasa, we, together with affiliates of Banco Itaú BBA S.A (Banco Itaú) and Banco Bradesco S.A. (Banco
Bradesco), incorporated a holding company  BIU Participações S.A. (BIU)  whose capital consists of the remaining common shares of Serasa held by Unibanco, Banco Itaú and Banco Bradesco. We currently
hold 24.5% of the capital stock of BIU. We and the other shareholders of BIU have executed a shareholders agreement that regulates our participation in Serasas management and also grants us preemptive and tag-along rights in respect of
our BIU shares. BIU currently holds 24.1% of the total capital stock of Serasa.

In addition, BIU and the Brazilian affiliate of Experian Solutions, Inc., executed a shareholders agreement that entitles each shareholder of BIU to indirectly participate in Serasas management through the
appointment of three members of the board of directors and certain veto rights relating to Serasas business and corporate structure.

Redecard

In July 2007, Redecard concluded its Initial Public Offering (IPO). Through the IPO, Unibanco Participações Societárias (UPS), sold 53,798,700 of Redecards common shares,
representing 8.73% of Redecards total capital, at a sale price of R$27.00 per share. As a consequence of the IPO,the result, before giving effect to taxes and minority interests, was approximately R$1.4 billion. In March 2008,
Redecard completed a follow-on equity offering, however, we did not participate in the offering and retained our 23.2% interest in Redecard.

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Bovespa Holding

In October 2007, Bovespa Holding concluded its IPO. In this IPO, we, through Unicard Banco Múltiplo S.A. (Unicard)sold 23,314,228 common shares of Bovespa Holdings capital stock,
representing 100% of our interest. The sale price per Bovespa Holdings common share was R$23.00. Our net profit was R$320 million.

BM&F

In November 2007, the IPO of BM&F was concluded. Through our financial subsidiary Unicard, we sold 4,467,371 of BM&Fs common shares representing 30% of our interest in BM&F, at a sale price of
R$20.00 per common share. Unicard also sold 1,489,124 of BM&F's common shares representing 10% of its interest in BM&Fs capital through a private transaction with General Atlantic Private Equity Group. This total sale of 40%
of our interest in BM&F yielded a net profit of R$62 million.

Partnerships

Unibanco Participações Societárias S.A. (UPS)

In June 2007, we admitted DRB Investments Co. Limited (DRB), a subsidiary of Deutsche Bank group, as a minority partner in UPS, one of our non-financial subsidiaries that holds several of our investments in
strategic companies, such as Redecard, Tecnologia Bancária S.A. (Tecban) and Interchange. DRB owns preferred shares, with and without voting rights, equivalent to 49% of the total capital and approximately 10% of the voting
capital of UPS. The purpose of this transaction was to assist with the financing of the long-term expansion of our businesses by reducing our permanent assets and consequently increasing our operational capacity in the amount of approximately
R$950 million.

Other Recent Partnerships

In recent years, we have also developed significant partnerships with Wal-Mart, Ipiranga Group and Banco Cruzeiro do Sul. See Item 4.B Business Overview  Retail Segment  Consumer Finance.

Cancellation of VR Group Partnership

During the second half of 2006, we signed a partnership agreement with Grupo VR, a human resources benefits provider. The partnership, named UniVR was formed in order to offer certain non-financial products
related to human resources benefits to our clients and other clients defined in the relevant agreement, as well as the offering of credit and product financing to VR Group clients and other clients defined in the relevant agreement.

In February 2008, Unibanco and Grupo VR mutually agreed to cancel this partnership. Both parties requested that the Central Bank discontinue the UniVR registration process.

Capital Expenditures

During the period from 2003 to 2006, our primary capital expenditures consisted of purchases of data processing hardware and software to support our growth, to increase productivity and to improve the level of services
we offer to our customers. In addition, we spent a significant amount of money implementing our New Service Model and expanding our branch network. For more information, see Item 5.B  Liquidity and Capital Resources  Capital
Expenditures.

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In 2007, our main capital expenditures were related to the remodeling of our branches, the purchase of computer hardware and capital improvements to expand our business, as shown in the table below:

|                                                |  |                    
|----------------------------------------------- |  | -------------------
|                                                |  | For the Year ended 
|                                                |  | December 31, 2007  
|                                                |  |                    
|                                                |  | (in millions of R$)
|                                                |  |                    
|                                               
|Land and buildings                              |  | 8                  
|Furniture and equipment                         |  | 48                 
|Leasehold improvements                          |  | 47                 
|Data processing                                 |  | 157                
|Software developed or obtained for internal use |  | 185                
|Total                                           |  | 445                

In 2008 and 2009, we intend to continue expanding our network of points of sale, directly or through our subsidiaries, by approximately 400 units, including banking branches, corporate-site branches and points of sale
within the establishments of retail partners to update our existing distribution network. We expect that this expansion will involve approximately 60% of the capital expenditures in each year.

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4.B Business Overview

Our Businesses

The following diagram shows our principal lines of business by operating segment:



Retail Segment

Our Retail segment provides a wide range of financial services and products, including:

- Banking services, provided by our nationwide branch network of 1,245 branches (including 293 corporate-site branches), and through internet and telephone banking;
- Commercial and Corporate Banking services, aimed at clients with revenues of up to R$150 million per year (small and medium-sized companies which we refer to as SMEs). As of December 2007, we had approximately 600,000 SME
clients;
- Credit card services (issuance, processing and billing for more than 35 million credit cards), including Visa, Mastercard, Hipercard (Wal-Mart Brazils official credit card, with over 8.8 million cards issued and more than 319,000 affiliated
merchants), and private label credit cards;
- Consumer Finance, with a wide array of distribution partnerships (e.g. Banco Investcred Unibanco S.A. (PontoCred) and LuizaCred S.A. Sociedade de Crédito Financiamento e Investimento (LuizaCred)) and proprietary
operations (e.g. Banco Fininvest S.A. (Fininvest));
- Auto Financing through Unibanco Veículos a nationwide operation by our branches in conjunction with franchised auto dealers;
- Payroll-linked loan business through our 100%-owned companies, partnerships and joint ventures; and
- Mortgage loans, with an increased focus on home financing and building strong relationships with homebuilders and brokers, in line with future growth expectations in Brazil.

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We categorize individuals and companies into smaller groups according to income brackets to enable us to offer specialized products and services to our clients. By doing this, we increase our competitiveness in the
market and foster cross-selling opportunities.

While we traditionally have focused on middle and upper income clients, we also have developed a strong presence in the financial services sector serving lower income individuals, and this market segment has provided a
significant source of growth for our retail business.

For the year ended December 31, 2007, we had a net income of R$1,122 million from our Retail segment and total fees and commissions of R$3,176 million. As of December 31, 2007, we held outstanding retail loans,
including loans by our subsidiaries and affiliates, of R$37,176 million, which represent 62% of our total loan portfolio. We provide loans to individuals and SMEs and believe we are well positioned to expand our retail loan business if economic
indicators follow trends, such as the declining unemployment in Brazil.

Our retail segment is an important source of funding for us.  As of December 31, 2007, 60% of our aggregate savings, demand and time deposits were attributed to retail customers. Our extensive distribution network and
strong deposit base support our retail products. As of December 31, 2007, our savings, demand and time deposits totaled R$26,454 million, an increase of 29% as compared to December 31, 2006.

Clients

Individuals

We provide our individual customers with fee-based products and services, including use of ATMs, phone and personal computer banking and fund transfers. We also make secured and unsecured personal loans in reais
for overdraft short term lines of credit, loans for consumer purchases, leasing and individual lines of credit. Individuals are separated into three different groups:  those earning more than R$4,000 per month (UniClass), those earning between
R$1,000 and R$4,000 per month (Exclusivo) and those earning between R$350 and R$1,000 (Especial).

In the UniClass group, we believe we distinguish ourselves from competitors by providing our customers with:

- products and services tailored to their needs;
- a specialized call center that we believe offers higher quality service than our competitors, and which includes dedicated customer service representatives;
- specialized branches called Espaço Uniclass and
- a specialized team of account officers within our extensive distribution network.

In the Especial and Exclusivo groups, we believe we distinguish ourselves from our competitors by providing personalized services and products which substantially reduce the time spent by our clients on
their basic banking transactions, such as withdrawals and payment of bills. In particular, we provide convenient banking through access to our 30 Hours services to our customers of theEspecial and Exclusivogroups.

Small and Medium Companies

We serve approximately 600,000 SMEs consisting primarily of retailers. We provide this group with a full range of financial services such as credit lines, account receivable financing, working capital loans, auto
financing, home financing, funded loans from the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), or
BNDES, leasing and payroll services and cash management services. As of December 31, 2007, we had approximately R$13.0 billion in outstanding loans to SMEs, or approximately 22% of our total loan portfolio.

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Our cash management unit optimizes companies cash flow management by making payments and processing receivables simply and efficiently. As of December 31, 2007, approximately 153,000 customers used our cash
management services, which include payment and collection services.

Distribution Network

As of December 31, 2007, we, our wholly-owned subsidiary, Fininvest, and certain associated companies, LuizaCred, PontoCred, and Tecban, had a distribution network with approximately 21,000 points of distribution
throughout Brazil, consisting of the following:

- 952 retail branches;
- 293 corporate-site branches;
- 585 Fininvest stores, kiosks and mini-stores;
- 357 LuizaCred points of sale;
- 427 PontoCred points of sale;
- 13,949 points of sale in retailers; and
- 4,886 free-standing ATMs.

Branches

Our branch system serves as a distribution network for the products and services that we offer to our retail customers. Our 952 full-service branches accept deposits, provide cash withdrawals and offer the full range of
our retail banking products, such as checking accounts, consumer loans, automobile financing, credit cards, loans to small-sized companies, leasing, insurance, asset management services and payment of bills, including bills for taxes and public
services.

In accordance with our original schedule, the New Service Model, known as the Novo Modelo de Atendimento, was fully implemented in our branch network by the end of 2006. Our New Service Model aims to improve the quality
of our customer service by harmonizing branch policies and processes, optimizing branch managers time and developing tools that will allow us to reduce our response time to client inquiries.

Corporate-Site Branches

We offer retail banking services to our corporate customers and their employees through special banking branches located on the premises of our corporate customers. Our network consists of 293 corporate-site branches.
In the case of retail and smaller corporate customers, corporate-site branches may consist solely of an automated branch. In the case of large corporate customers, corporate-site branches consist of an average of four employees dedicated to serving
the corporation and its employees.

ATMs

We operate 11,052 ATMs, 4,886 of which are free-standing ATMs for the convenience of our customers. In addition to the ATMs of our own network, this figure includes ATMs
operated through our participationinBanco 24 Horas, the shared ATM network operated by our affiliate Tecban. The Banco 24 Horas network has 3,939 machines throughout Brazil and serves the clients of 43 banks. Clients of the
banks associated with Tecban may withdraw cash through our ATM network for a fee, allowing us to increase our income and optimize our capabilities.

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30 Hour Services

For more than 15 years, we have been innovators in the distribution and promotion of remote banking services. Our 30 Hour telephone services provide clients with electronic banking services such as cash
withdrawal, pre-printed checkbooks, account statements and investment services 24 hours a day. The 30 Hour services are convenient for our clients and cost-efficient for us. The original concept of a call center was converted into a
contact center, using the 30 Hour telephone service as a customer relations and sales force platform. The majority of the calls are attended by an electronic voice reply system. This system identifies which callers may be potential
product purchasers and transfers such callers to an operator.

Internet Banking

Although we initially used the telephone as a primary instrument for conducting banking transactions with our clients, now we also provide a variety of retail banking services, including account opening, utility bill
payment, wire transfers, personal loans, investment products and mutual funds through our internet banking services. Since April 2000, we have also offered a variety of 30 Hour services electronically, enabling clients to access their
banking information from their mobile phones, PDAs or e-mail.

Since May 2005, our internet banking services have been considered the fastest among Brazilian banks, based on the time required to access an account information, according to the specialized survey conducted by
SiteSeeing. As of December 31, 2007, we had approximately 2.7 million registered users of our internet banking services. During 2007, we processed approximately 406 million internet transactions, an increase of 24% over 2006.

Consumer Finance

We operate in consumer finance through our affiliates Unicard, Hipercard Banco Múltiplo S.A. (Hipercard), Fininvest and Redecard, and also through our partnerships with Ponto Frio, Magazine Luiza,
Ipiranga Group, and Banco Cruzeiro do Sul. These companies operate in the credit card, personal credit, consumer credit and payroll-linked loan markets. We have also developed alliances with wholesalers, retailers and other businesses in order to
better reach our customers, creating a network of points of sales that have significantly expanded our reach to our client base.

Credit Cards

We believe that we rank among the leaders in terms of the overall number of credit cards issued in Latin America. We issue Visa, MasterCard and Hipercard credit cards and a wide array of private labels, primarily
through our subsidiaries Unicard, Hipercard and Fininvest.

In Brazil, the market for consumer credit, and consequently credit card usage, has grown rapidly in the past several years, due to a stronger economic environment and low inflation rates. Credit cards
have become an important credit instrument in addition to serving as a payment tool for our clients.

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We have responded to the current business environment by developing a large number of new products to serve all of our customers needs:

- We offer more than 100 co-branded cards whereby our customers can receive airline miles or other rewards for using their credit cards;
- We are a pioneer in the introduction of innovative value added services to credit cards in Brazil;
- We offer online, real-time credit approval;
- We send SMS alerts to our customers mobile phones or PDA units, informing such customers whenever a purchase has been made using their credit card, thereby reducing opportunities for credit card theft;
- We have introduced a variety of new credit card products, including the Supermarket Card, Twin Strategy (second brand offering), Unicard Payroll, Unicard MasterCard Black and Visa Infinite; and
- We have pioneered the introduction of socially and environmentally responsible credit cards, which contribute the cardholders monthly fees to either Aqualung Institute, Greenpeace, or Abrinq Foundation, each of which is dedicated to social or
environmental causes.

Unicard

Unicard is one of our credit card companies. Its loan portfolio consists of three different categories of loans:  (i) revolving credit, which yields high interest rates and, therefore, is the highest risk portion of
Unicards portfolio, (ii) loans that are usually due within thirty days, which are extended in connection with credit card purchases, and (iii) loans in connection with credit card purchases that are billed in multiple installments through
agreements with retailers, a common practice in Brazil.

Unicards credit portfolio reached R$3.8 billion as of December 31, 2007, an increase of 29.4%, when compared to December 31, 2006. As of December 31, 2007, Unicard had 14.9 million cards issued, a 25.4%
increase compared to December 31, 2006.

We use a credit evaluation system to provide our customers with real time, on-line credit decisions, in all of our distribution networks, with less than thirty-second response time from the initial credit request. This
system compiles business intelligence and analytical customer relationship management in a credit decision platform.

Hipercard

Hipercard started as a private label credit card company for the Bompreço chain of supermarkets and is now an independent credit card company separate from the supermarket chain, whose cards are accepted at over
319,000 points of sale in Brazil.

We acquired Hipercard in March 2004, at the same time when Bompreço was acquired by Wal-Mart. During 2004, the Hipercard portfolio continued to be concentrated in the Northeast region of Brazil. During 2005, we
expanded this business to the South and Southeast regions of Brazil in line with our Hipercard strategy.

Hipercard acquired E-capture in 2005 and uses E-capture technology to reduce costs and improve its level of technology. Hipercard went through an important modernization process to support its aggressive growth plans
and to continue consolidating its broad brand recognition in Brazil.

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In 2005, our investment in Hipercard was augmented by the acquisition, by Wal-Mart, of the Brazilian assets of the retailer Sonae. This acquisition effectively doubled Wal-Marts presence in Brazil. Pursuant to a
new Master Services Agreement, Wal-Mart extended our existing exclusivity to all of the acquired Sonae stores. In addition, as of January 2006, our agreement with Wal-Mart allows us to provide other financial products within all Wal-Mart stores.

Pursuant to the Master Services Agreements executed between us and Wal-Mart on March 1, 2004, November 1, 2004 and January 6, 2006, Hipercard is the exclusive private label credit card of Wal-Marts stores in
Brazil.

As of December 31, 2007, Hipercard had a credit portfolio of R$3.1 billion, with 8.8 million cards issued.

Fininvest

Fininvest provides personal loans mainly to lower-income individuals and also offers regular and private label credit cards. Fininvests credit portfolio was R$2.4 billion as of December 31, 2007. At the end of
2007, Fininvest had 585 stores, kiosks and mini-stores and approximately 14,000 points of sale.

In 2007, we began using Fininvests distribution network to offer payroll-linked loans. This service provides us with great potential to increase our payroll loan portfolio in 2008, given Fininvest extensive
network and client portfolio.

Redecard

Established in 1996, Redecard is responsible for the processing of credit and debit card transactions of the MasterCard, MasterCard Electronic, Maestro, Diners Club International and RedeShop brands in Brazil. Redecard
also provides certain products and services for their customers, such as leasing to retailers the machines that are used for the processing of debit and credit card transactions. In recent years, debit card usage has been increasing in Brazil.

In July 2007, we sold 53,798,700 of Redecards shares, representing 8.73% of Redecards total capital through the Redecard IPO. As of December 31, 2007, we own 23.2% of Redecard. For further information, see
 Item 4.A  History and Development of the Company  Divestitures.

LuizaCred

LuizaCred is a financial consumer credit company, established through an equal partnership between Fininvest and Magazine Luiza, a well-known Brazilian department store chain. LuizaCred provides consumer finance and
credit cards to Magazine Luiza customers. Magazine Luiza is geographically well positioned in the states of São Paulo, Paraná and Minas Gerais, which together respresent 48.7% of Brazils GDP according to IBGE (Brazilian Georaphy
and Statistics Institute).

PontoCred

PontoCred is a financial consumer credit company established through a strategic alliance with Globex S.A., the owner of the nationwide chain of Ponto Frio household appliance stores. Pursuant to this alliance, we own a
50% interest in PontoCred, which provides consumer finance and credit cards to Ponto Frios customers.

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Ipiranga Group

In late 2006, we announced the establishment of Maxfacil Participações, a new credit, financing and investment partnership with the Ipiranga group, in which each of us holds a 50% equity interest. Ipiranga
currently has approximately 4,200 service centers throughout Brazil. In addition to the private label cards and co-branded Ipirangas credit cards, this partnership intends to offer Ipirangas customers other financial, banking and
insurance products, including personal and direct consumer loans, through its retail consumer network as well as directly to Ipirangas distributors. Due to the recent change of control of the Ipiranga group, the approval process before the
Central Bank has been discontinued and we are already discussing an alternative format for this partnership.

Banco Cruzeiro do Sul

During the second half of 2006, we established a partnership with Banco Cruzeiro do Sul to jointly develop a payroll-linked loan business. The partnership combines our global scale of operations, products and services
with Banco Cruzeiro do Suls expertise in payroll-linked loans, and was effected by our acquisition of 50% of Bancred - Sociedade de Credito, Financiamento e Investimento S.A., a subsidiary of Banco Cruzeiro do Sul that was engaged in the
payroll-linked loan business.  We may also purchase Banco Cruzeiro do Suls loan portfolios pursuant to this partnership. Central Bank approval of this partnership is pending.

Payroll-Linked Loans

We provide directly, through Fininvest, partnerships and the joint venture with Banco Cruzeiro do Sul, loans in which the payments are deducted directly from the clients paycheck, with lower interest rates due to
the reduced insolvency risk. Although in 2007, we began acquiring payroll-linked loan portfolios from other financial institutions, at the end of the year we decided to focus on Unibanco-originated payroll loans rather than on the acquisition of
payroll loans. As of December 31, 2007, we had approximately R$5.0 billion in outstanding payroll-linked loans.

Auto Financing

We restructured our auto financing business in 2006 and as a result, our auto financing portfolio grew significantly in 2007.  As of December 31, 2007, we had approximately R$8.9 billion in outstanding auto loans.
We serve the car dealer network of all automobile manufacturers nationwide and hold a leadership position in the financing of commercial vehicles.

With a distinctive strategy in auto financing, focused on new vehicles, we are consistently increasing our market share in terms of financed units in both the car and commercial vehicle segments.

Mortgage Loans

As of December 31, 2007, we had approximately R$1.7 billion in outstanding mortgage loans. Given the expectation of growth over the next several years in the mortgage market in Brazil, we have increased our focus on
the sector. We have strengthened our business structure and simplified the documentation and credit approval process. We have also solidified our relationships with the main homebuilders, real estate developers and brokers in the country.

Savings and Annuity Products

Our wholly owned subsidiary, Unibanco Companhia de Capitalização, or Unibanco Capitalização, offers savings and annuity products. Unibanco Capitalizaçãos products consist

primarily of savings account-type products, which provide incentives to depositors through a special weekly lottery award.

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Wholesale Segment

Our Wholesale segment provides a wide array of products and services, including: general and specialized corporate lending; trade finance; derivatives operations; cash management; capital markets and investment banking
services; investment and brokerage services; project finance; and mergers and acquisitions advice to approximately 400 institutional investors and approximately 2,200 economic groups. We serve these clients through a network of regional offices
combined with a presence in major financial centers throughout Brazil.

The Wholesale segment serves companies with annual sales of over R$150 million, in addition to institutional investors.

During 2007, the expansion of our active client base and the continuous synergies among our various businesses allowed us to offer and increase the number of products we offer to clients through cross-selling.

For the year ended December 31, 2007, we had a total of R$22,600 million in outstanding loans in our Wholesale portfolio, fees and commissions of R$544 million and net income of R$512 million from our
Wholesale segment.

Wholesale Network

We have structured our regional branch network in order to maintain close proximity to our client base. We have five regional offices (two in São Paulo State and one each in Rio de Janeiro, Minas Gerais, and Rio
Grande do Sul) and two regional branches. These regional offices are responsible for developing our relationship with our clients by offering them our vast array of banking products and structuring tailored solutions to their needs. Our branches are
supported by products specialists who develop specific products to address our clients needs, and a corporate desk that attends to the daily transactions of our clients. We also have an international network to service our clients abroad. Our
subsidiaries and branches located abroad raise capital for trade finance and lending to our clients. Our international network consists of the following:

- a branch in the Cayman Islands;
- a representative office in New York;
- banking subsidiaries in Luxembourg, the Cayman Islands and Paraguay; and
- a brokerage firm in New York (Unibanco Securities Inc.).

Commercial Division  Large Companies and Institutional Investors

The commercial division is focused on increasing and improving our relationships with large corporate clients by offering them specialized corporate lending and structured finance products and regular retail and banking
services. As a result, we have increased our synergies with the product areas of our Retail segment in order to identify cross-selling opportunities for this potential clientele. For example, we are continually expanding our cash management
activities and services, creating new products to support our clients cash flow administration and targeting potential opportunities in connection with the employees of our corporate clients and their suppliers networks.

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International Trade Finance

We provide import and export financing and services to our corporate customers. We receive export and import financing funded or insured by export credit agencies and multilateral agencies. Our international operations
help us to provide our customers with foreign exchange and international trade support worldwide.

Investment Banking Products

Our equity, fixed income and mergers and acquisitions groups supply product expertise and innovation focused on the needs of Brazilian companies. Our brokerage and distribution groups are responsible for understanding
the needs of Brazilian and international investors, in order to offer suitable investment options.

Recently in 2008, we announced our intention to reorganize our investment banking structure. The re-structured department will handle origination, structure, distribution, and research. In order to implement our new investment
banking strategy, the new structure will enlist new officers with extensive experience in both the Brazilian and international financial sectors.

Brokerage

Our Brazilian brokerage operation offers equity and debt securities, derivatives products and provides trading services on Brazilian exchanges for institutional customers. It also provides research on approximately 80
listed companies to institutional and retail clients worldwide. Our Equity Research Team is recognized as one of the best in the market. In 2007, it was ranked as the fifth Research House in the All-Brazil Research Team ranking published by the
British magazine Institutional Investor, obtaining a third place position in the Consumer Goods sector and a runner up position in the Banking & Financial Services category. The Unibanco Research team was also awarded top Consumer
analyst in the ranking published by the Brazilian magazine Investidor Institucional.

Project Finance and Privatization

Our project finance group is responsible for structuring and financing infrastructure and industrial projects, such as projects related to toll roads, ports, railroads, energy and telecommunications. Our activities
include advising our corporate customers about the economic feasibility of proposed projects, as well as project structuring and long-term financing.

Treasury

Our Treasury has a dual mandate: it is a profit center and a service  provider, managing liquidity, market risk and making markets for our  clients.

Our Treasury is divided into five areas: Trading, Banking, Assets and  Liabilities Management, Derivatives Structuring and Macroeconomic Research. It  is managed by an Executive Officer who reports directly to our Chief Executive  Officer.  For the year ended December 31, 2007, our Treasury generated a  net income of R$384 million.

Banking

The main activities of our domestic and international Banking area are:  providing services to the business segments by pricing funds, assets and libilities and  managing liquidity; financially advising the various segments on their  operations; and maximizing returns by managing the market risk of our commercial  portfolios and our  Available for Sale Securities portfolio.

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Trading

Our  Trading area is responsible for managing portfolios originated both in  our proprietary and commercial transactions that are marked-to-market (MTM).   It is also in charge of proprietary trading and market-making activities for  our clients in the domestic and foreign fixed income, currency, equity,  commodities and derivatives markets.

Assets and Liabilities Management (ALM)

Our Assets and Liabilities Management group (ALM) has the role of  monitoring our balance sheet structure, while seeking to improve the management  of our consolidated funding and liquidity. The ALM group is responsible for our  institutional funding (for example, our MTN program and our receivables  securitization program) and for the coordination of our Assets and Liabilities  Management Committee (ALCO), which holds monthly meetings to deal with issues  related to the structure of our balance sheet.

Our  Correspondent Banking unit, which reports to ALM, has an extensive network with  foreign banks, or correspondent banks that help us provide our corporate  customers with trade finance and worldwide support in a comprehensive range of  financial products and services.

Derivatives Structuring

Our  Derivatives area is responsible for structuring derivatives solutions for our  clients. This area provides solutions in the derivatives market, which  are then distributed by the Retail, Wholesale and Private Bank areas.

Macroeconomic Research

Our Macroeconomic Research team makes short, medium  and long-term projections, providing support to our clients and to our own  business activities.

Wealth Management Segment

We established our Wealth Management segment in 2002, and we were a pioneer in implementing this concept in Brazil. This business is conducted primarily through Unibanco Asset Management and our Private Bank.

The Wealth Management segment offers fixed income and equity mutual funds to individual customers and manages portfolios on behalf of corporations, pension funds and private banking clients. Through Unibanco Private
Bank, we provide wealth management services targeted to high net worth individuals with potential investment portfolios of over R$3 million.

During 2007, we directed our efforts towards strengthening our competitive position in both the Asset Management and Private Bank markets by focusing on funds and portfolio performance enhancement and consistency.

For the year-ended December 31,   2007, Wealth Management segment had R$245 million in fees and commissions and   R$152 million net income.

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Assets under Management as of December 31, 2007



Asset Management

Unibanco Asset Management (UAM) was established more than ten years ago and was the first independent third-party asset management institution in Brazil that was linked to a large bank.

UAM usually charges its clients fees to invest in mutual funds. These fees are based on the average net asset value of the funds, which is calculated on a daily basis. UAM also manages portfolios for pension funds,
corporations, private banking customers and foreign investors. UAM usually negotiates fees for these services that are based on a percentage of assets under management and on performance.

For the year-ended December 31, 2007, UAM had R$54.9 billion in assets under management,  a 4.7% market share in
terms of assets under management among privately-owned banks, according to Investment Banks and Distributors National Association (Associação Nacional de Bancos de Investimento e Distribuidoras  ANBID).

Private Banking

Our Private Banking unit targets high net worth individuals with potential investment portfolios over R$3 million. Many of our private banking clients are major shareholders or senior executives of our corporate
clients.

With three offices in Brazil  in São Paulo, Rio de Janeiro, and Belo Horizonte  our Private Banking business provides services to approximately 8,800 customers. The foreign operations of our Private
Bank are supported by our international facilities through Unicorp Bank and Trust, Unibanco Luxembourg and UBT Finance.

Our Private Bank offers innovative, unique products, in addition to investment advice and full asset management. Among the services offered are estate planning, corporate, tax, and real estate advice, as well as
projects for asset planning, structured products, derivatives and investment operations with excellent profit levels.

Among the assets under UAM management, R$ 14.9 billion were under management in our Private Banking business, a 52% growth from December 31, 2006, ranking us third in the ANBIDs global ranking, with a 9.8%
market share.

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Insurance and Pension Plans Segment

As of December 2007, our Insurance and Pension fund companies ranked fourth in Brazil in terms of total consolidated premiums and contributions with a 7.6% market share, according to the Brazilian regulators
(Superintendência de Seguros Privados), or SUSEP, and (Agência Nacional de Saúde Suplementar), or ANS.

In 2007, our Insurance and Pension Plans investment contract income was R$516 million and our total net income of the Insurance and Pension Plans segment was R$104 million, based on our proportionate share of
the joint venture.

Insurance

Our Insurance business provides individuals and businesses with, among others, life, medical, automobile, personal property extended warranty insurance products and services, as well as pension plans. This business
operates primarily through UASEG, our joint venture with American International Group, Inc. (AIG). We own 52.97% of the equity voting shares of UASEG.

UASEG has the exclusive right to distribute insurance products through our branch network to our Retail and Wholesale customers. We believe that this distribution channel gives us a competitive advantage over many
insurance companies that are not affiliated with financial institutions. The portion of UASEGs insurance premiums obtained through our network customers generates significant cost savings and marketing synergies. UASEG also markets its
insurance products through approximately 14,200 independent brokers and our call center, website and in-store branches. UASEG distributes products through banks, financial institutions and mass marketing programs to affiliated groups. We also have
achieved a leadership position in sales of extended warranties for household appliances, which we offer at large retail stores.

Pension and Retirement Plans

Our subsidiary Unibanco AIG Vida e Previdência S.A., or UAVP, manages reserves that consist of pension and retirement contributions made by institutional clients and individuals and serves over 1,400 corporate
clients and 875,000 individual customers.

As of December 31, 2007, UAVP ranked fourth in Brazilian pension plan revenues with a 6.6% market share, according to SUSEPs official data and also ranked second in corporate pension plan revenues with an 18.6%
market share, according to the National Federation of Private Pension and Life Plans (Federação Nacional de Previdência Privada e Vida), or Fenaprevi.

Unibanco Business Strategy  Overview

Our objective is to maintain and enhance our position as a leading Brazilian full service financial institution operating in all business segments.

Our business strategy is to add economic value through continuous pursuit of profitability, scale and efficiency maximization. We seek to increase our client base, through cross-selling among our different businesses
and by achieving a high level of client satisfaction with all of our products and services through excellent customer service, credit quality and our optimized distribution network. We are also focused on achieving greater synergies among our
businesses. In order to achieve our goals, we aim to excel in human resources by promoting a challenging and cooperative work environment, valuing the principles propagated under our internal culture called Jeito Unibanco (the Unibanco
Way).

Since the second quarter of 2004, we have implemented important changes to our internal structure. Our new business model focuses on (i) increasing profits; (ii) fostering a
collaborative environment; (iii) continuing excellence in human resources; and (iv) reinforcing our focus on our Retail segment, through excellent customer service and credit growth.

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The main components of our business strategy are:

Continuous Pursuit of Profitability and Scale

We believe that to maintain competitiveness, we must increase our customer base, expand our product and service offerings in each of our business segments and identify additional sources of revenue, thereby improving
our profitability. We seek to accomplish this through organic growth, acquisitions, strategic alliances and partnerships.

We have focused our growth strategy on expanding our retail customer base by offering new products, and through acquisitions, alliances with retailers and organic expansion of our operations. We have also focused on
growing our SMEs customer base by designating a separate SMEs division within the Retail segment and training the staff at our branches to better serve these customers. We believe that this strategy contributes to improvements in our profitability
and helps to lower our cost of funding.

We are also focused on offering payroll-related services to SMEs and large corporate clients, as well as growing our payroll-linked loan portfolio through our wholly-owned subsidiaries, partnerships and joint
ventures.

We have also focused on the auto financing segment, serving the car dealer network of all automobile manufacturers in the country. Our distinctive strategy focuses on new vehicles, and we have consistently increased our
market share in terms of financed units.

Our strategy also focuses on the credit card and consumer finance segments. These businesses target different economic segments of the population than the ones that are generally targeted by Brazilian banks, and they
are largely responsible for the growth and penetration of credit access in Brazil.

In our Wholesale division, where we have traditionally been a market leader, we continue to improve our profitability by providing additional services to our large corporate clients such as cash management, derivatives
and capital markets operations, payroll and investment banking services.

Continuous Efficiency Maximization

In mid-2006, we created an Operational Efficiency unit to improve management practices. This units mission is to implement a management system similar to that seen in process-intensive industries, with targets and
capture curves used as indicators of activity performance and cross control, and is characterized by a constant effort to eliminate any problems that might occur during these processes.

In 2007, we continued our focus on maximizing efficiency, expanding this scope of the project and prioritizing the review and simplification of our operational processes. During 2007, we have already seen positive
results in our expenses reflecting our increased efficiency. See Item 5. Operating and Financial Review and Prospects.

The efficiency management system involves all levels of the organization, identifying areas where improvements can be made. Improvement projects are systematically monitored by executives from different areas of the
Bank. Results, causes and corrective measures are presented to our Executive Committee.

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We are focused on controlling our costs as well as managing all of our investments in order to maximize returns. For example:

- We have a multifunctional committee responsible for analyzing and approving our potential projects or strategic initiatives. As a result, projects and strategies are aligned;
- We established multifunctional teams responsible for improving our well developed cost control mechanisms. This group meets on a monthly basis in order to run the PDCA (Plan, Develop, Check and Adjust) cycle and to follow up with corrective actions
based on key performance indicators;
- We have centralized all of our back office activities, from operations to accounting, and we are now reaping benefits from this synergy. This centralization process has included Fininvest, Hipercard, Dibens, Unicard and other smaller operations;
- We have reviewed and refined certain of our policies related to the reimbursement of out of pocket expenses of our employees (i.e.  travel, telephone and meal expenses);
- We have established a single credit concession and recovery unit for all retail linked units called Credit Factory (Fábrica de Crédito) which provides unified credit and collections operations, systems and platforms for all of our
Retail customers;
- We reviewed all of our logistics operations, including transportation routes and our suppliers evaluation and assessment in order to seek greater efficiencies;
- We have consolidated and restructured our overseas platforms; and
- We have reduced our costs by outsourcing our document processing needs.

Jeito Unibanco

In 2006, we created and distributed information to all of our employees about our internal culture, called Jeito Unibanco. Jeito Unibanco is comprised of 10 principles that we expect each of our employees
to embody. Approximately 8,500 of our employees from different areas, positions and regions throughout Brazil took part in qualitative and quantitative surveys designed to define Jeito Unibanco.

Jeito Unibanco has also been widely disseminated through our internal communication channels, training sessions and recruiting and selection procedures. All of our employees are required to sign a manual that
outlines the terms of this commitment.

In 2007, more than 1,000 managers participated in the Jeito Unibanco workshop. The workshop promoted the implementation of Jeito Unibanco, which we consider essential to the establishment of our high
performance culture.

Retail Strategy

Increase Scale and Distribution Network

We believe that our ability to maintain our position as a leading full service financial institution depends in part on maintaining and increasing scale in our Retail segment. Our customer base grew from 13.2 million in
2002 to approximately 29 million in 2007. We have increased scale in our Retail segment through organic growth, strategic transactions initiatives and several new cross-selling opportunities through our subsidiaries and strategic
partners. As of December 2007, our total retail portfolio was R$37,176 million, representing 62% of our total loans, compared to 55% as of December 2006 and 55% in December 2005.

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We seek to increase our scale through carefully chosen acquisitions and strategic alliances. We believe that the consumer finance sector, including credit card businesses, is one of the most rapidly growing and
profitable segments of the Brazilian retail financial services market. Maintaining a strong presence in consumer finance is central to our strategy of gaining scale in our Retail segment. We will expand our branch network over the next several
years, in order to reach our market share and geographical coverage objectives.

We believe that expanding our distribution network is essential to improve the quality and scope of our customer service. During the past several years, we have substantially increased our businesses, product portfolios
and client base. Our continued increase in scale and improved quality control in product offering and customer service partially depends on an increase in and renovation of our distribution network, which includes increasing the number of branches,
corporate-site branches, customer service centers (Núcleo de Atendimento ao Cliente  NACs), points of sale, and ATMs.

Enhance Sales to Existing Customer Base Through Profitable Products and Service Offerings

We view scale not only in terms of the size of our customer base, but also as a function of the number of products we are able to sell per customer. Improving our product-per-client ratio has a positive impact on our
profitability, since it is less expensive to sell an additional product to an existing customer than to acquire a new customer. We believe that continually developing and marketing tailored and innovative products to serve the needs of specifically
identified customer segments increases our ability to sell multiple products per client.

Enhance Quality the New Service Model

We have improved our quality control practices in order to ensure a high level of quality for our services and products. We have also enhanced our communication with our clients. We have undertaken several initiatives
to maintain the high quality standard of our products and to satisfy our customers through the use of innovative communication channels with them.

The New Service Models main objective is to improve the quality of service through the optimization of branch manager time and the development of tools to reduce the response time to customers demands. At
the end of 2006, we had implemented the New Service Model in all of our branches.

We believe that we have already experienced positive results from this New Service Model, such as an increase in our client base and improvement in our financial results. We still believe, however, that a continuous
improvement in the quality of our products and services is key to increasing our client base and consequently enhancing sales and profits.

Focus on Credit Risk Management

The risk management of our Retail segment, which is composed of individuals and SMEs requires specific systems and processes. In SMEs, the need to obtain additional guarantees has grown as a strategy to mitigate this
segments increasing volatility. Several automated and/or statistical evaluation instruments are used, including credit and behavior scoring. An automatic credit system monitors loans at every stage. We also use a collection scoring system in
order to determine our most efficient payment collection methods.

We use rigorous standards of credit portfolio analysis and management, which can include restrictions on credit limit increases and on the renewal of overdraft limits. At the
same time, we have a specific structure to monitor and validate policies, models and processes used in the evaluation and concession of credit.

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During 2007, the increase in lower risk portfolios, along with our risk management policy, allowed a continued improvement in the quality of our credit portfolio. We continued to apply a more conservative approach to
the concession of loans, primarily implemented by our consumer finance companies in connection with unsecured personal loans. We began following this strategy in mid-2005, and it has succeeded in improving the quality of our loan portfolio as of
December 2007, when compared to December 2006.

Wholesale Strategy

Enhance Our Market Position in the Brazilian Wholesale Sector and Deepening Our Client Relationship Base

Our Wholesale segment aims to be the bank of choice for corporations and investors with interests in Brazil. Our strategy combines the strength of a commercial bank with the agility of a leading investment bank. Our
in-depth knowledge of our clients and their businesses coupled with our financial capabilities allows us to establish credit limits and to structure transactions in innovative ways.

Our Wholesale segment strategy is to build long-term banking relationships through regional coverage and industry-specific expertise. We offer distinctive products and services, including working capital credit lines,
foreign exchange lending, banking services, corporate finance, advisory services and derivative products. In addition, we focus on the delivery of personalized solutions to meet our clients needs.

We are one of the leading Brazilian banks participating in BNDES onlending programs. For more information, see The Brazilian Banking Industry section of this Item 4.B. As a financial agent of BNDES, we made available a
sum of R$4.4 billion throughout 2007 for loans to third parties, with a market share of 11.6% in terms of total BNDES disbursements, maintaining the third position in the BNDES general ranking.

Treasury Strategy

Provide Adequate Funding, Liquidity and Competitive Prices for Commercial Bank Units, and Manage Our  Balance Sheet Structure

Our Treasury aims to provide adequate funding, liquidity and competitive prices to the Retail, Wholesale and Wealth Management segments.  It also manages our balance sheet structure to maximize opportunities for profit and the funding needs of the Retail , Wholesale and Wealth Management segments (together, the “Commercial Bank”).

Maintain a Profit Center with Efficient Risk Management

Our Treasury pursues efficient risk management, working closely with the Market Risk unit aiming to generate a positive contribution to our financial margin. Our Treasury seeks to maximize profits by providing structured derivatives for clients, managing our proprietary and commercial portfolios, and optimizing our funding structure.

In 2007, especially during high volatility periods, efficient risk management enabled our Treasury to maintain its positive contribution to our results.

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Wealth Management Strategy

Be the Leading Provider of Wealth Management Services in Brazil

The mission of our Wealth Management segment is to provide proactive advice to help our clients to accumulate, preserve and transfer their wealth. We offer integrated financial solutions through our three main areas of
expertise: asset management; private banking; and advisory services. Our tailored and value-added products are targeted towards middle to large-sized companies and pension funds and high net worth individuals, thus leveraging our unique position in
those market segments.

With the decrease in interest rates in the last two years and the recent volatility in the domestic and international markets, we, through UAM, seek to continue to retain, diversify and increase our client base, by
increasing our offering of high value-added products such as credit risk, multi-market, off-shore and equity funds.

In order to provide these services, we have developed a strong local and international network of wealth management specialists in the areas of estate planning, tax and real estate advice, among others. In the area of
financial investments, we have developed a unique open structure through which our clients have access to our best investment products and also to the best investment products of third party asset managers.

Insurance and Pension Plan Strategy

Focus on Offering High Profitability Insurance Products and Strengthening our Leading Corporate Market Position

We believe that Brazilian economic growth will present opportunities for the countrys insurance industry as Brazilians spending on insurance products currently lags behind that of many other countries. We
intend to take advantage of this growing market by using our sophisticated product development capability to focus our insurance offerings on value-added products. By maintaining high standards for our underwriting criteria, our products are more
profitable than the relatively commoditized, market-standard products offered by many of our competitors.

In developing insurance products for retail and corporate clients, we have achieved leading market positions in a variety of specialized areas such as extended warranties and D&O insurance. We also provide insurance
products for the oil rig, maritime and aviation industries, as well as insurance covering enginnering, facultative and construction risks. Our focus on developing and offering value-added insurance products is supported by our joint venture with
AIG, which gives us access to AIGs expertise in product development and reinsurance, as well as a valuable brand name.

Unibanco AIG is distinguished by the success of its innovative products. In 2007, we were the first company to offer an environmental insurance, the most distinctive feature of which is its coverage of gradual and
ongoing pollution.

Enhance Profitability in Our Insurance Business through Cost Control, Operating Efficiency and Underwriting Expertise

The profitability of our Insurance business depends in part on our ability to minimize expenses and losses. We have taken significant steps to reduce expenses in our Insurance operations, including the merger of several
companies into Unibanco AIG, and the introduction of an internet portal to communicate with our insurance broker and the public.

The continuing decline in interest rates in Brazil is placing a premium on operating efficiency in the insurance market. In the past, gains were primarily made in financial revenues from technical reserves. Unibanco AIG
has been preparing itself by prioritizing
positive operating results. Unibanco AIG's operating results participation on total earnings has been increasing substantially over the past few years, and it has been above the market average.

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Since the establishment of our joint venture with AIG, underwriters from both companies have participated in a combined underwriting process. For example, UASEG uses information from our insurance applications to
evaluate life insurance proposals. For certain life insurance applicants, a medical examination is required to better analyze the risk. Property and casualty insurance underwriters and engineers assess and evaluate risks prior to issuing quotations
for property and casualty coverage. The evaluations of underwriters and engineers are reviewed and underwritten at the head office of UASEG. We draw on our specialized knowledge of industry segments and catastrophe control, so that our underwriting
decisions can take into consideration relevant account data and industry factors.

Improve Sales of Corporate Pension Plans

The primary strategy of our pension plans business is to improve sales of corporate pension plans by adding new companies to our pension plan portfolio and increasing the size of our portfolio of individual plans. We
offer several innovative investment contract products including Vida Gerador de Benefícios Livres, or VGBL, which combines life insurance with investment, enabling the insured party to redeem the invested amount at any time, while still
offering coverage in case of death, accident or disability; and Plano Gerador de Benefícios Livres, or PGBL, which enables customers to save for retirement with a tax-deductible feature and may include insurance coverage for death, accident
or disability. These pension products are mainly sold in our branches. Increasing sales and controlling expenses are the key drivers for the profitability of our pension plan business.

Additional Information about Unibanco

Technology

Technology is important to the execution of several components of our business strategy. We have invested heavily in technology, and we will continue to invest in new technology to enable us to retain and enhance our
competitive position in various markets to improve the quality of our services and to control costs.

During 2007, we invested a total of approximately R$350 million in technology. Our principal technology projects included:

- enhancing IT processing capacity;
- reviewing branch processes;
- implementing expansion projects;
- developing a new treasury platform;
- building an enterprise data warehouse;
- implementing virtualization of servers;
- supporting implementation of Basel II; and
- upgrading our SAP.

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Competition

The market for financial services in Brazil, including banking, insurance and asset management, remains highly competitive. Since 1990, the banking industry in Brazil has gone through a period of consolidation. A number
of banks were liquidated, many important state banks were privatized, many medium-sized non-state owned banks were sold and many were acquired by national or international banks. As of September 30, 2007, there were 134 multiple-service banks, 20
commercial banks, 17 investment banks and numerous savings and loan, brokerage, leasing and other financial institutions in Brazil.

Privately owned banks make up the largest sector of the banking industry. In December 2007, according to rankings published by the Central Bank, Banco Bradesco and Banco Itaú were the two largest privately owned
banks in Brazil in terms of assets, followed by ABN AMRO Real, Unibanco and Banco Santander. There are also a number of mid-sized banks focused mainly in middle-market companies and payroll-linked loans, such as Banco Cruzeiro do Sul, Banco BMG,
Banco Pine and Banco Sofisa.

Public sector banks also have an important presence in the Brazilian financial market. Certain of these banks have larger distribution networks and customer bases than their private-sector counterparts. These banks, the
largest of which are Banco do Brasil and Caixa Econômica Federal (CEF), accounted for 36.1% of total lending in the Brazilian banking system as of December 31, 2007, compared to 38.3% as of December 31, 2006. Public-sector banks
operate within the same legal and regulatory framework as the private-sector banks and have a strong presence in the retail sector.

In recent years, Brazilian banks have been facing increased competition from foreign banks. Citibank, HSBC, UBS and Credit Suisse, among others, have established a significant presence in the Brazilian market through
investments and acquisitions. The competition from foreign banks was specifically pronounced in the Wholesale segment, in which UBS and Credit Suisse acquired a significant portion of the investment banking industry and have established themselves
as market leaders.

In 2007, a significant development occurred in the acquisition of ABN AMROs Brazilian unit, Banco Real, by Banco Santander, which created a new strong competitor.

We expect that the recent acquisitions and partnerships will increase competition in the Retail sector, mainly in the consumer finance segment.

Credit Cards and Consumer Finance

As of December 31, 2007, there were approximately 436 million credit and debit cards in use in Brazil. Of this amount, 93 million were credit cards, 201 million were debit cards and 142 million were private-label credit
cards. The primary competitors of Unicard and Hipercard are Banco Itaú, Banco do Brasil, Banco Bradesco, Santander, Citibank (through Credicard's brand acquisition) and ABN AMRO Real. We believe that the primary competitive factors among
credit card companies are price (interest rate, cardholder fees and merchant fees), card distribution network, card acceptance and name recognition.

Co-branded cards, and in particular co-branded cards with companies that offer rewards, discounts or mileage programs, such as airline and automobile companies, are increasingly being adopted by credit card companies to
expand their client base.

Post-dated checks also compete with credit cards. They are a popular means of term payment in Brazil by which customers pay for merchandise and services with post-dated checks, effectively allowing payment over a longer
term. However, the use of post-dated checks has been decreasing, and we believe that they are gradually being replaced by credit
cards as the primary method of term payment because of their convenience, safety and growing acceptance.

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Consumer finance companies target different economic segments of the population than the ones that are generally targeted by banks, and they are largely responsible for the growth of credit access in Brazil. As access
to credit grows in segments not generally served by commercial banks, consumer finance companies are likely to continue to experience strong growth rates. Several of the large commercial banks have established consumer finance companies and
secondary brands to target this growing market. We believe the major competitors for Fininvest are Losango, which is owned by HSBC, Finasa, which is owned by Banco Bradesco, Taií, which is owned by Banco Itaú, Citifinancial, owned by
Citibank, Cetelém, owned by BNP Paribas, GE Money, owned by GE Capital, and many small independent companies.

Asset Management and Private Bank

The asset management industry in Brazil has been dominated by commercial banks offering fixed-income and equity funds to retail bank customers. Competition in the sector is mainly comprised of asset management companies
from large banks such as Banco do Brasil, Banco Itaú, Banco Bradesco, CEF, HSBC, UBS Pactual, Santander, ABN AMRO Real and Credit Suisse Hedging-Griffo. However, some small independent asset managers, such as Mellon and Legg Mason have been
able to carve out profitable market niches. Unibanco Asset Management has several competitive advantages, particularly its ability to offer a wide product range and its strong brand. In addition, UAM has distinguished itself with the quality of its
investment processes, which include credit analysis, macroeconomic and company research, asset allocation models and risk control.

Our primary competitors in the Private Banking industry in Brazil are Citibank, Banco Itaú, UBS Pactual, HSBC, ABN AMRO Real and Santander. Although this industry is dominated by the largest commercial banks,
there is also competition from investment management boutiques. Our offshore private banking operations have local competitors, and foreign competitors such as JP Morgan Chase, Merrill Lynch, Morgan Stanley, Credit Suisse and the Swiss private banks
(Lombard Odier Darier Hentsch, Mirabaud, Julius Baeur, among others).

Insurance and Pension Plans

The Brazilian insurance and pension plans market is highly competitive. The total insurance and pension plans market in 2007 had R$75.9 billion in premiums and pension contributions. The ten largest insurance and
pension plan groups had 80.6% of the market share in this area as of December 2007; UASEG had a 7.2% share of the insurance market, and UAVP had a 10.9% share of the pension plans market (excluding VGBL products), representing a combined market
share of 7.6% in insurance and pension plans.

Competition in the insurance market comes from two fronts: insurance companies in large commercial banks, such as Bradesco Seguros and Itaú Seguros, and independent companies such as Sul América Seguros
and Porto Seguro. Companies also tend to specialize in market niches, such as automobile, health, or property insurance. Although companies that operate nationwide are our main competitors, we also face competition from certain local or regional
companies in various markets that may have a relatively cheaper cost structure or a specialization in certain niches. We believe that our main competitive advantages are our strength, strong partnership with international company brand name
recognition, quality of services and competitive rates.

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The Brazilian Banking Industry

General

The Brazilian government controls some commercial banks and public financial institutions that play an important role in the Brazilian banking industry. These public financial institutions hold a significant portion of
the banking systems total deposits and total assets and they are stronger than private banks in the residential mortgage and agricultural lending markets. In addition, the development banks operated by the Brazilian government act as regional
development agencies.

State Owned Sector

The three main public financial institutions controlled by the Brazilian government are:

- Banco do Brasil, which provides a full range of banking products to both the public and private sectors. Banco do Brasil is the largest commercial bank in Brazil and the primary financial agent of the Brazilian government;
- BNDES, a development bank that provides medium and long-term financing to the Brazilian private sector, mainly in the industrial sector. BNDES provides funding both directly and indirectly through onlending by other public and private sector
financial institutions; and
- CEF, a bank involved principally in deposit-taking activities and financing for housing and urban infrastructure.

Non-stateOwned Sector

The following are the principal types of private financial institutions:

- multiple-service banks, such as Unibanco, which are licensed to provide a full range of commercial banking, investment banking (including securities underwriting and trading), consumer finance and other services;
- commercial banks, which are primarily engaged in wholesale and retail banking and are particularly active in deposit-taking and lending for working capital purposes; and
- investment banks, which are principally engaged in underwriting securities and structured transactions.

Regulation and Supervision

Principal Regulatory Bodies

The Brazilian Financial System (Sistema Financeiro Nacional) is composed of the following regulatory and inspection bodies:

- the CMN;
- the Central Bank;
- the CVM;

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- the National Private Insurance Council (Conselho Nacional de Seguros Privados) or CNSP; and
- the SUSEP.

The CMN, the Central Bank and the CVM regulate the Brazilian financial and capital markets industries, while the CNSP and SUSEP regulate the insurance market.

We summarize below the main functions and powers of each of these regulatory bodies:

National Monetary Council

- establishes currency and credit policies;
- controls lending and capital limits;
- approves monetary budgets;
- establishes foreign exchange and interest rate policy;
- oversees activities related to the stock exchange markets;
- regulates the constitution and operation of financial institutions;
- grants authority to the Central Bank to issue currency and establishes reserve requirement levels; and
- establishes general directives to the banking and financial markets.

|                                                                                                             |  |                                                                                         
|------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------
|Central Bank                                                                                                 |  | Brazilian Securities Commission                                                         
|                                                                                                             |  |                                                                                         
|                                                                                                            
|                                                                                                             |  |                                                                                         
| implements the currency and credit policies established by the CMN;                                        |  |   implements and regulates the securities and exchange policies established by the CMN;
|                                                                                                             |  |                                                                                         
| controls and supervises all public and private sector financial institutions;                              |  |   controls and supervises the Brazilian securities market;                             
|                                                                                                             |  |                                                                                         
| has the power to authorize and approve:                                                                    |  |   has the power to approve, suspend and cancel:                                        
|                                                                                                             |  |                                                                                         
| the establishment and operation of financial institutions;                                                 |  |   the registration of public companies;                                                
|                                                                                                             |  |                                                                                         
| capital increases by financial institutions;                                                               |  |   the authorization for brokers and dealers to operate in the securities market; and   
|                                                                                                             |  |                                                                                         
| the establishment of branches and facilities in Brazil and abroad;                                         |  |   public offerings of securities;                                                      
|                                                                                                             |  |                                                                                         
| mergers and acquisitions of financial institutions;                                                        |  |                                                                                         
|                                                                                                             |  |                                                                                         
| amendments to bylaws of financial institutions;                                                            |  |                                                                                         
|                                                                                                             |  |                                                                                         
| establishment or relocation of the principal place of business of financial institutions; and              |  |                                                                                         
|                                                                                                             |  |                                                                                         
| merger, spin-off or acquisition transactions resulting in the change of control of financial institutions; |  |                                                                                         

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|                                                 |  |                                                           
|------------------------------------------------ |  | ----------------------------------------------------------
|Central Bank                                     |  | Brazilian Securities Commission                           
|                                                 |  |                                                           
| establishes:                                   |  |   supervises the activities of:                          
|o   minimum capital  requirements;               |  | o public companies;                                       
|                                                 |  |                                                           
|o  compulsory reserve  requirements;             |  | o stock exchanges;                                        
|                                                 |  |                                                           
|o  operational limits;                           |  | o commodities and futures exchanges;                      
|                                                 |  |                                                           
|                                                 |  | o market members; and                                     
|                                                 |  |                                                           
|                                                 |  | o financial investment funds and variable income funds;   
|                                                 |  |                                                           
|                                                 |  |                                                           
| requires the submission of:                    |  |  requires:                                               
|                                                 |  | o full disclosure of material events affecting the market;
|o  annual audited financial  statements ;        |  |                                                           
|                                                 |  | o annual and quarterly reporting by public companies; and 
|o  semi-annual audited  financial statements;    |  |                                                           
|                                                 |  |                                                           
|o  quarterly reviewed  financial statements; and |  |                                                           
|                                                 |  |   imposes penalties.                                     
|o  monthly unaudited  financial statements;      |  |                                                           
|                                                 |  |                                                           
| requires full disclosure of:                   |  |                                                           
|o  all credit transactions;                      |  |                                                           
|                                                 |  |                                                           
|o  foreign exchange  transactions;               |  |                                                           
|                                                 |  |                                                           
|o  export and import  transactions;              |  |                                                           
|                                                 |  |                                                           
|o  any other related  economic activity; and     |  |                                                           
|                                                 |  |                                                           
|o  imposes penalties.                            |  |                                                           

National Private Insurance Council

- establishes directives and general rules of private insurance policies;
- establishes general terms for insurance contracts;
- establishes accountability and statistics general rules to be observed by insurance companies;
- sets a limit to the capital of insurance and reinsurance companies;
- establishes index and technical conditions regarding rates, investments and other patrimonial relations to be observed by insurance companies;
- establishes general rules for reinsurance transactions; and
- imposes penalties.

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Private Insurance Superintendency

- implements the CNSP policies and ensures compliance with such policies by insurance companies;
- supervises the constitution, organization, and operation of insurance companies, including but not limited to:
- issuance of rules regarding insurance transactions;
- analysis and approval of operational limits for insurance companies;
- supervision of the compliance by insurance companies with accounting rules and with relevant legislation;
- execution of the liquidation of insurance companies, and
- analysis and approval of the commercial and the product conditions of the insurance distributed by insurance companies; and
- imposes penalties.

Principal Limitations, Restrictions and Requirements on Financial Institutions

Under Brazilian laws and regulations, financial institutions operating in Brazil may not:

- operate in Brazil without the prior approval of the Central Bank;
- invest in the equity of any other company above the regulatory limits;
- lend more than 25.0% of its adjusted net worth to any single person or group;
- own real estate, except for its own use; or
- grant loans to or guarantee transactions of any company,
- in which they hold more than 10% of the capital (except for loans to leasing subsidiaries), or
- that holds more than 10% of their capital (except for as approved by the Central Bank).

Requirements

Capital Structure Requirements

Financial institutions must be organized as corporations and may divide their capital into voting (common share) and non-voting (preferred share) shares, although, non-voting shares may only represent up to 50% of their
total capital. As corporations, they are subject to all the provisions of the Brazilian corporate law and, if they are registered as public companies, to the supervision of the CVM.

Reserve Requirements

The Central Bank currently imposes compulsory reserve and related requirements that financial institutions in Brazil must deposit with the Central Bank. The Central Bank uses reserve and deposit requirements as a
mechanism to control the liquidity of the financial system. The reserves imposed on demand deposits, savings deposits and time deposits account for substantially all amounts required to be deposited with the Central Bank.

In January 2008, the Central Bank also established a compulsory deposit requirement on interbank deposits from leasing companies. Since our leasing company invests most of its available cash in interbank deposits with
us, this could have an adverse effect on our cost of funding. For further discussion of reserve requirements and the potential impacts of such measures, please see Item 5.  Operating and Financial Review and ProspectsMacroeconomic Factors Affecting Our Financial Condition and Result of OperationsEffect of Government Regulation on Our Financial Condition and Results of OperationsCompulsory Deposit Requirements.

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Mandatory Credit Allocation Requirement

For social purposes, Brazilian law imposes mandatory credit allocation requirements on financial institutions in order to foster certain economic activities.

Micro-credit

The Brazilian government has taken several measures intended to encourage lower-income individuals to have greater access to the Brazilian Financial System. Such measures include the requirement for credit allocation,
the simplification of banking procedures, and the liberalization of credit union (cooperativas de crédito) regulations.

Since 2003, commercial banks, full service banks licensed to provide commercial banking services, the CEF and credit unions must allocate 2% of their cash deposits to low-interest-rate loan transactions designated for
lower-income individuals, small companies and informal entrepreneurships, following a specific methodology. Interest rates on these loans cannot exceed 2% per month, the repayment term cannot be less than 120 days, and the principal amount of the
loan cannot exceed R$1,000 for individuals, and R$3,000 for micro-enterprises.

In addition to these low-interest-rate loans, in 2005, a program targeting the production sector was implemented. This program is called Programa Nacional de Microcrédito Produtivo Orientado (National Program of
Directed Micro Credit Production), and its purpose is to address small companies and individuals financial needs, within their businesses and production activities. In 2006, the Central Bank fixed the maximum interest rate for such
loans, which is currently at 4% per month, the minimum repayment term, which cannot be fewer than 120 days, and the maximum principal amount, which is capped at R$10,000.

Housing Finance and Real Estate Credit

According to Brazilian regulations, financial institutions are required to utilize at least 65% of their savings accounts balances to fund real estate and construction financing (housing allocation). Such
financing may be provided directly by the financial institutions, through loans and credit lines extended to its clients, or indirectly, through securitization of loans granted by third parties (such as real estate companies), to their clients.

This regulation is also designed to encourage financial institutions to extend loans to low and middle-income families.  Eight percent of the housing allocation must be used exclusively to fund loans in amounts less
than R$ 245,000.00, which will be applied to the construction or acquisition of residential properties whose total market value is under R$ 350,000.00. The interest rates applicable to such financing are capped at 12% per year. The remaining
20% of the housing allocation may be granted by Brazilian financial institutions for any real estate financing, without amount, market value, or interest rate limitations.

Rural Loans

Rural financing, which is limited to agricultural and cattle raising activities, is also subject to special regulation. Due to such regulation, financial institutions are required to use 25% of their checking accounts
deposits balances to fund such loans. The regulation also limits the terms of the loans by stipulating interest rates and maturity, in accordance with the nature of the rural activity financed by the relevant financing.

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Capital Adequacy Requirements

The Central Bank sets the minimum risk-based capital-adequacy ratio required for banks operating in Brazil. Such minimum capital requirement reflects the minimum balance between risk-adjusted assets and liabilities the
Central Bank considers adequate for a bank to operate in Brazil.

Brazilian financial institutions must comply with guidelines similar to those of the Basel Accord on risk-based capital adequacy. The requirements imposed by the Central Bank differ from the Basel Accord in a few
aspects. Among other differences, the Central Bank:

- imposes a minimum capital requirement of 11% in lieu of the 8% minimum capital requirement of the Basel Accord;
- requires an additional amount of capital with respect to off-balance sheet interest rate and foreign currency swap operations; and
- assigns different risk weights to certain assets and credit conversion amounts, including a risk weight of 300% on deferred tax assets relating to income and social contribution taxes.

The 11% minimum capital ratio imposed by the Central Bank for capital adequacy of Brazilian financial institutions is higher than the 8% minimum capital ratio imposed by the Basel Accord, in effect in the United States
for U.S. financial institutions, as a result of specific characteristics of the Brazilian economy, such as its higher volatility. Notwithstanding the above, Brazilian banks may freely increase this capital ratio in accordance with their respective
financial conditions and internal policies.

In addition to capital adequacy requirements, financial institutions are subject to certain operational limits, such as limits on credit-risk concentration and limits on foreign-currency exposure. Operational Limits are
calculated based on Reference Capital, which is considered capital in order to determine the financial institutions ́ capital adequacy. The Reference Capital of financial institutions is its adjusted shareholders ́ equity, represented by
the sum of Tier 1 and Tier 2 capital.

In February 2007, the CMN enacted Resolution 3.444/07 which redefined (i) the concepts of Reference Capital, (ii) the calculation method of both Tier 1 and Tier 2 capital, and (iii) the terms and conditions required for
subordinated debt or hybrid bond instruments to compose Tier 2 capital and the terms and conditions required for hybrid bond instruments to compose Tier 1 capital.  According to Resolution 3.444/07, each Tier is composed as follows:

- Tier 1 corresponds to stockholders equity plus positive result account plus deposits into collateral accounts to remedy capital deficiencies minus negative result account, excluding reserves, contingency reserves and special profit reserves
related to mandatory dividends not yet distributed, the amounts related to preferred cumulative stock and preferred redeemable stock, certain tax credits, deferred permanent assets (save for premiums paid in the acquisition of investments), unpaid
balance of gains and losses that arises from the market value of securities classified as securities available for sale and derivative transactions used to hedge cash flow; and
- Tier 2 corresponds to revaluation reserves plus contingency reserves, special profit reserves related to mandatory
dividends not yet distributed, the amounts related to preferred cumulative stock and, preferred redeemable stock, unpaid balance of
gains and losses that arises from the market value of securities classified as securities available for sale, and derivative transactions used to hedge cash flow, subordinated debt and hybrid instruments. The total amount of Tier 2 capital may not exceed the total amount of Tier 1 capital, provided that: (i) the total amount of revaluation reserves in Tier 2 capital may not exceed 25% of the Reference Capital; (ii) the total amount of subordinated debt in Tier 2 capital plus the amount of preferred redeemable stock, in each case originally maturing in less than 10 years, may not exceed 50% of the Tier 1 capital amount; and (iii) a 20% reduction shall be applied to the amount of the subordinated debt and preferred redeemable stock in Tier 2 capital every year for
the 5 years immediately preceding the respective maturity. Please note that, in the case of subordinated debt with a redemption option, issued under Resolution 3.444/07, the date such option may be exercised shall be considered as the maturity date


 for Tier 2 calculations.

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In 2007, the CMN and the Central Bank also issued new rules for the risk-based capital adequacy of Brazilian financial institutions, modifying the Brazilian principles to better approximate them to the latest guidelines
provided by the Basel Accord. The Brazilian authorities defined a standard system of risk-weighing assets, which recognizes three types of risks  market risk, credit risk and operational risk. The rules will be effective as of July, 2008, with
the exception of foreign currency exposure rules, which have been in effect since August, 2007.

Notwithstanding such standardized system of risk assessment, the Central Bank has announced that Brazilian financial institutions that have international holdings and a significant role in the National Financial System,
may adopt more effective internal methodologies of credit, market and operational risk management. These more effective internal methodologies may consist of, among other measures, the use of a more advanced approach based on internal systems of
risk classification. Until December 2012, such financial institutions will be able to elaborate and to adopt these more effective internal methodologies while observing the minimum standards and requirements established by the Central Bank.

Brazilian financial institutions calculate their capital adequacy ratio and their Reference Capital in accordance with Accounting Practices Adopted in Brazil and Central Bank rules.

Restrictions and Limitations

Restrictions on Funding Mechanisms

Financial institutions raise funds through a variety of deposit transactions, generally time deposits, which must comply with all relevant legislation and regulation. Federal legislation imposes restrictions on this
type of funding by financial institutions in the local market through prohibitions on the issuance of debt and any borrowing through loans. Notwithstanding such restrictions, leasing companies of financial institutions may issue debentures and
borrow through loans in the domestic and international markets.

Constitutional Restrictions on Financial Institutions

The Federal Constitution provides that a special law will regulate foreign investments in Brazilian financial institutions. As long as such special law is not issued, foreign investments are only permitted if they have
specific authorization from the Brazilian government.

Notwithstanding the above, Brazilian government has declared that foreign investments in financial institutions are in the governments interest, as long as the foreign company or individual does not have any
voting rights. Therefore, authorization from the Brazilian Government is not required for companies or individuals to acquire publicly traded
non-voting shares of Brazilian financial institutions or depositary receipts offered abroad representing such non-voting shares.

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The Federal Constitution also prohibits foreign financial institutions from establishing new branches in Brazil, except when duly authorized by the Brazilian government. A foreign financial institution duly authorized
to operate in Brazil through a branch or a subsidiary is subject to the same rules, regulations and requirements that are applicable to any Brazilian financial institution.

Limitations on Repurchase Transactions

Repurchase transactions (operações compromissadas) are transactions involving assets that are sold or purchased subject to a repurchase or resale commitment on an established date or within an established
term.

Repurchase transactions executed in Brazil are subject to operational capital limits based on the financial institutions adjusted shareholders equity. A financial institution may only hold repurchase
transactions in an amount up to 30 times its adjusted shareholders equity. Within that limit, repurchase transactions involving private securities may not exceed five times the amount of adjusted shareholders equity. Limits on repurchase
transactions involving securities backed by Brazilian governmental authorities vary in accordance with the type of security involved in the transaction and the perceived risk of the issuer as established by the Central Bank.

Restrictions on Risk Concentration

Brazilian law prevents financial institutions from concentrating risks in only one person or group of related persons.  The regulation prohibits a financial institution from extending credit to any person or group of
related persons in an aggregate amount equivalent to 25% or more of the financial institutions adjusted shareholders equity. This limitation applies to all transactions involving extension of credit, including those involving:

- loans and advances;
- guarantees;
- the underwriting, purchase and renegotiation of securities; and
- inter-bank deposits.

Restrictions on Fees and Interest Rates

Brazilian laws and regulations issued by the CMN impose several restrictions on both the fees and the interest rates charged by financial institutions. These restrictions require compliance with certain indices, rates
and parameters mandated by regulation. The most significant recently enacted restrictions include:

- Payroll-linked loans: since December 2003, certain regulated employees may authorize their employers to deduct from their paychecks the amounts due under certain applicable loan, financing and lease agreements and to pay the creditor such
amounts directly in accordance with the terms and conditions under the respective agreements. Since this arrangement decreases the financial institutions credit risk on the transaction, there are limits on the interest rates financial
institutions may charge;
- Prepayment Commissions: since December 2007, financial institutions are prohibited from charging their retail clients for payments made in advance of the maturity date of credit transactions. In addition, the Central Bank established guidelines to calculate the present value of payments or settlements of those credit transactions;

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- Mandatory Credits Allocation: financial institutions must comply with certain limitations on interest rates they charge under government-mandated programs for the benefit of Brazilian society. Please see Mandatory Credits
Allocation Requirementsabove for additional information about these programs and the limits on the interest rates; and
- Salary Accounts: financial institutions are prohibited from charging their clients fees on certain transactions made through their salary accounts, which such clients are required to maintain with a bank designated by their employer, pension
fund or other income provider. Please see Regulations to Foster Competitionbelow for additional information about these accounts and the restrictions on fees.

Restrictions on the Extension of Credit

Financial institutions may not grant loans to, or guarantee the transactions of their affiliates, except in some limited circumstances. For this purpose, the law defines an affiliate as:

- any company which holds more than 10% of the share capital of the financial institution;
- any company in which the financial institution holds more than 10% of the share capital; or
- managers of the financial institution (executive officers, directors and their family members), and any company in which these persons hold more than 10% of the share capital or in which they are also managers.

Moreover, there are certain restrictions imposed on financial institutions limiting the extension of credit to public-sector entities, such as government-owned companies and governmental agencies, which are in addition
to certain limits on indebtedness to which these public sector entities are already subject.

Restrictions on Investments

Financial institutions may not:

- hold, on a consolidated basis, permanent assets in excess of 50% of their adjusted shareholders equity;
- own real property, other than real property for its own offices and branches; or
- acquire equity investments in other financial institutions abroad, without prior approval by the Central Bank.

When a bank receives real estate in satisfaction of a debt, such property must be sold within one year.  Such one-year limit may be extended for two additional periods of one year, subject to the Central Banks
approval.

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Regulations

Assignment of Credit Rights and Securitization

The assignment of credit rights, derived from loans, financings and leasing, is regulated by the Brazilian Civil Code and regulations promulgated by the CMN and reviewed by the Central Bank. Under these regulations:

- financial institutions are allowed to assign credit rights to other financial institutions and leasing companies are permitted to assign credit rights to other leasing companies and to financial institutions;
- financial institutions and leasing companies are allowed to assign credit rights to non-financial institutions, subject to the following conditions: (i) the seller cannot be a co-obligor; (ii) a repurchase of the credit rights is prohibited; and
(iii) the settlement must be in cash;
- financial institution cannot assign credit rights to non-financial institutions from the same economic group without prior Central Bank approval; and
- if the credit rights are denominated in a foreign currency, the assignee must have compatible funding in the same currency.

Credit assignments as part of securitizations, however, are exempt from these regulations. Accordingly, the seller of credit rights in a securitization is allowed to be a co-obligor and may repurchase the credit rights.
In addition, when the securitization company is controlled by, or affiliated with, the seller or when the credits are assigned with a repurchase obligation, the seller is required to notify the Central Banks Credit Risk System.

Regulations to Foster Competition

Certain restrictions are imposed on the services rendered by Brazilian financial institutions in order to, among other things, increase competition within the financial sector and protect consumers from abusive
practices. Some of these restrictions include:

- Salary Account: As of April 2, 2007, employees are entitled to designate a bank account to receive their salary or retirement, pension and other labor and social security benefits. Transfers from this designated account to any of the account
holders other bank accounts are exempt from bank fees;
- Records Mobility: Since September 6, 2006, a client of one bank can request that financial institutions provide to another financial institution his or her record of credit transactions and an account statement that includes the last 12 months of
activity.
This information is intended to improve the quality and efficiency of credit analysis and thereby allow the lending bank to tailor the interest rate to the credit of the borrower; and
- Insurance Regime: The Federal depositary insurance has begun guaranteeing losses of up to R$60,000 per customer in the event of bank insolvency, which, among other things, is aimed to increase client confidence in smaller baking
institutions.

By creating mechanisms that will make it easier for clients to open new bank accounts and transfer their funds from one institution to another, these new regulations facilitate a clients ability to switch their
business from one financial institution to another.

Securities Market Regulation

The Brazilian securities market is regulated by the Central Bank, CMN, the CVM and stock exchanges, such as BM&F, BOVESPA and organized over-the-counter markets, which
trade securities and financial assets. Derivatives are classified as securities and are subject to securities regulations and supervision.

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In October 2007, the CMN eliminated the restrictions on the types of assets that were permitted to underlie derivatives transactions. Accordingly, any asset may underlie a derivative transaction, provided that the price
of such underlying asset is calculated and published periodically and that the method employed to determine its price is subject to independent verification. All derivatives transactions be registered with an entity authorized by the Central Bank
and the CVM, such as CETIP (Câmara de Custódia e Liquidação) or BM&F. In April of 2008, the CVM issued a new regulation, which provides that as of July of 2008, derivatives agreements must be approved by the entity
with which the derivatives transactions are registered (either the CETIP or the BM&F). The rules pursuant to which such approval will be granted have yet to be published.

On May 8, 2008, the shareholders of BM&F and BOVESPA approved the merger of their two companies. The merger is still pending approval by the CVM and by the regulatory body responsible for anti-trust matters
(Conselho Administrativo de Defesa Econômicaor CADE). According to press releases published by both companies, this merger aims to reach a more efficient structure; saving costs related to the two exchange markets and increasing the
profitability of both companies.

We are subject to regulation in conjunction with our roles as underwriter, broker and asset manager, as described below.

Role as Underwriter

Except in specific circumstances, any public distribution or public offering performed in the securities market shall be intermediated by institutions, including financial institutions, that participate in the
Securities Distribution System.

As underwriter, financial institutions are jointly responsible with the issuers for certain compliance obligations such as: (i) registration requirements; (ii) disclosure obligations; (iii) insider trading prohibitions;
(iv) special qualification requirements for managers; and (v) rules protecting minority shareholders.

Furthermore, when acting as an underwriter of a public distribution of securities, an intermediary institution shall take all possible measures and act with the highest standards of diligence as well as take
responsibility for any lack of diligence or omission to assure that:

- the information provided by the issuer is true, consistent, correct and adequate, allowing investors to make informed investment decisions; and
- the information disclosed to the market during distribution of securities, including interim financial information required to be filed by the issuer to update its registration with the CVM or any economic-financial feasibility study, if applicable,
that is integrated into the prospectus, is sufficient, allowing the investors to make informed investment decisions.

Role as Broker

Brokerage firms that have been chartered by the Central Bank are the only institutions in Brazil authorized to trade on Brazil ́s securities exchanges and on organized over-the-counter markets.  Brokerage firms
authenticate and liquidate securities and financial assets traded through them. One of the principal obligations of a brokerage firm is to identify investors and supervise their transactions in order to prevent money laundering.
In connection with this supervisory role, brokerage firms are obligated to select a director responsible for this oversight.

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Role as Asset Manager

The CMN and CVM also regulate and supervise the management of third party assets and investment funds, which may be provided through direct management of portfolios or through investment funds. Only individuals or
entities authorized by the CVM may act as managers of third party assets. Financial institutions must appoint an officer as the agent responsible for the management of third party assets and segregate such assests from their other activities.

In addition, strict Chinese Wall policies are required to guarantee the independence of the personnel who work in the asset management segment by isolating them from the areas that trade the financial
institutions own investment portfolios.

The Central Bank, except in very specific circumstances, has prohibited institutions that manage third party assets and their affiliated companies from investing in the funds they manage. There are also some rules
regarding mutual funds portfolio diversification and composition, which aim to reduce exposure to certain types of risk.

Fund managers are required to account for and record all funds portfolio assets at their fair market value.

Foreign Currency Regulation

Foreign Currency Exchange

The Brazilian foreign exchange market is subject to extensive regulation and supervision by the Central Bank and the CMN. Only institutions authorized by the Central Bank to operate in the foreign exchange markets may
purchase and sell foreign currency in Brazil.

These foreign exchange rules also set forth certain standards for international payments related to trade and financial transactions, such as standardized agreements, registration on the Central Bank Information System
(SISBACEN) and documentary evidence of the transaction.

Foreign Currency Exposure

The Central Bank imposes a limit on the net exposure of Brazilian financial institutions and their affiliates to assets and liabilities denominated in or indexed to fluctuations in foreign currencies and gold.  As of
June 2007, this limit is 30% of adjusted shareholders equity.

Foreign Currency Loans

Financial institutions may borrow reais-denominated or foreign currency-denominated funds in the international markets for any purpose, including on-lending such funds in Brazil to Brazilian corporations and
other financial institutions without the prior written consent of the Central Bank. Although the Central Bank may establish limits on the term, interest rate and general conditions of such international loan transactions (including the issuance of
bonds and notes by financial institutions), currently there are no limits imposed on such transactions, and financial institutions are only required to register the loans with the Central Bank. The Central Bank, however, frequently changes these
regulations in accordance with the economic scenario and the monetary policy of the Brazilian government.

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Internal Compliance Procedures

All financial institutions must establish internal policies and procedures to control their activities; supervise the financial, operational and management information systems; and ensure compliance with all applicable
regulations.

The board of executive officers of a financial institution is responsible for implementing an effective structure of internal controls by defining responsibilities and control procedures and establishing corresponding
goals at all levels of the institution. The board of executive officers is also responsible for verifying compliance with internal procedures.

Either an internal audit department, which reports directly to the board of directors of the institution, or the institutions external auditors, must be responsible for monitoring the internal control system.

Independent Accountants and Audit Committee

Independent Accountants

All financial institutions must be audited by independent accountants. Independent accountants can only be hired if they are registered with the CVM, certified in specialized banking analysis by the Federal Board of
Accounting (Conselho Federal de Contabilidade) and the Institute of Brazilian Independent Auditors (Instituto dos Auditores Independentes do Brasil) and meet several strict requirements that assure their independence.  In addition, financial
institutions must replace their independent accounting firm at least every five consecutive fiscal years and former accountants can be rehired only after three complete fiscal years have passed since their prior service.  Financial institutions must
designate a senior manager to be responsible for compliance with all regulations regarding financial statements and auditing.  The Central Bank, however, issued Resolution No. 3503 on October 26, 2007 which suspend the obligation to replace the
independent accounting firms at least every five consecutive fiscal years through December 31, 2008 for all of the institutions under Central Bank regulation.

In addition to preparing an audit report, the independent accountants must report:

- an evaluation of the financial institutions internal controls and risk management procedures, including its electronic data processing system, showing all deficiencies found; and
- a description of the financial institutions non-compliance with applicable regulation material to the financial institutions financial statements or activities.

Audit Committee

In accordance with CMN regulation, all financial institutions that (i) have reference assets or consolidated reference assets equal to or in excess of R$1 billion; (ii) manage third-party funds of at least R$1
billion; or (iii) hold deposits and manage third-party funds in an aggregate amount of at least R$5 billion, are required to have an in-house audit committee.

Audit committees should be created subject to an express provision in the bylaws of the respective financial institution and should be composed of at least three members, one of which specializes in accounting and
auditing. For further information, see Item 16.A Audit Committee Financial Expert. Audit committee members of financial institutions with shares traded on a stock exchange may not (a) be or have been in the previous twelve months: (i) an
officer of the institution or its affiliates; (ii) an employee of the institution or its affiliates; (iii) an officer, manager, supervisor, technician, or any other member of the team involved in
auditing activities at the institution; or (iv) a member of the institutions audit council or that of its affiliates and (b) be a spouse or relative of the persons described in items (a)(i) to (iii).

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Audit committee members of publicly trade financial institutions are also forbidden from receiving any other kind of remuneration from the institution or its affiliates other than that relating to their respective post
as a member of the audit committee. In the event an audit committee member of the institution is also a member of the board of directors of the institution or its affiliates, such member must opt for remuneration related to only one of the posts.
The audit committee should report to the board of directors or officers, as applicable and its principal functions are to:

- nominate the independent auditor to be elected by the board of directors;
- supervise the work of the independent auditor;
- request that the independent auditor be substituted whenever deemed necessary;
- review the semi-annual financial statements as well as the administrative and auditing reports;
- supervise accounting and auditing, including compliance with internal procedures and applicable regulations;
- evaluate the compliance of the financial institutions management with the guidelines provided by the independent auditor;
- receive and disclose information in the event of any non-compliance with internal procedures or applicable regulations;
- advise officers and directors with respect to the adoption of internal controls and procedures; and
- meet with officers and directors, independent auditors and internal accountants to verify compliance with committee guidelines.

According to Central Bank regulations, the audit committee is required to be a body, created by shareholder resolution, which is separate from the board of directors. Notwithstanding the requirement of separate legal
entities, the members of the audit committee may be members of the board of directors, provided that they meet certain independence requirements. In addition, under Brazilian law, the hiring of the independent auditor is a function reserved
exclusively for the board of directors of a company. Furthermore, Brazilian legislation permits the creation of a single committee for an entire group of companies.

Independent auditors and the audit committee must immediately notify the Central Bank of the existence or evidence of error or fraud within a maximum period of three business days from the respective identification of
the same, including:

- non-compliance with legal and regulatory norms that place the continuity of the audited entity at risk;
- fraud of any amount perpetrated by the administration of said institution;
- relevant fraud perpetrated by entity employees or third parties; or
- errors that result in significant mistakes in the accounting records of the entity.

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Ombudsman (Ouvidoria)

We have created an ombudsman department (Ouvidoria) independent from our internal audit committee, which complies with regulatory requirements of CMN Resolution 3,477 of June 26, 2007. The Ouvidoria is responsible for
the control of all our clients claims and opinions, efficiency in responding to clients, internal handling of deficiencies identified in our operational processes, staff training, among others. The Ouvidoria shall, among other things, prepare
semiannual reports containing information on clients complaints and opinions.

Treatment of Overdue Debts

Under Central Bank regulations, banks have to classify their loan transactions with companies into nine categories, ranging from AA to H, in accordance with their risk. Risk assessment includes an evaluation of the
borrower, the guarantor and the relevant loans. Credit classifications are determined in accordance with Central Bank criteria relating to:

- characteristics of the debtor and the guarantor, such as their economic and financial situation, level of indebtedness, capacity for generating profits, cash flow, delay in payments, contingencies and credit limits; and
- characteristics of the transaction, such as its nature and purpose, the sufficiency of the collateral, the level of liquidity and the total amount of the loan.

The regulations specify, for each category of loans, a minimum provision, as follows:

|          |  |                  
|--------- |  | -----------------
|Loan Rank |  | Minimum Provision
|          |  |                  
|         
|AA        |  |                 
|A         |  | 0.5%             
|B         |  | 1.0%             
|C         |  | 3.0%             
|D         |  | 10.0%            
|E         |  | 30.0%            
|F         |  | 50.0%            
|G         |  | 70.0%            
|H         |  | 100.0%           

In general, banks must review loan classifications annually.  However, banks must review loans:

- semi-annually in any case where the aggregate amount of loans extended to a single borrower or economic group exceeds 5% of the banks adjusted shareholders equity; and
- monthly in the case of loans that become past due.

A loan may be upgraded if it has a credit support or downgraded if in default. Banks cannot charge-off credit transactions until six to 12 months after they are ranked H, depending on this initial maturity.

Some loans may be charged-off in less than six months from the date they were past due if they were ranked H before becoming past due, which may occur if the bank classified the loan as a high credit risk where,
for example, the borrower is bankruptcy or in very poor financial condition.  Moreover, the Central Bank allows loans with maturities in
excess of 36 months to be charged-off in 12 months. Furthermore, if personal or corporate loans are fully collateralized (such as by mortgages or vehicles in automobile financing), they may take more than one year to be ranked H.

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As part of our risk assessment policy, we analyze:

- the economic and financial condition of each debtor and its guarantors, including their level of indebtedness, capacity for generating profits, cash flow, quality of management and internal controls, payment history, contingencies, type of economic
activity and credit limits; and
- the nature and purpose of the transaction, as well as sufficiency of the collateral, level of liquidity and total amount of the loan.

In the case of loan transactions with individuals, in addition to the criteria set forth above, we also evaluate the individuals income, net worth and credit history (as well as other personal data).

For loans that are past due, the regulations establish maximum classifications, as follows:

|                                   |  |               
|---------------------------------- |  | --------------
|                                   |  | Maximum       
|Number of Days Loan is Past Due(1) |  | Classification
|                                  
|15 to 30 days                      |  | B             
|31 to 60 days                      |  | C             
|61 to 90 days                      |  | D             
|91 to 120 days                     |  | E             
|121 to 150 days                    |  | F             
|151 to 180 days                    |  | G             
|More than 180 days                 |  | H             

Banks are required to determine, on a monthly basis, whether any loans must be reclassified as a result of these maximum classifications, and, if so, must adjust their provisions accordingly.

Finally, banks are required to make their lending and loan ranking policies available to the Central Bank and to their independent accountants. They must also provide information relating to their loan portfolio along
with their financial statements, including:

- breakdown of activities and nature of the borrower;
- maturity of the loans;
- amounts of rolled-over, written-off and recovered loans;
- loan portfolio diversification in accordance with the loan classification; and
- overdue loansdivided between loans past due up to 15 days and loans past due over 15 days.

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Central Bank Credit Risk System

Financial institutions are required to provide information to the Central Bank concerning the extension of credit and guarantees rendered to clients. The information is used to:

- strengthen the Central Banks supervisory capacity; and
- make information concerning debtors available to other financial institutions (however, other institutions can only access information subject to clients authorization).

In the event that the amount of a clients transaction exceeds R$5,000 or the aggregate amount of transactions of a single client is equal to or greater than R$ 5,000,000 the financial institution must
provide the Central Bank with:

- the identity of such customer;
- a breakdown of such customers transactions, including any guarantees rendered by the bank with respect to his obligations; and
- information regarding the clients credit risk classification based on the credit risk classification policy described above.

For transactions that, in the aggregate, are below or equal to R$5,000 the financial institution must only report the total amount of transactions per client.

Moreover, the CMN announced that in 2007 the Central Bank would reduce the threshold for reporting loans from R$5,000 to R$3,000. Although this reduction has not yet occurred, we expect that a reduction in the
threshold would yield an increase in registered financial transactions, especially those relating to individual and consumer finance.

Anti-Money Laundering Law

Pursuant to the Brazilian anti-money laundering law, financial institutions must:

- identify and maintain up-to-date records regarding their customers;
- maintain internal controls and records;
- keep records, for a five-year period, of any transaction or set of transactions performed by individuals or entities pertaining to the same economic group involving Brazilian and foreign currency, securities, metals or any other asset which may be
converted into money;
- review transactions or proposals with characteristics which may indicate the existence of a crime; and
- communicate any suspicious transaction to the appropriate authorities (without the customers knowledge), within 24 hours.

In addition, the Brazilian anti-money laundering law created the Financial Activity Control Council. The main role of the Council is to promote cooperation among the Brazilian governmental bodies responsible for
implementing national anti-money laundering policies, in order to avoid the performance of illegal acts and frauds. In 2008, in addition to the rules mentioned above, the CVM issued a new regulation whereby financial institutions must follow certain special procedures concerning banking transactions of Politically Exposed Persons
(PEP). Under these rules, the financial institutions also must:

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- identify PEPs;
- supervise the commercial relations carried out by PEPs;
- focus on new commercial relationship with PEPs and on transactions executed with PEPs from countries that maintain strong financial relationships, common boundaries or ethnic, linguistic or political similarities with Brazil.

Additionally, in order to prevent financial transactions in connection with terrorism, financial institutions must inform the appropriate authorities of any transaction involving:

- Osama bin Laden and members of Al-Qaeda and Taliban, as recorded on the list of persons and entities published on: http://www.un.org/Docs/sc/committees/1267/1267ListEng.htm
- persons affiliated with Sadam Hussein or the prior Iraqi government, as recorded on the list of persons and entities published on: http://www.un.org/Docs/sc/committees/IraqKuwait/IraqSanctionsCommEng.htm
- all other people with terrorists connections.

Anti-Tax Evasion Law

The Central Bank is authorized to require financial institutions to provide information generally protected by bank secrecy without judicial authorization, as long as they have strong circumstantial evidence that a
customer has engaged in tax evasion. Such evidence may be represented by, among others:

- declarations by the customer of transactions with a value lower than their market value;
- loans acquired from sources outside the financial system;
- transactions involving tax havens;
- expenses or investments that exceed the declared available income;
- overseas currency remittances through non-resident accounts in amounts which exceed the declared available income; and
- legal entities that have their registration with the General Taxpayers Registry cancelled or declared null.

Other than in the circumstances described above, information protected by bank secrecy laws can only be provided in compliance with a court order or an order by a Congress Inquiry Committee, or CPI.

Client Relationships

The relationship between financial institutions and their clients is regulated in general bylaws applicable to all commercial transactions, and by the Brazilian Civil Code in particular.

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Regulations established by the CMN and the Central Bank, however, address specific issues relating to banking activity and contracts, complementing the general regulation.

The Consumer Defense Code and the Banking Client Defense Code

The Brazilian Consumer Defense Code was enacted in 1990 to establish rules to govern the relationship between product and service providers and consumers and to protect consumers and, since June 2006, is also applicable
to the relationships financial institutions have with their clients. Financial institutions are also subject to the Banking Client Defense Code, a regulation enacted by the CMN, which, among other things, specifically regulates the relationship
between financial institutions and their clients.

Banking Secrecy

Financial institutions must maintain the secrecy of their banking operations and services provided to their customers. Certain exceptions apply to this obligation, however, such as the sharing of information on credit
history, criminal activity and violation of bank regulations or disclosure of information authorized by interested parties. Bank secrecy may also be breached when necessary for the investigation of any illegal act.

Supervision in Other Jurisdictions

We have branches and subsidiaries in several other jurisdictions, including [ ]. The Central Bank exercises global consolidated supervision over branches, subsidiaries and representative offices located in other
jurisdictions, and the prior approval of the Central Bank is necessary to establish any new branch, subsidiary or representative office. In most cases, however, financial institutions are required to obtain governmental approvals from local central
banks and monetary authorities in other jurisdictions before initiating business in such jurisdiction, and in all cases are subject to local authorities supervision.

Taxation of Financial Transactions

Temporary Contribution on Financial Transactions (CPMF)

The Temporary Contribution on Financial Transactions (Contribuição Provisória sobre Movimentações Financeiras), or CPMF, expired in December 2007. Although the Brazilian Congress
considered extending the effective period for the CPMF, levied at a rate of .38% on all financial transactions, on December 13, 2007, the Senate rejected the extension.

The Brazilian government, however, retains the ability to reestablish the CPMF through a Constitutional Amendment for the purpose of funding the health care system.

Increase in CSLL Tax Rate

On January 3, 2008, the Brazilian government published Provisional Measure 413, which was converted into Law No 11,727 on June, 23, 2008, and, included, among other  provisions, an increase in the rate of the CSLL from 9% to 15%;

Tax on Financial Transactions (IOF)

The Tax on Financial Transactions (Imposto sobre Operações Financeiras), or IOF, taxes four different types of transactions at different rates. At present, the actual rates are much lower than their legal
limit.

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On December 17th, 2007, Decree No. 6,306 introduced new provisions regarding the IOF effective January 4, 2008.

This Decree increased the IOF rate on several financial transactions involving loans, insurance and foreign exchange transactions by 0.38% .

Furthermore, the daily IOF rate applied on loans to individuals was increased from 0.0041% to 0.0082%, subject to a 3.0% cap.

Set forth below are the new IOF rates imposed upon the following transactions:

|                                                                                           |  |              |  |                                                                                                                                                                                                                                                                                                                          
|------------------------------------------------------------------------------------------ |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                          
|                                                                                           |  | Maximum      |  |                                                                                                                                                                                                                                                                                                                          
|Transaction                                                                                |  | legal rate   |  | Present rate                                                                                                                                                                                                                                                                                                             
|                                                                                          
|                                                                                          
| Credit transactions                                                                      |  | 1.5% per day |  |  Companies: up to 0.0041% per day depending on the transaction, limited to 1.5% plus 0.38% flat rate; Individuals: up to 0.0082% per day depending on the transaction limited to 3.0% plus 0.38% flat rate                                                                                                              
|                                                                                          
| transactions relating to securities and transactions involving gold as a financial asset |  | 1.5% per day |  |  0.5% per day for investment funds of any type with grace period (1)
     0% on transactions with equity securities 
     1% decreasing over time on transactions with fixed income securities and investment funds (0% for investments maturing in more than 30 days) (2)                                            
|                                                                                          
| insurance transactions entered into by insurance companies                               |  | 25%          |  |  0.38% for health and life insurance 
     7.38% for all other types of insurance (3)                                                                                                                                                                                                                                  
|                                                                                          
| foreign exchange transactions                                                            |  | 25%          |  |  0.38% (general rule)
     2.38% on credit card transactions 
     5.38% for inbound credits redeemed prior to 90 days of inception 
     1.5% for inflow of funds (2689 and 4131 accounts) in the Brazilian financial and capital markets 
     0% for other exchange transactions related to investments in Brazil
|                                                                                          

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In addition, as of September 2006, clients are able to transfer their loans from one institution to another without paying IOF taxes. The receiving institution will pay the amount of the credit directly to the original
institution by means of a special form of wire transfer of funds (TED), and the receiving institution will have a credit right against the client.

Bank Failure

Intervention, Administrative Liquidation and Bankruptcy

The Central Bank may intervene in the operations of a bank if there is a material risk for creditors. The Central Bank may intervene if liquidation can be avoided or it may perform administrative liquidation or, in some
circumstances, require the bankruptcy of any financial institution except those controlled by the Brazilian government.

Extrajudicial Liquidation

An extrajudicial liquidation of any financial institution (with the exception of public financial institutions controlled by the Brazilian Government) may be carried out by the Central Bank if it can be established
that:

- debts of the financial institution are not being paid when due; or
- the financial institution is deemed insolvent; or
- the financial institution has incurred losses that could abnormally increase the exposure of the unsecured creditors; or
- management of the relevant financial institution has materially violated Brazilian banking laws or regulations; or
- upon cancellation of its operating authorization, a financial institutions ordinary liquidation proceedings are not carried out within 90 days or are carried out with delay representing a risk to its creditors, at the Central Banks
discretion. Liquidation proceedings may otherwise be requested, on reasonable grounds, by the financial institutions officers or by the intervener appointed by the Central Bank in the intervention proceeding.

Extrajudicial liquidation proceedings may cease:

- at the discretion of the Central Bank if the parties concerned assume the administration of the financial institution after having provided the necessary guarantees; or
- when the liquidators final accounts are rendered and approved, and subsequently filed with the competent Public Registry; or
- when converted to an ordinary liquidation; or
- when the financial institution is declared bankrupt.

Temporary Special Administration Regime

In addition to the aforesaid procedures, the Central Bank may also establish the Temporary Special Administration Regime (Regime de Administração Especial Temporária),
or RAET, which is a less severe form of Central Bank intervention in private and non-federal public financial institutions and which allows institutions to continue to operate normally.

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The RAET may be imposed by the Central Bank in the following circumstances:

- the institution continually participates in transactions contrary to the economic and financial policies established by federal law;
- the institution fails to comply with the compulsory reserves rules;
- the institution has operations or circumstances which call for an intervention;
- illegal or management misconduct; and
- the institution faces a shortage of assets.

The main object of the RAET is to assist with the recovery of the financial conditions of the institution under special administration. Therefore, the RAET does not affect the day-to-day business operations, liabilities
or rights of the financial institution, which continues to operate in its ordinary course.

Repayment of Creditors in Liquidation

In the event of the liquidation of a financial institution, employees wages and indemnities and tax claims enjoy the highest priority of any claims against the bankrupt estate.  The Credit Insurance Fund is a
deposit insurance system, which guarantees a maximum amount of R$60,000 of deposits and credit instruments held by an individual against a financial institution (or against financial institutions of the same financial group). The Credit
Insurance Fund is funded principally by mandatory contributions, currently at 0.15% per year, from all Brazilian financial institutions that handle customer deposits. The payment of unsecured credit and customer deposits not payable under the Credit
Insurance Fund is subject to the prior payment of all secured credits and other credits to which specific laws may grant special privileges.

Brazilian Payment and Settlement System

The rules for the settlement of payments in Brazil are based on the guidelines adopted by the Bank of International Settlements, or BIS, and the Brazilian Payment and Settlement System began operating in April 2002.
The Central Bank and CVM have the power to regulate and supervise this system. Pursuant to these rules, all clearing houses are required to adopt procedures designed to reduce the possibility of systemic crises and to reduce the risks previously
borne by the Central Bank. The most important principles of the Brazilian Payment and Settlement System are:

- the existence of two main payment and settlement systems: real time gross settlements, using the reserves deposited with the Central Bank; and deferred net settlements, through the clearing houses;
- the clearing houses, with some exceptions, will be liable for the payment orders they accept; and
- bankruptcy laws do not affect the payment orders made through the credits of clearing houses, nor the collateral granted to secure those orders. However, clearing houses have ordinary credits against any participant under bankruptcy laws.

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Leasing Regulation

The basic legal framework governing leasing transactions is established by Law No. 6,099 of September 12, 1974, as amended, which we call the Leasing Law, and the regulations issued thereunder by the CMN.
The Leasing Law sets forth general guidelines for the incorporation of, and the activities permitted to be performed by, leasing companies. The CMN, in its capacity as regulator of the financial system, provides the details of the provisions set
forth in the Leasing Law and supervises and controls the transactions conducted by leasing companies. The laws and regulations issued by the Central Bank with respect to financial institutions in general, such as reporting requirements, capital
adequacy and leverage, asset composition limits and treatment of doubtful loans, are also applicable to leasing companies to the extent applicable.

Insurance Market

Insurance

Insurance companies require government approval to operate, as well as specific approval from the SUSEP for each of their products. Insurance companies may sell policies only through qualified brokers.

Insurance companies must set aside reserves, funds and provisions in accordance with the criteria established by the CNSP. The investments backing up the reserves must be diversified in fixed-income funds, stock funds
and real estate.  Securities comprise a substantial portion of the assets in which insurance companies can invest.  As a result, insurance companies are major investors in the Brazilian financial markets and are subject to a series of rules and
conditions imposed by the CMN regarding the investment of technical reserves.

Insurance companies, subject to certain specific exceptions approved by CMN, are prohibited among other things from:

- acting as financial institutions by extending credit or issuing guarantees;
- trading in securities; or
- investing outside of Brazil.

Insurance companies must operate within technical limits set forth by SUSEP pursuant to rules established by the CNSP. The rules take into account the economic and financial situation of the insurance companies, the
technical conditions of their respective portfolios and the results of their operations with IRB-Brasil Resseguros S.A., or IRB, and other reinsurers.

Insurance companies (i) with adjusted net worth greater than R$500 million disclosed in the financial statements for each of the two previous years, or (ii) technical provisions greater than R$700 million as
disclosed in the financial statements for each of the two previous years must appoint internal audit committees.

For insurance companies that are part of financial groups, such conditions are applied considering all of the insurance companies under the same group. Additionally, insurance companies that are part of a financial
group may have a single audit committee for the group, in order to comply with the responsibilities of the insurance companies.

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Reinsurance

All risks in excess of the companies maximum retention limits established by the SUSEP are required to be reinsured or co-insured. According to industry practice, insurance companies also voluntarily reinsure or
co-insure a portion of their exposure, regardless of whether they meet the maximum retention limits. The regulation of reinsurance transactions in Brazil has traditionally been the domain of a government-controlled entity that enjoyed a monopoly
over the Brazilian reinsurance market since 1932.

In 2007, the Brazilian Government issued a Special Law, formally eliminating the monopoly and transforming IRB into a local reinsurer. In addition, the regulatory powers were formally transferred to the insurance
supervisory body, the CNSP, and the supervision powers were given to SUSEP.

According to this Special Law, the Brazilian insurance market must give preference to local reinsurers for at least:

- 60% of their reinsurance cessions, during the first three years; and
- 40% of their reinsurance cessions, after such period.

The Resolution no 168 issued by CNSP on December, 17 2007, regulates reinsurance and retrocession activities as well as its intermediation, establishing the parameters and conditions to incorporate and contract a
reinsurer.

Reporting Requirements

Insurance companies must file unaudited monthly and audited semi annual and annual reports with the SUSEP.

Liquidation

Insurance companies are exempt from ordinary bankruptcy procedures and instead follow a special procedure administered by the SUSEP. Liquidation may be either voluntary or compulsory.  The Minister of Commerce and
Industry has the authority to institute compulsory liquidation.

Foreign Participation in the Insurance Market

There is currently no rule restricting foreign investment in insurance companies.

The Brazilian Government issued a Special Law in 2007, regulating the foreign investments in the reinsurance market. According to such Special Law, foreign reinsurers must be registered by SUSEP and shall be classified
within the following two main categories:

- Admitted: a reinsurer domiciled in a foreign country, with representative offices in Brazil; and
- Eventual: a reinsurer domiciled in a foreign country, with no representative offices in Brazil.

Companies domiciled in tax haven countries may not operate in Brazil, irrespective of whether such companies have local offices in Brazil. For the purposes of this Special Law, tax havens means
any country that does not have income taxes or its rate is below 20%. Additionally, countries that impose legal restrictions on the information about the companies shareholders shall also be considered as tax havens.

Foreign reinsurers must observe the following requirements to operate in Brazil:

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- have operated as a reinsurer in its original country for at least five years in the same business they intend to perform in Brazil;
- observe SUSEPs minimum economic and financial guidelines for reinsurers;
- have a creditworthiness survey recognized by SUSEP, observing Brazilian guidelines; and
- have an attorney-in-fact in Brazil with powers to receive both administrative and judicial notices.

In addition to the above-mentioned requirements, the admitted reinsurer must submit its financial statements to SUSEP and guarantee its operations in Brazil in accordance with SUSEP requirements.

Extended Warranty Insurance

According to Resolution No. 122, enacted by SUSEP on May 3, 2005, extended warranty agreements are considered insurance products for the purpose of insurance regulations, and therefore, must be entered into by insurance
companies, subject to the supervision of SUSEP. Unibanco AIG Seguros S.A. (UASEG) is our insurance subsidiary that distributes extended warranty products and it is in full compliance with requirements under Resolution No. 122.

Health Insurance

Private health insurance and health plans are currently regulated by Law No. 9,656, of July 4, 1998, as amended, which we refer to as the Health Insurance Law, which determines the general provisions
applicable to health insurance companies and the general terms and conditions of agreements entered into between health insurance companies and their customers. The Health Insurance Law establishes, among other things:

- mandatory coverage of certain expenses, such as those arising from preexisting conditions;
- the conditions precedent for admission to a plan;
- the geographical area covered by each insurance policy; and
- the pricing criteria plans may use.

The ANS is responsible for regulating and supervising supplemental health services provided by health insurance companies pursuant to directives set forth by the Conselho de Saúde Suplementar(the
Supplemental Health Council).

On Februray 12, 2001 the Brazilian Government issued the Law No 10.185, which established that only operators of private health assistance plans are authorized to offer such plans.



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Private Pension Plans

Open private pension entities, as defined by regulation, are subject, for purposes of inspection and control, to the authority of the CNSP and the SUSEP. Such entities must set aside reserves and technical provisions as
  collateral for their liabilities. According to the Law No 11,196 enacted on November 21, 2005, companies authorized to operate open private pension plans and insurance companies are allowed to create investment funds with segregated assets since January 1, 2006.

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4.C Organizational Structure

The following chart sets forth information, as of March 31, 2008, regarding our main subsidiaries and main associated companies:(1)(2)




|(1)  | The percentages refer to the investment in total capital,which is equal to the voting capital held, unless otherwise noted.                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | All corporations have been incorporated in Brazil unless otherwise noted.                                                                                                                                    
|(3)  | This percentage does not include treasury shares.                                                                                                                                                            
|(4)  | The percentage of the voting capital held is 97.08%.                                                                                                                                                         
|(5)  | These corporations are controlled by Unipart Participações Internacionais Ltd.                                                                                                                               
|(6)  | The percentage of the voting capital held is 52.97%.                                                                                                                                                         
|(7)  | These corporations are controlled by Unibanco AIG Seguros S.A.                                                                                                                                               
|(8)  | This ownership interest reflects the 18.99% interest of Dibens Leasing S.A. Arrendamento Mercantil and the 4.21% interest of Unibanco Participações Societárias S.A.                                        
|(9)  | Unibanco  União dos Bancos Brasileiros S/A and Dibens Leasing S.A. Arrendamento Mercantil hold 24.49%of the total capital of BIU Participações S.A., which holds 24.69% of the total capital of Serasa S.A.
|(10) | Unibanco Rodobens Administradora de Consórcios S.A. is the current corporate name of Unibanco Rodobens Administradora de Consórcios Ltda.                                                                    
|(11) | The percentage of the voting capital held is 90.00%.                                                                                                                                                         
|(12) | The total percentage is held by Unibanco Participações Societárias S.A                                                                                                                                       



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4.D Property, Plants and Equipment

Our principal executive offices are located in São Paulo, Brazil. We own a portion of these offices and lease the remainder. The main offices that we own, and the main activities at each of these facilities are:

- Unibanco Building: Principal executive offices and main administrative offices (24,775.52 m2);
- CAU, or Unibanco Administrative Center: Data Processing Center, Information Technology, Accounting and Human Resources (45,673 m2);
- Barão de Iguape Building: Back-offices (25,096.14 m2);
- Boa Vista Building: Back-offices (19,839.14 m2); and
- Call Center Building: 30 Hour Telephone Center (17,522 m2).

We also have a number of other administrative offices in the main Brazilian cities, most of which are leased. We own 5% of our total branches and lease the remaining 95%. We lease most of our branches under renewable
leases with terms averaging five years.

4.E UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements as of and for the years ended December 31, 2005, 2006 and 2007 and the related notes thereto
  included in Item 18  Financial Statements.

Overview

We operate our business in five segments: Retail, Wholesale, Treasury, Insurance and Pension Plans and Wealth Management. Any financial information presented with respect to these segments has been prepared in
  accordance with Accounting Practices Adopted in Brazil. See Presentation of Financial Information and note 31 to our audited consolidated financial statements.

Our primary sources of revenues and expenses are:

- Interest income from our interest-bearing assets including loans, securities, federal funds sold and securities purchased under resale agreements and Central Bank compulsory deposits, among others;
- Non-interest income from fees and commissions, including banking tariffs and other fees and commissions from capital markets, investment banking, credit card, asset management and collection businesses, from trading income such as realized
    and unrealized gains or losses on securities and derivatives transactions, from insurance, private retirement plan and pension investment contracts, and from our equity in results of unconsolidated companies, among others;
- Interest expense from our interest-bearing liabilities, including savings and time deposits, federal funds purchased and securities sold under repurchase agreements, short-term borrowings and long-term debt, among others;
- Non-interest expense from personnel and administrative expenses, insurance, private retirement plan and pension investment contracts, contingency provisions and other taxes, among others; and
- Provisions for loan losses based on the quality and size of our loan portfolio and reflecting our expectations regarding the ability of our customers to repay their loans.

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The following table shows our financial performance highlights for the years ended 2005, 2006 and 2007:

|                                                 |  |                                          |  |         |  |        
|------------------------------------------------ |  | ---------------------------------------- |  | ------- |  | -------
|                                                 |  | For the Year Ended December 31,         
|                                                 |  |                                         
|                                                 |  | 2005                                     |  | 2006    |  | 2007   
|                                                 |  |                                          |  |         |  |        
|                                                 |  | ( in millions of R$, except percentages)
|Income Before Income Taxes and Minority Interest |  | 2,268                                    |  | 2,642   |  | 5,633  
|Net Income                                       |  | 1,650                                    |  | 1,951   |  | 3,560  
|Return on average equity                         |  | 18.3%                                    |  | 19.5%   |  | 29.6%  
|Return on average assets                         |  | 2.0%                                     |  | 2.0%    |  | 2.9%   
|Basel Capital Adequacy Ratio (1)                 |  | 15.6%                                    |  | 16.0%   |  | 14.7%  
|Total Assets                                     |  | 89,818                                   |  | 102,563 |  | 148,271
|Total Loans (gross)                              |  | 39,237                                   |  | 44,654  |  | 60,348 
|Total Deposits                                   |  | 35,936                                   |  | 36,201  |  | 46,495 
|Shareholders' equity                             |  | 9,534                                    |  | 10,439  |  | 13,037 

|                |  |                                                                                                                                
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|_______________
|(1)             |  | The Basel capital adequacy ratio measures the percentage of minimum regulatory capital required on risk-based to total capital.

Macroeconomic Factors Affecting Our Financial Condition and Results of Operations

Our earnings and businesses are affected by general economic conditions, the performance of financial markets, interest rates, currency exchange rates, changes in laws, regulations and policies of the Central Bank, and
  competitive factors on a global, national and regional level. Given that the majority of our customers are Brazilian, our financial condition and results of operations are dependent on Brazilian economic conditions. For example, high levels of
  inflation and interest rates in Brazil adversely affect the ability of our customers to repay their loans and may affect our financial condition and results of operations. We are also affected by changes in the value of the realrelative to the U.S. dollar and other foreign currencies because we have assets and liabilities denominated in or indexed to foreign currencies, primarily the U.S. dollar.

Brazilian Economic Environment

The following table sets forth the main Brazilian macroeconomic indicators for the periods indicated:

|                                             |  |                             |  |        |  |       
|-------------------------------------------- |  | --------------------------- |  | ------ |  | ------
|                                             |  | For Year Ended December 31,
|                                             |  |                            
|                                             |  | 2005                        |  | 2006   |  | 2007  
|                                             |  |                             |  |        |  |       
|                                            
|Real GDP growth(1)                           |  | 2.3%                        |  | 2.9%   |  | 5.4%  
|Inflation rate(2)                            |  | 1.2%                        |  | 3.8%   |  | 7.9%  
|Inflation rate(3)                            |  | 5.7%                        |  | 3.1%   |  | 4.5%  
|Period end exchange rate (R$/US$)(4)         |  | 2.3407                      |  | 2.1380 |  | 1.7713
|Appreciation of the real vs. U.S. dollar (5) |  | 11.8%                       |  | 8.7%   |  | 17.2% 
|Average exchange rate (R$/US$)(6)            |  | 2.4125                      |  | 2.1679 |  | 1.9300
|SELIC interest rate(7)                       |  | 18.0%                       |  | 13.3%  |  | 11.3% 
|Average interbank deposit interest rate(8)   |  | 19.1%                       |  | 15.0%  |  | 11.8% 



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|    |  |                                                                                                                                                                                                                                                                                                                            
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Source:Brazilian Institute of Geography and Statistics (IBGE). On March 21, 2007, IBGE reviewed the methodology used to calculate the GDP, which resulted in a revised GDP of 2.9% for 2005 and 3.7% for 2006.                                                                                                             
|(2) |  | Source: IGP-DI, as published by the Fundação Getúlio Vargas (FGV)                                                                                                                                                                                                                                                          
|(3) |  | Source: IPCA, the Consumer Price Index published by IBGE                                                                                                                                                                                                                                                                   
|(4) |  | Source:Central Bank of Brazil as of December 31 for each year                                                                                                                                                                                                                                                              
|(5) |  | When we refer to a specific percentage of appreciation of the realagainst the U.S. dollar in any year, we have derived such percentage by comparing the number of reaisexchangeable for one U.S. dollar at the end of the given year to the number of reaisexchangeable for one U.S. dollar at the end of the previous year
|(6) |  | Average of the closing exchange rates (R$/US$) on the last day of each month in the period                                                                                                                                                                                                                                 
|(7) |  | Source:Central Bank of Brazil as of December 31 for each year                                                                                                                                                                                                                                                              
|(8) |  | Source:Câmara de Custódia e Liquidação (CETIP)                                                                                                                                                                                                                                                                             

2005. During the first half of the year, the Central Bank continued to increase the SELIC base interest rate in response to inflation concerns, from 18.25% in January 2005 to 19.75% in May 2005. The SELIC base interest
  rate of 19.75% was maintained until August 2005.

Towards the end of 2005, the Central Bank acknowledged that inflation was moving towards the established annual goal, and once again began to lower interest rates. In September 2005, the Central Bank announced the first
  decrease in the SELIC base interest rate for 2005, from 19.75% to 19.50% . By the end of the year, after two more decreases in interest rates, the SELIC base interest rate was 18.00% .

The trade balance continued to post strong results, accumulating a surplus of US$44.8 billion in 2005, as compared to a surplus of US$33.7 billion in 2004. At the same time, the Central Bank continued to acquire U.S.
  dollars in the open market but was unable to curb the appreciation of the realagainst the U.S. dollar. At December 31, 2005, the real appreciated 11.8% against the U.S. dollar, as compared to December 31, 2004.

The ratio of public sector debt to GDP closed at 51.6% in 2005, the same level of 2004.  Accumulated inflation, as measured by the IPCA index, reached 5.69% as of December 31, 2005, as compared to 7.6% as of December
  31, 2004. Industrial production in Brazil, as measured by the IBGE, increased 3.1% in 2005 as compared to the same period in 2004.

During 2005, Brazilian sovereign risk decreased significantly, mainly as a result of the continued high liquidity in the global capital markets, the growth in Brazilian exports and the improvement observed in several
  key internal economic indices. The EMBI Brazil Index closed at 305 basis points as of December 31, 2005, 20.4% lower than at the end of 2004.

2006.  During 2006, the Central Bank continued the trend it had started in September 2005 of lowering interest rates as inflation shifted towards the annual goal. The interest rate as of January 31, 2006 was 18.0%, and
  after eight consecutive rate cuts during the year, arrived at 13.25% as of December 31, 2006.

The trade balance continued to post strong results, accumulating a surplus of US$46.1 billion in 2006, as compared to a surplus of US$44.8 billion during 2005. At the same time, the Central Bank continued to acquire
  U.S. dollars in the open market, but was unable to stem the appreciation of the real, which by December 31, 2006 had appreciated 8.7% as compared to December 31, 2005.

The ratio of public sector debt to GDP closed at 50% in 2006, a decrease as compared to the ratio of 51.6% during 2005. Accumulated inflation, as measured by the IPCA index, decreased to 3.14% as of December 31, 2006 as
  compared to 5.69% as of December 31, 2005.  GDP growth for 2006 was 2.9% and industrial production, as measured by the IBGE, registered an increase of 2.8% in 2006 as compared to 2005.

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Brazilian sovereign risk decreased significantly during the year, mainly as a result of continued high liquidity in the global capital markets, growth in exports and the improvement of several key internal economic
indices. The EMBI-Brazil index closed at 192 basis points as of December 31, 2006, 38.0% lower than on December 31, 2005.

2007. The Brazilian macroeconomic indicators remained favorable in 2007, despite the uncertainty in respect of the U.S. economy. The subprime mortgage crisis and its consequences in the financial sector have increased
  the risk of a U.S. recession, causing high volatility in the financial markets. During 2007, however, mild inflation in Brazil caused the Central Bank to pursue the policy of gradual reduction in the SELIC base interest rate, which closed at 11.25%
  on December 31, 2007.

The trade balance continued to post strong results by accumulating a surplus of US$40.0 billion in 2007, slightly below the US$46.1 billion surplus of 2006. The Central Bank continued its repurchase of U.S. dollars in
  the open market, but was unable to stem the appreciation of the real, which by December 31, 2007 had appreciated 17.2% as compared to December 31, 2006. The realappreciation cycle was influenced by Brazils solid external
  accounts and the large spread between domestic and international interest rates.

As of December 31, 2007, the ratio of public sector debt to GDP closed at 42.8%, below 2006s ratio of 50%. The economy grew robustly evidenced by GDP growth of 5.4% in 2007, as compared to 3.7% in 2006 in the
  revised methodology. Industrial production, as measured by the IBGE, registered an increase of 6.0% in 2007 as compared to 2006. Accumulated inflation, as measured by IPCA index, increased to 4.5% as of December 31, 2007 as compared to 3.1% as of
  December 31, 2006, but it was in line with the Central Bank target.

Brazilian sovereign risk increased significantly during 2007, mainly as a result of the volatility in the international markets that reduced the demand for emerging market assets. Nonetheless, Brazil suffered less than
  other emerging countries due to the maintenance of solid economic fundamentals.The EMBI-Brazil index closed at 222 basis points as of December 31, 2007, 15.6% higher than on December 31, 2006.

2008 to date. Although not all information for 2008 is currently available, certain information is available through May 2008. Industrial production increased by 7.3% in the four-month period ended April 30, 2008
  as compared to the same period of 2007. The trade balance continued presenting a positive outlook, with a surplus of US$8.7 billion in the five-month period ended May 31, 2008, but is less favorable than the US$16.7 billion surplus, which existed
  during the same period in 2007. The main reason behind the decrease in the trade balance is the strong domestic demand, which has produced a larger increase in imports. At the end of May 2008, the real had appreciated 8.0% against the U.S.
  dollar as compared to December 31, 2007, reaching R$1.62 per dollar as of May 31, 2008.

Standard & Poors (S&P) and Fitch Ratings (Fitch) upgraded Brazils long term external debt to investment grade as of April 2008 and May 2008, respectively. As a
  consequence, Brazils sovereign risk decreased, with the EMBI-Brazil Index reaching 178 basis points at the end of May 2008, 44 basis points lower than at the end of May 2007. A stronger inflow of international capital should be expected, which
  we believe favors a reduction in the cost of capital and added value for domestic companies.

The continued economic uncertainty both in Brazil and abroad, caused in part by the tightening of the global credit markets and the possibility of a U.S. recession could have a negative effect on Brazils economic
  growth. Moreover, the Central Bank, has begun taking measures to control inflation, as evidenced by their decision to raise interest rates in both April and June 2008, to the current level of 12.25% . Brazils economic outlook, however, is
  positive and is supported by solid economic fundamentals. We expect continued economic growth, which should create an attractive environment for foreign investors, reduce risk for creditors and create favorable conditions for credit expansion within
  Brazil.

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Effects of Depreciation or Appreciation of the real on Our Financial Condition and Results of Operations

The depreciation or appreciation of the real affects our net income, since a portion of our assets and liabilities are denominated in or indexed to foreign currencies, primarily the U.S. dollar.

When the real depreciates, we incur losses on net income from our liabilities that are denominated in or indexed to foreign currencies, such as U.S. dollar-denominated short-term borrowings and long-term debt, as
  the carrying value and interest expense measured in reais increases. At the same time, we experience gains from our assets that are denominated in or indexed to foreign currencies, such as U.S. dollar-indexed marketable securities and loans,
  as the carrying value and interest income measured in reais also increases.

On the other hand, when the real appreciates, we incur gains on net income from our liabilities that are denominated in or indexed to foreign currencies, as the carrying value and interest expense measured in reais decreases. At the same time, we experience losses from our assets that are denominated in or indexed to foreign currencies, as the carrying value and interest income measured in reais also decreases.

Effects of Interest Rates on Our Financial Condition and Results of Operations

Increases in the Brazilian interest rate may positively affect our interest income as interest rates on our interest-bearing assets also increase.  On the other hand, our interest expense may also be negatively affected
  as interest rates on our interest-bearing liabilities increase.

Typically, increases in the interest rate enable us to increase our revenues from credit operations due to higher net interest spreads on these operations. However, increases in the interest rate could adversely affect
  our results and loan portfolios by reducing demand for credit and increasing the risk of customer default. On the other hand, decreases in the interest rate could decrease our revenues from credit operations due to lower spreads. This decrease in
  revenues may be offset by an increase in the volume of credit due to increased demand for credit.

Effects of Inflation on Our Financial Condition and Results of Operations

Increases in the Brazilian inflation rate may affect our net income by increasing our costs and decreasing our operating margins if such increases are not accompanied by a corresponding increase in interest rates.
  Moreover, inflation may contribute to increases in volatility in the market due to economic uncertainty, decreases in spending, lower real income growth and decreases in consumer confidence, which in turn could adversely affect our results of
  operations.

Effects of Government Regulation on our Financial Condition and Results of Operations

Compulsory Deposit Requirements

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The Central Bank imposes several compulsory deposit requirements on financial institutions, as a mechanism to control the liquidity of the Brazilian financial system.  By changing the compulsory deposit requirements,
the Central Bank is able to effect changes in the amount of our interest-bearing assets and interest-bearing liabilities, and consequently our interest income and interest expense.

As of December 31, 2005, 2006 and 2007, respectively, the compulsory deposit requirements were as follows:

- the rate of compulsory deposit requirements for demand deposits was 45%;
- the rate of compulsory deposit requirements for savings deposits was 20%;
- the rate of compulsory deposit requirements for time deposits was 15%; and
- the additional reserve requirements on time deposits, demand deposits and savings deposits were, respectively, 8%, 8% and 10%.

Compulsory deposits are deposited with the Central Bank and earn interest, except for the 45% compulsory deposits related to demand deposits (the additional 8% reserve requirement on demand deposits earns interest). As
  of December 31, 2007, we had R$6,683 million of Central Bank compulsory deposits as follows: R$4,589 million on demand deposits, R$2,076 million on savings deposits and R$18 million on other deposits. Additionally, we had R$4,260 million of reserve
  requirement deposited with the Central Bank in the form of Brazilian government securities.

In February 2008, the Central Bank established a compulsory liquidity reserve deposit on interbank deposits made by leasing companies within financial institutions. The initial deposit is 5% of these interbank deposits
  effective March 2008 with progressive increases through January 2009, subject to a 25% cap.

Capital Adequacy

The Central Bank requires banks to maintain a minimum capital adequacy ratio of 11% of total capital to total risk-adjusted assets. Due to specific characteristics of the Brazilian economy, the Central Bank adopts a
  more conservative minimum capital adequacy ratio than that which is applied by financial institutions operating in the United States. Brazilian banks may choose to increase this ratio in light of their respective financial conditions and in
  accordance with their internal policies. As of December 31, 2007, our capital adequacy ratio according to Central Bank calculations was 14.7% .

On December 9, 2004, the Central Bank, by means of Communication No. 12,746, expressed its intention to adopt Basel II over the course of the next few years, with the appropriate customization for the Brazilian
  financial market.  This communication sets forth a proposed timetable for the implementation of the minimum capital requirements directives. In September 2007, the Central Bank, by means of Communication no. 16.137, updated the proposed timetable
  for implementation of Basel II.

The Basel II implementation timeline is composed of two phases both of which starting in June 2008:

- Phase I of the project involves the implementation of the standardized approach, which defines new rules for credit risk capital allocation based on segmentation by business line.  In addition, the standardized approach incorporates new risk
    factors when calculating market risk capital and, for the first time, considers capital allocation for operational risk; and
- Phase II involves the adoption to internal risk models, which are more sophisticated in measuring credit, market, and operational risk, thus providing higher standards in risk management practices.

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During Phase II, we intend to adopt the advanced approach for credit, market and operational risks and are investing and applying our best efforts to achieve compliance with all requirements set forth therein. For us,
the implementation of the advanced approach reinforces our internal culture dedicated to managing risks and continuing to provide the best tools to assess risk and provide senior management with strategy for capital allocation. By stimulating an
internal culture focused on efficient and integrated risk management, we aim to reduce costs and losses and explore business opportunities, maximizing the return to our shareholders.

Loan Charge-off

We consider certain loans as charge-offs when in our judgment all amounts due, including accrued interest and indexation, are no longer considered collectible in accordance with the contractual terms of the loan. In our
  experience, if collection efforts are not successful within one year, we are unlikely to recover the amount past due. This practice is also consistent with the general rule of the Central Bank for banks to write-off credit transactions six or twelve
  months after they are ranked H, depending on their initial maturity. See Item 4.B  Business Overview  Regulation and Supervision  Treatment of Overdue Debts. As a result, our allowance for loan losses for any loan
  remains on our books for a period of 360 days until such loan is charged off.

Below is a tabular summary of the number of months loans were past due at the time the loan was charged-off. All of the loans were already ranked as H at the time they were charged-off.

|                                                 |  |                                 |  |          |  |         
|------------------------------------------------ |  | ------------------------------- |  | -------- |  | --------
|                                                 |  | For the Year Ended December 31,
|                                                 |  |                                
|                                                 |  | 2005                            |  | 2006     |  | 2007    
|                                                 |  |                                 |  |          |  |         
|                                                 |  | (in millions of R$)            
|number of months past due 
    up to 6 months(1) |  | 24                              |  | 22       |  | 17      
|7 to 12 months                                   |  | 1,204                           |  | 1,590    |  | 1,722   
|More than 12 months(2)                           |  | 214                             |  | 230      |  | 278     
|                                                 |  |                                 |  |          |  |         
|Total                                            |  | R$ 1,442                        |  | R$ 1,842 |  | R$ 2,016
|                                                 |  |                                 |  |          |  |         

|    |  |                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | There are some loans that were past due less than 6 months at the time they were charged-off because they were ranked H before becoming past due. A loan can be ranked H before becoming past due if the loan is considered of high credit risk, for
      instance in the case of bankruptcy or very poor financial conditions of the debtor for corporate loans.
|(2) |  | The Central Bank allows loans with maturity in excess of 36 months to have the period double counted.  Moreover, if loans are fully collateralized, they may take more than one year to be ranked H. Those are typically mortgage loans and
      automobile financing.                                                                                           

Income Taxes

Our income tax expenses consist of two components: the Federal Income Tax and the Social Contribution on Net Income (CSLL). For each of the years 2005, 2006 and 2007, the Federal Income Tax was assessed at a rate of 25%
  and the CSLL at a rate of 9%.

On January 3, 2008, the Brazilian Government published Provisional Measure 413, which was converted into Law No. 11,727 on June 23, 2008, and increased the CSLL rate from 9% to 15%, effective as of May 1, 2008. The new rate specifically applies to financial institutions,
  private insurance companies, capitalization companies and other similar entities. Other legal entities are still subject to the CSLL at the rate of 9%.

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Other Taxes

The Programa de Integração Social, or PIS, and the Contribuição para Financiamento de Seguridade Social, or COFINS, are imposed on net margins of banking and financial activities. Pursuant to
  Law No. 10,684 of May 30, 2003, the PIS and COFINS combined rate payable by financial institutions was 4.65% on net margins of banking and financial activities for each of the years 2005, 2006 and 2007.

The Contribuição Provisória sobre Movimentações Financeiras, or the CPMF, was assessed at a rate of 0.38% in 2005, 2006 and 2007, mainly on debits from bank accounts, with certain
  limited exceptions. In December 2007, the Brazilian Senate rejected extending the term of the CPMF and since January 1, 2008 the CPMF rate has been 0%.

For additional information, see Item 4.B  Business Overview  Regulation and Supervision  Taxation of Financial Transactions and Item 10.E  Taxation  Expiration of CPMF and
  New Rate of IOF/ Exchange Tax.

Critical Accounting Estimates

In preparing our consolidated financial statements, we use management estimates, assumptions and judgments to account for certain assets, liabilities, revenues, expenses and other transactions, in accordance with U.S.
  GAAP.  Actual results in future periods could differ from those estimates, assumptions and judgments, and consequently, our reported results of operations may be affected.

The following is a brief description of the key estimates, assumptions and judgments in the application of our accounting policies under U.S. GAAP.

Allowance for Loan Losses

We assess the creditworthiness of our loan portfolio and establish allowances for probable credit losses on a regular basis.  The process used to determine these reserves involves estimates and judgments. We determine
  an allowance for probable losses inherent within each clients rating considering, among other things, recent loss experience, current economic conditions, the risk characteristics of the various classifications of loans, the fair value
  of the underlying collateral, the probability of default, as well as the size and diversity of individual credits. Changes in these estimates and judgments have a direct impact on our allowances.

Wholesale loans and small-balance loans with similar characteristics, such as overdrafts, credit card loans, mortgage loans and consumer finance loans, are managed using specialized systems and processes. We use a wide
  range of statistical tools to evaluate loan requests and client performance, which include credit and behavior scoring models, such as Stochastic Process (Markov Chain), Back Testing using non-parametrical tests (Mann-Whitney) and stress testing in
  Markov Chain. For additional information, see Note 2 (h) to our consolidated financial statements.

Fair Value and Impairment of Financial Instruments

Our financial instruments include fixed rate securities, equity securities, derivatives and other financial instruments.  We carry our investments at fair value if they are considered to be available for sale or trading
  securities. For the majority of our portfolios, fair value is determined based on externally quoted prices. If externally quoted prices are not available, (i) we determine the fair value by reference to the quoted market price of comparable
  instruments, (ii) we discount the expected cash flows using market interest rates commensurate with the credit quality and maturity of the investments on internally developed pricing models based on independent sources of market information, or
  (iii) we use internal valuation techniques, such as Black-Scholes or Monte Carlo simulation to determine the fair value of our derivatives.

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The market risk exposure of our portfolio is independently supervised and controlled. Changes in the fair value of available for sale securities are recognized and included as a component of shareholders equity,
unless the loss is considered to be other than temporary.  Impairment losses that are considered other than temporary are recognized as losses in the period in which they occur. We conduct regular reviews to assess whether other than temporary
impairment exists.  For additional information, see Notes 2(d), 2 (e), 2(f), 7 and 8 to our consolidated financial statements.

Deterioration in economic conditions could adversely affect these values.  Changes in the fair value of trading assets and liabilities, including our derivatives instruments, are recognized in earnings.

Insurance Reserves

Reserves for insurance claims and claims expenses are charged as they are incurred. The reserves for claims and claims expenses represent the accumulation of estimates for reported claims and include provisions for
  claims incurred but not reported. The methods of determining such estimates and establishing the reserves are reviewed and updated regularly. Adjustments resulting thereof are recognized in earnings for the respective period. For additional
  information, see Notes 2(t) and 21(b) to our consolidated financial statements.

Income Taxes

In preparing our consolidated financial statements we are required to estimate income taxes, which involve an estimation of current tax expenses together with an assessment of temporary differences. Temporary
  differences result from the temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and this difference generates net deferred tax assets. Net
  deferred tax assets may also include tax loss carry forwards.

Our carrying value of net deferred tax assets assumes that we will be able to generate sufficient future taxable income based on an internal forecast model that uses estimates and assumptions. We frequently evaluate the
  realizability of the deferred tax assets. If these estimates and assumptions change in the future, we may be required to record valuation allowances against our deferred tax assets resulting in additional income tax expense in our consolidated
  financial statements. We recorded no valuation allowances related to our net deferred tax assets for the years ended December 31, 2005, 2006 and 2007.

In 2007, we adopted the FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48), which sets out a recognition threshold and measurement
  attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Based on provisions of FIN 48, we recognize the financial statement effects of a tax position only when it is more
  likely than not, based on the technical merits, that the position will be sustained upon examination. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit
  that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority. The differences between tax positions taken in a tax return and amounts recognized in the financial statements result in one or both of the
  following: (i) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, (ii) a reduction in a deferred tax asset or an increase in a deferred tax liability. For further information see Notes 2(s) and 18
  to our consolidated financial statements.

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Impairment of Goodwill and Intangible Assets

Our balance sheet includes goodwill and intangible assets.  Intangible assets with finite useful lives are depreciated or amortized over their estimated useful lives. Useful lives are estimated based on the length of
  time that the assets will generate revenue.  If circumstances and conditions indicate deterioration in the value of intangible assets, the book value will be adjusted and a loss will be recognized in earnings.

Statement of Financial Accounting Standards 142 Goodwill and Other Intangible Assets, or SFAS 142, provides that goodwill and identified intangible assets with indefinite useful lives should not be amortized
  but should be tested for impairment on an annual basis, or more frequently. In assessing the recoverability of goodwill and other intangible assets we must make assumptions regarding estimated future cash flows and other factors to determine the
  fair value of such assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for such assets that were not recorded previously based on the difference between the fair value and the
  book value of such assets. Goodwill was tested for impairment at December 31, 2005, 2006 and 2007, and no impairment charges were recorded in 2005, 2006 and 2007. In addition, we evaluated the useful lives of intangible assets at December 31, 2005,
  2006 and 2007, and no significant impairment was recognized.

Provisions for Litigation

We are subject to administrative proceedings, lawsuits and other claims related to tax, social security, labor and civil matters. We are required to assess the likelihood of any adverse judgments or outcomes to these
  matters as well as potential ranges of probable, possible or remote losses. The determination of the amount of reserves required, if any, for both civil and labor contingencies is made according to two different criteria. For strategic cases, which
  involve amounts substantially higher than the average for similar matters, the determination of the reserve amount is made after a careful and individual analysis of each case. For other civil and labor contingencies, such determination is based on
  average amounts paid for similar claims during the previous twelve-month period. According to our policy for tax disputes, including those involving social security debts, we only record provisions when we believe it is probable that we will incur
  losses as a result of such disputes or when the tax or social security obligation under discussion is expressly due by force of law or regulation. With respect to tax administrative proceedings, we do not record provisions when the probability of
  loss is remote or possible. We usually pay the amounts due thereunder when there is high probability of loss. The required reserves for these contingencies may change in the future due to new developments in each matter or changes in the approach we
  use to assess the likelihood of loss. These changes could negatively impact the future results and cash flows. For additional information, see Item 8.A - Consolidated Statements and Other Financial Information  Legal Proceedings
  and Note 29 to our consolidated financial statements.

Accounting for Results of Unconsolidated Companies

In accordance with U.S. GAAP, our equity in results of unconsolidated companies consists primarily of our proportionate interest in the results of affiliated companies whose results of operations are not consolidated.
  Under U.S. GAAP, we only consolidate the results of companies in which we have a controlling interest (either through a majority voting interest, or through the existence of other control factors).

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In 2007, the most significant equity interests that we held in unconsolidated companies were:

- 23.2% equity interest in Redecard;
- 50.0% equity interest in Maxfácil Participações;
- 50.0% equity interest in
    PontoCred;
- 50.0% equity interest in LuizaCred;
- 20.3% equity interest in Tecban; and
- 50.0% equity interest in Unibanco Rodobens Administradora de Consórcio Ltda., a consortium company focused on vehicle and mortgage business.

For additional information concerning the contributions to our net income generated by unconsolidated companies, see Item 5.A.  Operating Results  Results of Operations for the Year Ended December 31, 2007
  Compared to the Year Ended December 31, 2006 and the Year Ended December 31, 2005  Non-Interest Income and Notes 2(j) and 11 to our consolidated financial statements.

Accounting   for Unique and Complex Transactions

Accounting for unique and   complex transactions requires significant judgment in identifying the key terms   of the transaction, determining the appropriate literature potentially relevant   to the transaction and, finally, determining which treatment is the appropriate   or determining out of potential alternative treatments which is, for our   management, the most appropriate method of accounting for the transaction.   Certain of our transactions, including the transaction entered into during 2007   with Deutsche Bank, as described in Note 30 to our consolidated financial   statements, requires management to apply significant judgment in determining the   accounting treatment for each of such transactions.

5.A Operating Results

Overview

Unibanco Holdings, a corporation organized under Brazilian laws, controls us through its ownership of our shares.  As of May 31, 2008, Unibanco Holdings held 97.1% of our outstanding common shares, 12.1% of our
  outstanding preferred shares, owning 57.8% of our total outstanding shares.  Unibanco Holdings engages in no activities other than holding our shares. As a result, the financial statements of Unibanco Holdings are similar to ours in all material
  respects, except for the minority interest line of the balance sheet and income statement and the financing activities section of the cash flow statement. References herein to our consolidated financial statements also refer to the financial
  statements of Unibanco Holdings.

In our discussion of our operating results for 2007 as compared to 2006 and 2005 below, when we refer to changes from year to year being due to the appreciation of the real, we are referring primarily
  to the effects of the appreciation of the real described under Item 5. Operating and Financial Review and Prospects  Macroeconomic Factors Affecting Our Financial Condition and Results of Operations  Effects of Depreciation
  or Appreciation of the real on Our Financial Condition and Results of Operations, as applicable. During the years ended December 31, 2005, 2006 and 2007 the real appreciated by approximately 11.8%, 8.7% and 17.2%, respectively,
  against the U.S. dollar. When we refer to a specific percentage depreciation or appreciation of the real against the U.S. dollar in any year, we have derived such percentage by comparing the number of reais exchangeable for one U.S.
  dollar at the end of the given year to the number of reais exchangeable for one U.S. dollar at the end of the previous year, as reported by the Central Bank.

When we refer to changes from 2006 to 2007 being due to the higher appreciation of the real, we are referring to the fact that although we experienced effects of appreciation in 2007 that were similar
  to those we experienced in 2006, such effects were more pronounced because the percentage appreciation was higher in 2007. On the other hand, when we refer to changes from 2005 to 2006 being due to the lower appreciation of the real, we are referring to the fact that although we experienced effects of appreciation in 2006 that were similar to those we experienced in 2005, such effects were less pronounced because the percentage appreciation was lower in
  2006.

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In addition, we refer in our discussion of our operating results below to average interest earned and average interest paid on our interest-bearing assets and interest-bearing liabilities,
respectively. Average interest earned on assets denominated in or indexed to foreign currency is the yield on such assets, taking into account the effect of the depreciation or appreciation of the real on the carrying value of and interest on
such assets when measured in reais. Average interest paid on liabilities denominated in or indexed to foreign currency is the yield on such liabilities, taking into account the effect of the depreciation or appreciation of the real on
the carrying value of and interest on such liabilities when measured in reais.

Results of Operations for the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006 and the Year Ended December 31, 2005

Net income

The following table shows the principal components of our consolidated net income for 2005, 2006 and 2007:

|                                                 |  |                                 |  |          |  |         
|------------------------------------------------ |  | ------------------------------- |  | -------- |  | --------
|                                                 |  | For the Year Ended December 31,
|                                                 |  |                                
|                                                 |  | 2005                            |  | 2006     |  | 2007    
|                                                 |  |                                 |  |          |  |         
|                                                 |  | ( in millions of R$)           
|Net Interest Income(1)                           |  | 8,577                           |  | 9,575    |  | 10,501  
|Provision for loan losses                        |  | (1,870)                         |  | (2,030)  |  | (1,935) 
|Non Interest Income(1)                           |  | 6,582                           |  | 7,587    |  | 11,853  
|Non Interest Expense(1)                          |  | (11,021)                        |  | (12,490) |  | (14,786)
|                                                 |  |                                 |  |          |  |         
|Income Before Income Taxes and Minority Interest |  | 2,268                           |  | 2,642    |  | 5,633   
|Income Taxes                                     |  | (460)                           |  | (532)    |  | (1,346) 
|                                                 |  |                                 |  |          |  |         
|Income Before Minority Interest                  |  | 1,808                           |  | 2,110    |  | 4,287   
|Minority Interest                                |  | (158)                           |  | (149)    |  | (727)   
|Change in accounting principle                   |  | -                               |  | (10)     |  | -       
|                                                 |  |                                 |  |          |  |         
|Net Income                                       |  | 1,650                           |  | 1,951    |  | 3,560   
|                                                 |  |                                 |  |          |  |         

|    |  |                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | The amounts of R$102 million for 2005 and R$132 million for 2006, related to fees on loans, were reclassified from Non Interest Income to Net Interest Income, and the amounts of R$91 million for 2005 and R$87 million for
      2006, related to costs associated with fees on loans, were reclassified from Non Interest Expense to Net interest income.

In 2006, we reached a net income of R$1,951 million, a 18.2% increase over 2005. Our income before taxes and minority interest increased 16.5% in 2006 as compared to 2005, primarily due to (i) an increase in net
  interest income despite a steep decline in the SELIC interest rate, as a result of higher credit volume of 13.8% (despite our conservative lending policy, especially in unsecured personal loans) and considerable improvement in our funding mix due to
  an increase in the percentage of lower cost funding, (ii) an increase on fees and commissions, due to increased number of products and services offered to our clients and opening of new checking accounts, (iii) an improvement in the quality of loan
  portfolio, highlighted by a lower growth of provision for loan losses as compared to the loan portfolio and (iv) a continuous cost control. Income tax expenses grew 15.7% in the same period, mainly driven by the increase on income before taxes and
  minority interest.

In 2007, we reached a net income of R$3,560 million, a 82.5% increase over 2006. Our income before taxes and minority interest increased 113.2% in 2007 as compared to 2006, mainly due to (i) a R$579 million gross gain
  from the IPOs of Bovespa Holding and BM&F; R$1,436 million and R$429 million gross gains from the sale of part of our stake in Redecard and Serasa, respectively; and a R$640 million gain from the admittance of a minority partner
  in our subsidiary UPS (see Note 30 to our consolidated financial statements), (ii) a decrease in interest expenses, despite the increase of our average interest-bearing liabilities, as a result of a continuous improvement of our funding mix and a decline on the SELIC base interest rate, which led to a
  lower average interest rate paid, (iii) the higher quality of our loan portfolio due to our conservative lending policy, which led to lower provisions for loan losses expenses in 2007 as compared to 2006, despite the growth of our loan portfolio in
  the same period, (iv) an increase on fees and commissions driven by an increased number of products and services offered to our clients and opening of new checking accounts and (v) a continuous effort to  control costs. Income tax expenses grew
  153.0% in the same period, mainly driven by the increase on income before taxes and minority interest.

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Retail Segment

In 2006, net income of our Retail business segment decreased 14.9% in 2006 as compared to 2005, mainly due to the 37.3% increase in provision for loan losses expenses, primarily attributable to the previous growth of
  loan portfolios that present greater risk, such as unsecured personal loans, despite the conservative credit approach we adopted in mid-2005. The increase in provision for loan losses expenses was partially offset by (i) an increase of 13.1% in the
  net interest income, mainly as a result of our expansion in credit volume, especially in SMEs and credit card businesses, combined with an improvement in the composition of our funding in 2006; and (ii) an increase of 8.9% in fee and commission
  income as a result of the expansion of our client base, the increasing number of products and services offered through our branch network and the increase in credit card fees following the business expansion in 2006. As a result of strict cost
  control, personnel and administrative expenses increased by 3.7% in 2006 as compared to 2005, despite the increases in expenses generated by bargaining agreements, annual adjustments of utilities, premises and equipment related to the refurbishment
  of branches and communication and third party services due to the expansion of our consumer finance activities.

In 2007, the net income of our Retail business segment increased 27.5%, as compared to 2006, primarily as a result of: (i) a 4.8% increase in net interest income driven by the net effect of: a decline in the SELIC base interest that
  positively affected our interest expenses and negatively affected our interest income; an improvement in the composition of our funding; and a 50.9% increase in our loan portfolio due to the strength of our payroll-linked loan and auto financing
  portfolios; (ii) a 13.2% decrease in provision for loan losses expenses because of our shift in focus
  towards lower risk loans; (iii) a 5.9% increase in fee and commission income due to the expansion of our client base, an increased number of products and services offered through our branch network and the expansion of certain businesses, such as
  credit cards and auto financing; and (iv) our focus on cost control, which led to a significant improvement in our efficiency and profitability despite a 2.1% increase in personnel and administrative expenses.

Wholesale Segment

In 2006, the net income of our Wholesale business segment increased by 27.5%, as compared to 2005. Despite the decrease in interest rates and spreads on large-company transactions, Wholesale business managed to remain
  profitable and even expanded its assets. During the period, net income growth was primarily a result of: (i) a 21.3% increase in fee and commission income due to our more active role in capital markets; and (ii) a 25.2% increase in net interest
  income due to a 14.7% increase in the segments loan portfolio. This loan portfolio growth is attributable in part to the continued synergy among corporate divisions, which has led not only to more products for clients through cross-selling,
  but also to funding of new economic groups. Provision for loan losses expenses remained stable in 2006, as a result of the continued reduction in the risk assigned to individual corporate clients and the settlement of certain large corporate loans,
  following an improvement in the Brazilian economy.

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In 2007, the net income of our Wholesale business segment increased by 4.1%, as compared to 2006, mainly due to: (i) a 40.2% increase in fee and commission income, mainly as a result of higher commissions derived from
our capital markets, equity structuring and financial advisory businesses; and (ii) a 17.8% increase in net interest income due to a 16.4% increase in the segments loan portfolio (despite the 17.2% appreciation of the real against the
U.S. dollar).  This loan portfolio growth is attributed in part to an increased amount of large-company clients to whom we offer loans and other products and services in accordance with our business strategy. These increases were partially offset by
the increase in the provision for loan losses expenses, from a reversal of R$130 million in 2006 to expenses amounting to R$11 million in 2007, due to higher settlements of some large corporate loans occurred in 2006.  In 2007, our Wholesale capital
markets, project finance and financial advisory businesses completed their restructuring processes, solidifying our position as one of the major players in the Brazilian capital markets.

Treasury Segment

In 2006, the net income of our Treasury segment increased by 70.7%, as compared to 2005, mainly due to an increase in net interest income of 66.8% during the period.

In 2007, the net income of our Treasury segment increased by 34.7% in 2007, as compared to 2006, mainly due to a 35.0% increase in net interest income during the period. Despite the high volatility in the financial
  markets, our Treasury segment contributed positively to our interest income, due to our strategic positioning in a economic environment characterized by low interest rates and the appreciation of the real, combined with appropriate risk
  management and the offering of more sophisticated products to our Retail, Wholesale and Private Bank clients.

Wealth Management Segment

In 2006, our Wealth Management business segment net income increased by 13.8% as compared to 2005. Based on the declining interest rates in 2006, we sought to diversify and increase our client base and expand our
  offering of high value-added products. The increase in net income was mainly due to the 11.2% increase in fee and commission income and an 8.6% increase in net interest income, driven by the 17.1% and 25.1% growth during 2006 in the assets managed
  by UAM and our Private Bank, respectively. UAM ranked eighth in ANBIDs ranking and had R$43,780 million in assets under management, representing 4.6% market share as of December 31, 2006. Additionally, our Private Bank ranked second in
  ANBIDs ranking with a market share of 10.0% as of December 31, 2006.

In 2007, the net income of our Wealth Management segment increased by 42.1% as compared to 2006. During the year, we continued implementing the strategy we started in 2006, which focused on expanding our client base and
  offering high value-added products. This focus led to a 23.8% increase in our net interest income and a 23.1% increase in our fee and commission income. As of December 31, 2007, UAM had an aggregate amount of R$54,935 million in assets under
  management, a 25.5% increase over the previous twelve months.  According to ANBIDs ranking, as of December 31, 2007 we held 4.7% market share based on total assets under management in Brazil compared to 4.6% as of December 31, 2006. At our
  Private Bank, assets under management grew 36% in 2007, as compared to 2006. According to research by the Boston Consulting Group, the assets under the management of our Private Bank were among the fastest growing assets under management in Latin
  America.

Insurance and Pension Plans Segment

In 2006, the net income of our Insurance and Pension Plans segment increased 29.2% as compared to 2005, partly because the continued decline in interest rates in Brazil drove the entire insurance market to search for
  more operating efficiency. In the past, gains had been realized from revenues earned on technical reserves. In anticipation of these trends, we have (i) prioritized positive operating earnings, which now account for a larger percentage of total
  earnings and (ii) continued improving our operational efficiency, which has been substantially better than the market average for many years. According to SUSEP and ANS, our insurance and pension plan companies ranked fourth in the combined
  insurance and supplementary pension-fund market in December 2006. We also maintained our leadership status in the areas of industrial risk, energy production and distribution, environment, D&O liability, transportation and extended warranty.

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In 2007, the net income of our Insurance and Pension Plans ssegment decreased 9.6% as compared to 2006. Despite our increased focus on operating earnings, which account for a larger percentage of total earnings, and
improving on operational efficiency, which has been substantially better than the market average for many years, our net income was negatively affected by lower interest rates in 2007 as compared to 2006. We continue, however, to lead important
market segments, such as D&O (Directors and Officers), transportation risks, construction risks, aviation risks, oil risks and extended warranty products. As of December 31, 2007, we are ranked fourth by SUSEP and ANS based on insurance and
private pension plan premiums issued, where we hold 7.6% of the market. In addition, according to SUSEP and ANS, we hold 51.2% market share of premiums issued within the oil risk insurance industry as of December 31, 2007.

Net Interest Income

The following table shows the principal components of our net interest income for 2005, 2006 and 2007:

|                    |  |                                 |  |         |  |        
|------------------- |  | ------------------------------- |  | ------- |  | -------
|                    |  | For the Year Ended December 31,
|                    |  |                                
|                    |  | 2005                            |  | 2006    |  | 2007   
|                    |  |                                 |  |         |  |        
|                    |  | ( in millions of R$)           
|Interest Income(1)  |  | 15,122                          |  | 16,470  |  | 16,244 
|Interest Expense(2) |  | (6,545)                         |  | (6,895) |  | (5,743)
|                    |  |                                 |  |         |  |        
|Net interest income |  | 8,577                           |  | 9,575   |  | 10,501 
|                    |  |                                 |  |         |  |        

|                |  |                                                                                                                                                                                        
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|_______________
|(1)             |  | Interest income includes the interest on securities, loans, federal funds sold and securities purchased under resale agreements, deposits in other banks and compulsory deposits.      
|(2)             |  | Interest expense includes interest from customers and bank deposits, federal funds purchased and securities sold under repurchase agreements, short-term borrowings and long-term debt.

In 2006, interest income increased by R$1,348 million, or 8.9%, interest expense increased by R$350 million, or 5.3% and net interest income increased by R$998 million, or 11.6%, in each case, as compared to 2005.

The increase in net interest income during 2006 was primarily attributable to a combination of:

- growth in our loan portfolio, positively affected by the focus on higher margin segments, such as personal loans, credit card operations and SME transactions; and
- improvement in our funding mix, with a greater focus on lower cost products.

In 2007, interest income decreased by R$226 million, or 1.4%, interest expenses decreased by R$1,152 million, or 16.7% and net interest income increased by R$926 million, or 9.7%, in each case, as compared to 2006.

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In 2007, the increase in net interest income was primarily due to a combination of the improvement in our funding mix and the lower interest expenses, due to a decline of the SELIC base interest rate. However, the SELIC
decline negatively affected our interest rate earned, which was partially mitigated by the 35.1% growth in our loan portfolio.

Interest Income

The following table shows the principal components of our average interest-bearing assets and the average interest rate earned in 2005, 2006 and 2007:

|                                                                    |  |                             |  |        |  |        
|------------------------------------------------------------------- |  | --------------------------- |  | ------ |  | -------
|                                                                    |  | For Year Ended December 31,
|                                                                    |  |                            
|                                                                    |  | 2005                        |  | 2006   |  | 2007   
|                                                                    |  |                             |  |        |  |        
|                                                                    |  | (in millions of R$)(1)     
|Average interest-bearing assets                                     |  |                             |  |        |  |        
|Interest-bearing deposits in other banks                            |  | 3,879                       |  | 5,812  |  | 7,334  
|Federal funds sold and securities purchased under resale agreements |  | 10,549                      |  | 13,152 |  | 20,569 
|Central Bank compulsory deposits                                    |  | 3,826                       |  | 4,012  |  | 4,453  
|Trading assets                                                      |  | 8,658                       |  | 11,401 |  | 10,045 
|Securities available for sale                                       |  | 3,511                       |  | 6,790  |  | 11,236 
|Securities held to maturity                                         |  | 3,267                       |  | 2,534  |  | 2,256  
|Loans                                                               |  | 33,310                      |  | 39,245 |  | 48,883 
|Other interest-bearing assets                                       |  | 49                          |  | 52     |  | 56     
|                                                                    |  |                             |  |        |  |        
|Total                                                               |  | 67,049                      |  | 82,998 |  | 104,832
|                                                                    |  |                             |  |        |  |        
|Average interest rate earned:                                       |  | 22.6%                       |  | 19.8%  |  | 15.5%  

|                |  |                                                                    
|--------------- |  | -------------------------------------------------------------------
|_______________
|(1)             |  | Except for the average interest rate earned, which is a percentage.

The following table indicates the extent to which the increase in our interest income was attributable to changes in the average volume of interest-bearing assets and to changes in the average interest rates earned, including the effects of the
  appreciation of the real, in each case for 2006 as compared to 2005 and 2007 as compared to 2006:

|                                                            |  |                     |  |                    
|----------------------------------------------------------- |  | ------------------- |  | -------------------
|                                                            |  | 2006/2005           |  | 2007/2006          
|                                                            |  |                     |  |                    
|                                                            |  | Increase/(Decrease) |  | Increase/(Decrease)
|                                                            |  |                     |  |                    
|                                                            |  | (in millions of R$)
|                                                           
|Due to changes in average volume of interest-bearing assets |  | 3,266               |  | 3,815              
|Due to changes in average interest rates                    |  | (1,918)             |  | (4,041)            
|                                                            |  |                     |  |                    
|Net change                                                  |  | 1,348               |  | (226)              
|                                                            |  |                     |  |                    

In 2006, interest income increased R$1,348 million, or 8.9%, as compared to 2005, principally as a result of:

- an increase in total average interest-bearing assets of 23.8%, which resulted in a R$3,266 million increase in interest income; and
- a decrease in the average interest rate earned of 280 basis points, which generated a decrease of R$1,918 million interest income.

The increase in interest income in 2006 as compared to 2005 can also be explained by:

- a R$751 million increase in interest and fees on loans;
- a R$732 million increase in interest on securities;
- a R$83 million decrease
    in interest on Central Bank compulsory deposits;
- a R$260 million decrease in interest income on federal funds sold and securities purchased under resale agreements; and
- a R$208 million increase in interest on deposits in other banks.

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In 2007, interest income decreased R$226 million, or 1.4%, as compared to 2006, mainly as a result of:

- a decrease in the average interest rate earned of 430 basis points, which generated a decrease of R$4,041 million in interest income; and
- an increase in total average interest-bearing assets of 26.3%, which led to a R$3,815 million increase in interest income.

The decrease in interest income in 2007 as compared to 2006 can also be explained by:

- a R$340 million decrease in interest and fees on loans;
- a R$594 million decrease in interest on securities;
- a R$61 million decrease in
    interest on Central Bank compulsory deposits;
- a R$375 million increase in interest income on federal funds sold and securities purchased under resale agreements;
- a R$395 million increase in interest on deposits in other banks; and
- a R$1 million decrease in interest in other assets.

Interest income and fees on loans. Interest income and fees on loans increased from R$9,354 million in 2005 to R$10,105 million in 2006. This growth of 8.0% was mainly driven by the increase of R$5,417 million,
  or 13.8%, in the volume of our loan portfolio, partially offset by the decrease of average interest earned from 28.1% in 2005 to 25.7% in 2006 as a result of (i) a decrease in the percentage of loans to individuals in the total portfolio due to our
  conservative credit approach adopted in the mid-2005, especially in unsecured personal loans and (ii) a decrease in the SELIC base interest rate, despite the lower appreciation of the real in 2006 as compared to 2005.

Interest income and fees on loans decreased from R$10,105 million in 2006 to R$9,765 million in 2007. The 3.4% decrease in interest income and fees on loans is a result of the 570 basis points lower average interest
  earned in 2007, as compared to 2006, which is mainly due to the decrease in the SELIC base interest rate in 2007. This reduction was partially offset by the increase of R$15,694 million, or 35.1% in our loan portfolio. This growth was boosted by the
  retail segment, positively affected by credit card operations, auto financing, payroll-linked loans and SME transactions.

Interest on Securities. Interest income on securities (including trading, available for sale and held to maturity securities) increased from R$2,690 million in 2005 to R$3,422 million in 2006, as a result of:

- Trading securities: increased by R$1,119 million in 2006 as compared to 2005, due to (i) an increase in average volume of R$2,743 million, which resulted in a R$444 million increase in interest income and (ii) an increase in average interest
    earned, which generated an increase of R$675 million in interest income;
- Securities available for sale: decreased by R$230 million in 2006 as compared to 2005, due to (i) an increase in average volume of R$3,279 million, which resulted in a R$673 million increase in interest income and (ii) a decrease in average
    interest earned, which generated a decrease of R$903 million in interest income. Average interest earned was positively impacted in 2005 by higher market volatility; and
- Securities held to maturity: decreased R$157 million in 2006 as compared to 2005, due to (i) a decrease in average volume of R$733 million, which resulted in a R$77 million decrease in interest income and (ii) a decrease in average interest
    earned, which generated a decrease of R$80 million in interest income.

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Interest income on securities (including trading, available for sale and held to maturity securities) decreased from R$3,422 million in 2006 to R$2,828 million in 2007, as a result of:

- Trading securities: decreased by R$1,312 million in 2007 as compared to 2006, due to (i) a decrease of R$1,356 million in average volume posted in 2007, which resulted in a R$247 million decrease in interest income in the same period and
    (ii) a decrease in average interest earned, which generated a decrease of R$1,065 million in interest income;
- Securities available for sale: increased by R$746 million in 2007 as compared to 2006, due to (i) an increase in average volume of R$4,446 million, which resulted in a R$642 million increase in interest
    income and (ii) an increase in average interest earned, which generated an increase of R$104 million in interest income; and
- Securities held to maturity: decreased R$28 million in 2007 as compared to 2006, due to (i) a decrease in average volume of R$278 million, which resulted in a R$25 million decrease in interest income and (ii) a decrease in average interest
    earned, which generated a decrease of R$3 million in interest income.

In general, interest income on securities could present volatile earnings due to the use of these kinds of instruments for global hedging purposes of market exposure accounted in other instruments.

Interest on Deposits in Other Banks. Interest income on deposits in other banks increased 47.7%, or R$208 million, in 2006 as compared to 2005, mainly due to the increase of 49.8% in the average volume of
  deposits. In the same period, average interest rate earned was stable, achieving an average of 11.2% in 2005 and 11.1% in 2006.

In 2007, interest income on deposits in other banks increased R$395 million, or 61.3% as compared to 2006, mainly as a result of (i) the interest bearing deposits in other banks average balance growth of 26.2% in 2007
  and (ii) a 310 basis points growth in the average deposits in other banks rate.

Interest on Central Bank Compulsory Deposits.Interest income from our compulsory deposits with the Central Bank, of which 80.9% are interest-bearing deposits, decreased from R$569 million in 2005 to R$486
  million in 2006. This R$83 million decrease, despite the 4.9% growth in average balance of Central Bank compulsory deposits, was primarily due to lower interest rates earned in 2006 as compared to 2005. The average interest rate earned decreased
  from 14.9% to 12.1%, primarily due to the correlation of the interest rates earned on these deposits with the SELIC base interest rate, which on average also decreased in 2006.

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In 2007, interest income from our compulsory deposits with the Central Bank, of which 83.5%are interest-bearing deposits, decreased from R$486 million in 2006 to R$425 million in 2007. This R$61 million decrease
was mainly due to the decrease in the average interest rate earned, from 12.1% in 2006 to 9.5% in 2007, reflecting the reduction of the average SELIC base interest rate in the same period. This decrease was partially mitigated by the Central Bank
average compulsory deposits balance increase of R$441 million, or 11.0% in 2007 as compared to 2006, as a result of the overall increase in our deposits in 2007.

Interest on Federal Funds Sold and Securities Purchased under Resale Agreements.Interest on federal funds sold and securities purchased under resale agreements decreased by R$260 million, or 12.6% from R$2,069
  million in 2005 to R$1,809 million in 2006, mainly due to lower average interest rate earned despite the increase of R$2,603 million, or 24.7%, on average balance of these assets. The average interest rate earned decreased from 19.6% in 2005 to
  13.8% in 2006, in large part due to the correlation with the SELIC base interest rate, which on average also decreased in 2006.

In 2007, interest on federal funds sold and securities purchased under resale agreements increased by R$375 million, despite the lower average SELIC base interest rate in the same period, which led to a 320 basis points
  lower interest rate from federal funds sold and securities purchased under resale agreements in 2007 as compared to 2006. The interest income increase is mainly a result of its average balance in 2007, which posted a R$7,417 million growth in the
  same period, a reflection of the change in our funding strategy, which has started to focus more on repurchase agreements using Dibens Leasing debentures as collateral.

Interest Expense

The following table shows the principal components of our average interest-bearing liabilities and the average interest rate paid on those liabilities in 2005, 2006 and 2007:

|                                                                        |  |                                 |  |        |  |       
|----------------------------------------------------------------------- |  | ------------------------------- |  | ------ |  | ------
|                                                                        |  | For the Year Ended December 31,
|                                                                        |  |                                
|                                                                        |  | 2005                            |  | 2006   |  | 2007  
|                                                                        |  |                                 |  |        |  |       
|                                                                        |  | (in millions of R$)(1)         
|Average interest-bearing liabilities                                    |  |                                 |  |        |  |       
|Time deposits                                                           |  | 25,358                          |  | 27,192 |  | 21,866
|Savings deposits                                                        |  | 6,130                           |  | 5,996  |  | 8,840 
|Deposits from banks                                                     |  | 115                             |  | 182    |  | 810   
|Federal funds purchased and securities sold under repurchase agreements |  | 7,194                           |  | 14,459 |  | 23,272
|Short-term borrowings                                                   |  | 2,686                           |  | 1,374  |  | 4,875 
|Long-term debt                                                          |  | 11,735                          |  | 14,267 |  | 16,872
|                                                                        |  |                                 |  |        |  |       
|Total                                                                   |  | 53,218                          |  | 63,470 |  | 76,535
|                                                                        |  |                                 |  |        |  |       
|Average interest rate paid:                                             |  | 12.3%                           |  | 10.9%  |  | 7.5%  

|                |  |                                                                  
|--------------- |  | -----------------------------------------------------------------
|_______________
|(1)             |  | Except for the average interest rate paid, which is a percentage.

The following table indicates the extent to which the increase in our interest expense was attributable to changes in the average volume of interest-bearing liabilities and to changes in average interest rates paid,
  including the appreciation of the real, in each case for 2006 as compared to 2005 and 2007 as compared to 2006:

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|                                                                 |  |                     |  |                    
|---------------------------------------------------------------- |  | ------------------- |  | -------------------
|                                                                 |  | 2006/2005           |  | 2007/2006          
|                                                                 |  |                     |  |                    
|                                                                 |  | Increase/(Decrease) |  | Increase/(Decrease)
|                                                                 |  |                     |  |                    
|                                                                 |  | (in millions of R$)
|                                                                
|Due to changes in average volume of interest-bearing liabilities |  | 1,169               |  | 1,244              
|Due to changes in average interest rates                         |  | (819)               |  | (2,396)            
|                                                                 |  |                     |  |                    
|Net change                                                       |  | 350                 |  | (1,152)            
|                                                                 |  |                     |  |                    

In 2006, interest expense increased R$350 million, or 5.3%, as compared to 2005, principally as a result of:

- an increase in total average interest-bearing liabilities of 19.3% which resulted in an increase of R$1,169 million in interest expense; and
- a decrease in the average interest rate paid of 140 basis points, which generated a decrease of R$819 million in interest expense.

The increase in interest expense in 2006 as compared to 2005 can also be explained by:

- a R$150 million increase in interest on long-term debt;
- a R$125 million increase in interest on short-term borrowings;
- a R$677 million increase in interest on federal funds purchased and securities sold under repurchase agreements; and
- a R$602 million decrease in interest on time deposits, savings deposits and deposits from banks.

In 2007, interest expense decreased R$1,152 million, or 16.7%, as compared to 2006, mainly as a result of:

- a decrease in the average interest rate paid of 340 basis points, which generated a decrease of R$2,396 million in interest expense; and
- an increase in total average interest-bearing liabilities of 20.6% which resulted in an increase of R$1,244 million in interest expense.

The decrease in interest expense in 2007 as compared to 2006 can also be explained by:

- a R$714 million decrease in interest on long-term debt;
- a R$143 million increase in interest on short-term borrowings;
- a R$644 million increase in interest on federal funds purchased and securities sold under repurchase agreements; and
- a R$1,225 million decrease in interest on time deposits, savings deposits and deposits from banks.

Interest on Long-term Debt.Interest expense from our long-term debt increased from R$969 million in 2005 to R$1,119 million in 2006. Despite lower appreciation of the real in 2006 as compared to 2005,
  interest expense increased 15.5% primarily due to a 21.6% increase in the average balance of long-term debt with approximately 31.3% of such debt denominated in or indexed to foreign currencies. The average interest rate paid on these liabilities
  decreased, from 8.3% in 2005 to 7.8% in 2006. Increases on the gains generated by our global hedges of our foreign investments contributed to offset the increase in this interest expense. In 2006, we recognized gains on these global hedging
  transactions of R$272 million as compared to R$251 million in 2005 as a result of the higher volume of instruments used to hedge our foreign investments partially offset by the lower appreciation of the real in 2006 as compared to 2005 .

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In 2007, interest on long-term debt decreased from R$1,119 million in 2006 to R$405 million in 2007. This decrease was mainly a result of (i) the higher appreciation of the realin 2007 as compared to 2006, and
(ii) the higher gains in our global hedges of our foreign investments, from R$272 million in 2006 to R$714 million in 2007. These events were partially counterbalanced by the 18.3% increase in this liability average balance in 2007 as compared to
2006.

Interest on Short-term Borrowings. Interest expense on our short-term borrowings decreased from interest income of R$116 million in 2005 to interest expenses of R$9 million in 2006, mainly due to lower
  appreciation of the real in 2006 as compared to 2005. The average interest paid on short-term borrowings increased 500 basis points, from negative 4.3% in 2005 to positive 0.7% in 2006. However, the average amount of our short-term borrowings
  decreased by 48.8% in 2006, as a result of the appreciation of the real in 2006.

In 2007, interest expenses on short-term borrowings increased R$143 million as compared to 2006, despite the higher appreciation of the realin the same period. This increase was mainly a result of average
  increase in the liability balance of 254.8%, from R$1,374 million in 2006 to R$4,875 million in 2007.

Interest on Federal Funds Purchased and Securities Sold under Repurchase Agreements.Our interest expense on federal funds purchased and securities sold under repurchase agreements increased R$677 million, or
  65.3%, from R$1,037 million in 2005 to R$1,714 million in 2006. Despite the decrease in average interest paid, from 14.4% in 2005 to 11.9% in 2006, which was driven by the decrease in the average SELIC base interest rate which occurred during this
  period, the average volume of these liabilities increased 101.0%, accounting for the increase in interest expense.

In 2007, our interest expense on federal funds purchased and securities sold under resale agreements increased R$644 million, or 37.6% as compared to 2006, due to the average increase in the liability balance in 2007, a
  growth of R$8,813 million or 61.0% as compared to 2006, mainly as a result of the shift in our funding strategy from time deposits to securities sold under repurchase agreement using Dibens Leasing debentures as collateral. This increase was
  partially compensated for, a 180 basis points decrease in the average rate paid under these liabilities, mostly due to a decrease of the SELIC base interest rate.

Interest on Time Deposits, Savings Deposits and Deposits from Banks. Interest expense on time deposits, savings deposits and deposits from banks decreased R$602 million in 2006 as compared to 2005 as follows:

- Interest expense on time deposits decreased R$554 million, or 13.1%, from 2005 to 2006.  The average volume of time deposits in 2006 increased R$1,834 million, or 7.2% . This modest growth of volumewas primarily due to a shift in our
    funding strategy from time deposits to securities sold under repurchase agreement using Dibens Leasing debentures as collateral. The average interest rate paid in 2006 decreased 310 basis points, from 16.6% in 2005 to 13.5% in 2006, primarily due to
    the correlation with the SELIC base interest rate, which also decreased in 2006;
- Interest expense on savings accounts decreased R$70 million, or 16.8%, in 2006 as compared to 2005. During the same period, the average volume of savings deposits decreased 2.2%, or R$134 million, and the average interest rate decreased 100
    basis points, from 6.8% in 2005 to 5.8% in 2006. The
    decrease in the average interest rate was primarily due to the correlation with the SELIC base interest rate, which also decreased in 2006; and
- Interest expense on deposits from banks increased R$22 million, or 115.8%, primarily due to the increase in the average interest rate paid, from 16.5% in 2005 to 22.5% in 2006, also due to the 58.3% increase, or R$67 million, in the average
    volume of deposits from 2005 to 2006.

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Interest expense on time deposits, savings deposits and deposits from banks decreased R$1,225 million in 2007 as compared to 2006 due to:

- Interest expense on time deposits decreased R$1,313 million, or 35.8%, from 2006 to 2007.  The average volume of time deposits in 2007 decreased R$5,326 million, or 19.6% . This reduction is a reflection of the shift in our funding strategy
    from time deposits to securities sold under repurchase agreement using Dibens Leasing debentures as collateral. The average interest rate paid in 2007 decreased 270 basis points, from 13.5% in 2006 to 10.8% in 2007, mainly due to the correlation
    with the SELIC base interest rate, which also decreased in 2007;
- Interest expense on savings accounts increased R$48 million, or 13.9%, in 2007 as compared to 2006 mainly as a result of growth in the average volume of savings deposits of 47.4%, or R$2,844 million during the same period, this growth
    resulted in a R$139 million higher interest expense in 2007, which was partially compensated by the decrease in the average interest rate, which was primarily due to the correlation with the SELIC base interest rate, which also decreased in 2007;
    and
- Interest expense on deposits from banks increased R$40 million, or 97.6% in 2007, primarily due to an increase in the average balance of deposits from banks of 345.1% in the same period, which was partially offset by a decrease in the
    average interest rate paid, from 22.5% in 2006 to 10.0% in 2007, which in turn was caused by the decrease in the SELIC base interest rate.

Provision for Loan Losses

The following table shows the loan portfolio and consolidated provisions for loan losses for the years ended December 31, 2005, 2006 and 2007:

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|                                     |  |                                 |  |         |  |        
|------------------------------------ |  | ------------------------------- |  | ------- |  | -------
|                                     |  | For the Year Ended December 31,
|                                     |  |                                
|                                     |  | Total Consolidated             
|                                     |  |                                
|                                     |  | 2005                            |  | 2006    |  | 2007   
|                                     |  |                                 |  |         |  |        
|                                     |  | (in millions of R$)            
|Total Loans (A)                      |  | 39,237                          |  | 44,654  |  | 60,348 
|Average Total Loans (B) (1)          |  | 34,692                          |  | 41,257  |  | 51,075 
|Provision for Loan Losses (C )       |  | 1,870                           |  | 2,030   |  | 1,935  
|(C) / (B)                            |  | 5.4%                            |  | 4.9%    |  | 3.8%   
|Loan Charge-Offs (D)                 |  | (1,442)                         |  | (1,842) |  | (2,016)
|(D) / (B)                            |  | 4.2%                            |  | 4.5%    |  | 3.9%   
|Allowance at the end of the year (E) |  | 2,107                           |  | 2,577   |  | 2,712  
|(E) / (A)                            |  | 5.4%                            |  | 5.8%    |  | 4.5%   
|Non-performing Loans (F)             |  | 1,694                           |  | 2,278   |  | 2,167  
|(F) / (A)                            |  | 4.3%                            |  | 5.1%    |  | 3.6%   
|Loan Recoveries (G)                  |  | 119                             |  | 282     |  | 216    
|Net charge-Offs (D+G)                |  | (1,323)                         |  | (1,560) |  | (1,800)

|                |  |                                       
|--------------- |  | --------------------------------------
|_______________
|(1)             |  | Includes average Non-performing Loans.

Our performance on this sector in 2006 was marked by a conservative lending policy, especially in unsecured personal loans. This policy began in mid-2005 as a result of increasing default rates in the consumer loan
  market. For the year, loan portfolio grew by 13.8% as compared to December 31, 2005. Our decision to slow the growth rate of loans proved to be accurate: allowances for loan losses remained at an acceptable level. The provision for loan losses
  increased from R$1,870 million in 2005 to R$2,030 million in 2006, reaching an 8.6%, or R$160 million, increase as compared to 2005. The ratio of total provisions to average loans decreased from 5.4% in 2005 to 4.9% in 2006 and the ratio of
  non-performing loans to total loans increased from 4.3% in 2005 to 5.1% in 2006.

The increase of R$160 million, or 8.6%, in 2006 as compared to 2005, of our provision for loan loss expenses was primarily a result of:

- (i) an increasing default rate in the consumer loan market, (ii) the expansion of Hipercard business through the South and Southeast of Brazil, which carries a riskier credit profile and (iii) Unicards aggressive strategy of acquiring
    new clients along with a strong credit expansion in Brazil adopted mainly in the second half of 2005. These increases were partially offset by (i) our conservative lending policy adopted since mid-2005, (ii) an increased focus in offering lower risk
  products to individuals, such as payroll-linked loans, and (iii) the expansion in the SMEs portfolio that also carries lower risk than unsecured personal loans; and
- a reduction in the risk assigned to individual corporate clients and settlements of some large corporate loans during the year.

In 2006, loan charge-offs increased R$400 million, or 27.7%, non-performing loans increased R$584 million, or 34.5%, and allowance for loan losses increased R$470 million, or 22.3%, as compared to 2005, primarily due to
  our previous growth of our loan portfolio in segments that present greater risk, such as unsecured personal loans.

In 2007, our performance was marked by an overall increase in our loan portfolio quality, mainly as a result of (i) our conservative lending policy adopted since mid-2005, especially in unsecured personal loans, due to
  an increasing default rate in the consumer loan market, (ii) our greater focus on lower risk loan portfolio, such as payroll-linked loans and auto financing and (iii) the improvement of the Brazilian economic environment, which led to a reduction of
  the risk of default from large corporate clients.

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Despite the 35.1% increase in our loan portfolio in 2007 as compared to 2006, our provisions for loan losses decreased 4.7% or R$95 million, the ratio of total provisions to average loans decreased from 4.9% in 2006 to
  3.8% in 2007 and the ratio of non-performing loans to total loans decreased from 5.1% in 2006 to 3.6% in 2007. Additionally, our allowances for loan losses increased R$135 million, or 5.2% in 2007 as compared to 2006, lower than the loan portfolio
  growth for the same period.

Due to the previous growth of our loan portfolio, loan charge-offs increased R$174 million, or 9.4% in 2007 as compared to 2006, despite the positive outcome from our credit strategy.

Non-Interest Income

The following table shows the principal components of our non-interest income for 2005, 2006 and 2007:

|                                                                    |  |                                 |  |       |  |       
|------------------------------------------------------------------- |  | ------------------------------- |  | ----- |  | ------
|                                                                    |  | For the Year Ended December 31,
|                                                                    |  |                                
|                                                                    |  | 2005                            |  | 2006  |  | 2007  
|                                                                    |  |                                 |  |       |  |       
|                                                                    |  | (in millions of R$)            
|Fee and commission income                                           |  | 2,712                           |  | 3,008 |  | 3,084 
|Trading income                                                      |  | 111                             |  | 225   |  | 475   
|Net gains on securities and non-trading derivatives                 |  | 83                              |  | 132   |  | 208   
|Net losses on foreign currency transactions                         |  | (100)                           |  | (43)  |  | (130) 
|Equity in results of unconsolidated companies                       |  | 158                             |  | 195   |  | 261   
|Insurance, private retirement plan and pension investment contracts |  | 2,616                           |  | 3,220 |  | 4,137 
|Other non-interest income                                           |  | 1,002                           |  | 850   |  | 3,818 
|                                                                    |  |                                 |  |       |  |       
|Total                                                               |  | 6,582                           |  | 7,587 |  | 11,853
|                                                                    |  |                                 |  |       |  |       

In 2006, our non-interest income increased R$1,005 million, or 15.3%, as compared to 2005, mainly as a result higher fee and commission income, higher trading income and higher income from our insurance, private
  retirement plan and pension investment contracts.

In 2007, our non-interest income increased R$4,266 million, or 56.2%, as compared to 2006 mainly due to (i) a R$579 million gross gain from the IPOs of Bovespa Holding and BM&F; (ii) R$1,436 million and R$429
  million gross gains from the sale of part of our stake in Redecard and Serasa, respectively; and (iii) a R$640 million gain from the admittance of a minority partner in our subsidiary UPS (see Note 30 to our consolidated financial statements). Non-interest income was also boosted by
  higher fee and commission income, higher trading income and higher income from our insurance, private retirement plan and pension investment contracts.

Fee and Commission Income. Fee and commission income increased 10.9%, or R$296 million, in 2006 as compared to 2005. In 2006, fee and commission income was derived from the following sources:

- 59.6%, or R$1,792 million, from banking tariffs and other fees and commissions, representing an increase of R$223 million, or 14.2%, as compared to 2005, mainly as a result of increased number of products and services offered to our clients
  and the expansion of our client base;
- 24.5%, or R$738 million, from credit card fees, representing an increase of R$111 million, or 17.7%, as compared to 2005, primarily due to new commercial initiatives undertaken by Unicard and Hipercard followed by significant growth in both
    businesses;
- 8.6%, or R$259 million, from asset management fees, representing a R$9 million decrease, or 3.4%, as compared to 2005, reflecting the decrease on average fees charged from 0.9% in 2005 to 0.8% in 2006, despite the growth of 16% in our total
    assets under management in the same period; and



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- 7.3%, or R$219 million, from collection fees, representing a R$29 million decrease or 11.7%, as compared to 2005.

In 2007, our fee and commission income increased R$76 million, or 2.5% as compared to 2006. Fee and commission income in 2007 was derived from the following sources:

- 58.9%, or R$1,817 million, from banking tariffs and other fees and commissions, representing an increase of R$25 million, or 1.4%, as compared to 2006, mainly due to (i) the increase in our client base and (ii) the commissions derived from
    primary and secondary equity offerings, which we coordinated in 2007, such as Redecard and SulAmérica S.A.. This increase was partially mitigated by the selling of BWU as of January 24, 2007, which generated fees in the previous period;
- 23.6%, or R$728 million, from credit card fees, representing a decrease of R$10 million, or 1.4%, as compared to 2006, mostly as a result of the end of Unibanco and Redecards Consortium as of March 2007, which started to be recognized
    as our equity in results of unconsolidated companies in Redecards income. This decrease was partially offset by our credit card client growth, resulting in an increase in Unicard, Hipercard and Fininvests credit card fees of R$26
    million, R$45 million and R$5 million, respectively as compared to 2006;
- 9.4%, or R$290 million, from asset management fees, representing a R$31 million, or 12.0% increase, as compared to 2006, mainly due to a 25.6% increase in assets under management during the same period. This increase was partially offset by
    a decrease in the average rates charged, from 0.8% in 2006 to 0.7% in 2007; and
- 8.1%, or R$249 million, from collection fees, representing a R$30 million or 13.7% increase, as compared to 2006.

Trading Income.Trading income is affected by exchange and interest rate variations. In general, it could present volatile earnings due to the use of securities and derivatives for hedging purposes of market
  exposure accounted in other instruments.

In 2006, trading income increased R$114 million as compared to 2005. In 2006, we recognized net earnings of R$48 million from realized gains (losses) on securities, as compared to net expenses of R$23 million in 2005,
  net earnings of R$220 million from realized gains (losses) on derivatives, as compared to R$139 million in 2005, and R$43 million in unrealized losses on securities and derivatives, as compared to R$5 million in 2005. In 2006, we did not record any
  results from derivatives used as global hedges of foreign investments.

In 2007, trading income increased R$250 million, or 111.1% as compared to 2006. In 2007, we recognized (i) net expenses of R$225 million from realized gains (losses) on securities, as compared to net earning of R$48
  million in 2006, (ii) net earnings of R$247 million from realized gains (losses) on derivatives in 2007, as compared to R$220 million in 2006, and (iii) R$453 million in unrealized gains on securities and derivatives in 2007, as compared to a loss
  of R$43 million in 2006. In 2007, we recorded a gain of R$209 million from derivatives used as global hedges of foreign investments.

Net Gains (Losses) on Securities and Non-trading Derivatives. In 2006, net gains on securities and non-trading derivatives increased by 59.0% or R$49 million, principally due to an increase in realized gains on
  securities available for sale, from R$84 million in 2005 to R$133 million in 2006.

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In 2007, net gains on securities and non-trading derivatives increased by 57.6% or R$76 million, mainly due to an increase in realized gains on securities available for sale, from R$133 million in 2006 to R$208 million
  in 2007.

Net Gains (Losses) on Foreign Currency Transactions.In 2006, net losses on foreign currency transactions improved by R$57 million, from expenses of R$100 million in 2005, to expenses of R$43 million in 2006.
  The results of such transactions were directly impacted by the volume of transactions and the appreciation of the real.

In 2007, net losses on foreign currency transactions increased by R$87 million, from expenses of R$43 million in 2006, to expenses of R$130 million in 2007, mainly due to a higher appreciation of the real in the
  same period, as compared to 2006.

Equity in Results of Unconsolidated Companies.The equity in results of unconsolidated companies increased from R$158 million in 2005 to R$195 million in 2006, mainly due to Redecard (debit card processor), which
  had an increase of R$43 millionof equity in results, as a result of increased debit card activity in Brazil and the expansion of our client base. This increase was partially offset by a decline of equity in resultsof LuizaCred and
  Investcred(consumer finance companies) of R$3 million and R$5 million, respectively, in 2006 as compared to 2005, as a result of our conservative lending policy adopted in mid-2005, as a result of increasing default rates in the consumer
  loan market.

In 2007, the equity in results from unconsolidated companies increased 33.8%, from R$195 million in 2006 to R$261 million in 2007, mainly as a result of:

- an increase in Redecards equity income, from R$103 million in 2006 to R$173 million in 2007, mainly as a result of the expansion of its clients base and the growth in transaction volume during the same period. This increase was
    partially offset by the decrease in our participation in Redecards, from 31.9% in 2006 to 23.2% in 2007, as a result of the selling of such capital through an initial public offering in July, 2007; and
- the establishment in 2007 of BIU Participações S.A., which posted an equity income of R$3 million, offset by a decrease of R$12 million, from R$20 million in 2006 to R$8 million in 2007, in Serasas equity income that was
    recognized as of June 2007.

Insurance, Private Retirement Plans and Pension Investment Contracts. In 2006, premiums from insurance, private retirement plans and pension investment contracts increased by 23.1% or R$604 million, as compared
  to 2005. Also, due to the reduction in the SELIC base interest rate in 2006, we focused to grow our results in operational gains to compensate the impact on financial results. Insurance premiums and private retirement plans fees increased R$385
  million and R$220 million, respectively, in 2006 as compared to 2005, as a result of our organic growth and the expansion of our extended warranty business in 2006.

In 2007, premiums from insurance, private retirement plans and pension investment contracts increased by 28.5% or R$917 million, as compared to 2006, mainly due to an increase of R$483 million and R$433 million in 2007,
  from insurance premiums and private retirement plan fees, respectively. These increases were driven by our organic growth in this segment and our continued focus on increasing our operational gains to offset the impact on our financial results, due
  to the reductions in the SELIC base interest rate.

Other Non-interest Income. In 2006, other non-interest income decreased 15.2%, or R$152 million, from R$1,002 million in 2005 to R$850 million in 2006, mainly due to the indemnity payment that we received in 2005
  from Caixa Geral de Depósitos, the former majority shareholder of Banco Bandeirantes, in the amount of R$238 million. For additional information, see Note 23(c) to our consolidated financial statements.

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In 2007, other non-interest income increased 349.2%, or R$2,968 million, from R$850 million in 2006 to R$3,818 million in 2007, mainly due to (i) a R$579 million gross gain from the IPOs of Bovespa Holding and BM&F;
  (ii) R$1,436 million and R$429 million gross gains from the sale of part of our stake in Redecard and Serasa, respectively; and (iii) a R$640 million gain from the admittance of a minority partner in our subsidiary   UPS (see Note 30 to our consolidated financial statements).

Non-Interest Expense

The following table shows the principal components of our non-interest expense for 2005, 2006 and 2007:

|                                                                    |  |                                 |  |        |  |       
|------------------------------------------------------------------- |  | ------------------------------- |  | ------ |  | ------
|                                                                    |  | For the Year Ended December 31,
|                                                                    |  |                                
|                                                                    |  | 2005                            |  | 2006   |  | 2007  
|                                                                    |  |                                 |  |        |  |       
|                                                                    |  | (in millions of R$)            
|Salaries and benefits                                               |  | 3,016                           |  | 3,044  |  | 3,514 
|Administrative expenses                                             |  | 2,740                           |  | 3,101  |  | 2,982 
|Amortization of intangibles and impairment on goodwill              |  | 134                             |  | 77     |  | 120   
|Insurance, private retirement plan and pension investment contracts |  | 2,830                           |  | 3,548  |  | 4,405 
|Other non-interest expense                                          |  | 2,301                           |  | 2,720  |  | 3,765 
|                                                                    |  |                                 |  |        |  |       
|Total                                                               |  | 11,021                          |  | 12,490 |  | 14,786
|                                                                    |  |                                 |  |        |  |       

Non-interest expense increased in each years of 2005, 2006 and 2007, from R$11,021 million to R$12,490 million to R$14,786 million, respectively.

The increase in 2006 as compared to 2005 was mainly due to higher salaries and benefits expenses; administrative expenses; insurance, private retirement plan and pension investment contract expenses; and other
  non-interest expenses, such as exchange losses on foreign investments, tax litigation, credit card selling expenses and service, revenues and other taxes.

In 2007, the increase as compared to 2006 was driven by higher salaries and benefits expenses, amortization of intangibles and impairment on goodwill, insurance, private retirement plan and pension investment contract
  expenses, and other non-interest expenses, such as exchange losses on foreign investments and tax litigation.

Salaries and Benefits.Salaries and benefitsincreased 0.9%, or R$28 million, in 2006 as compared to 2005. In 2006, we continued focusing on efficiency gains with continuous operational restructuring as
  well as strict cost controls. This strategy contributed to partially offset (i) increases in employee salaries of 3.5% in September 2006 and 6.0% in September 2005 pursuant to collective bargaining agreements with our employees, (ii) organic growth
  in the banking activities, specially in the Retail segment, (iii) increase in profit sharing expenses, as a result of higher net income under accounting practices adopted in Brazil and (iv) expansion in consumer finance activities.

In 2007, salaries and benefitsincreased 15.4%, or R$470 million, as compared to 2006 largely due to (i) an increase in labor litigation expenses in 2007, (ii) an increase in profit sharing expenses, as a result
  of higher net income in the same period, (iii) an increase in employee salaries due to a 3.8% increase in the number of employees in 2007 as compared to 2006, mainly as a result of the Retail segments business expansion and the growth of
  information technology infrastructure to support our businesses, and also due to an increase in employee salaries of 6.0% in September 2007 and 3.5% in September 2006 pursuant to the collective bargaining agreements with our employees. These
  increases were partially mitigated by our strict cost control policies and operational restructuring.

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As of December 31, 2006 we had 32,956 employees as compared to 29,504 employees as of December 31, 2005. This increase was mainly a result of the addition of new sales force employees in consumer finance companies, as
well as the expansion of our business.

As of December 31, 2007 we had 34,215 employees as compared to 32,956 employees as of December 31, 2006. This increase was mainly a result of the expansion of our businesses, as well as addition of new employees in the
  information technology infrastructure to support the expansion of our businesses.

Administrative expenses increased 13.2%, or R$361 million, in 2006 as compared to 2005, primarily due to:

- higher communication and third party service costs as a result of the expansion of consumer finance activities, as well as our new television campaign;
- higher expenses for premises and equipment mainly due to the refurbishment of branches as a result of the relaunch of our brand; and
- annual price adjustments on public utilities tariffs, rental and software maintenance contracts.

In 2007, administrative expenses decreased by 3.8% or R$119 million as compared to 2006, mainly due to our continuous focus on cost control policies, operational restructuring and efficiency gains. This decrease was a
  result of:

- a R$40 million increase in advertising and publicity;
- a R$27 million increase in net occupancy expenses for premises and equipment;
- a R$24 million increase in information technology expenses;
- a R$27 million decrease in banking and brokerage fees
- a R$41 million decrease
    in external administrative services expenses;
- a R$66 million decrease in communication expenses; and
- a R$76 million decrease in other expenses.

Amortization of Intangibles and Impairment of Goodwill. Theamortization of intangibles and impairment on goodwill decreased R$57 million, or 42.5%, in 2006 as compared to 2005. In 2006, we recognized no
  amortization of intangibles for Bandeirantes as compared to R$90 million in 2005, since it was fully amortized in 2005.

In 2007, the amortization of intangibles and impairment on goodwill increased R$43 million, or 55.8% as compared to 2006, primarily due to the acquisition of several new customer databases and purchased of the rights to
  provide new payroll management and financial resource administration services to third party companies.For further information see Note 3 to our consolidated financial statements.

Insurance, private retirement plan and pension investment contracts. Insurance, private retirement plan and pension investment contracts expenses increased 25.4%, or R$718 million, from R$2,830 million in 2005 to
  R$3,548 million in 2006. This increase was driven largely by a R$125 million increase in insurance claims and by a R$156 million increase in benefit expenses related to our private retirement plans, as a result of an increase in the volume of such
  plans.  Sales growth led to an R$174 million increase in pension investment contract expenses. Our selling expenses also increased by R$212 million largely due to an increase in our extended warranty portfolio, which carries higher expenses.

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In 2007, insurance, private retirement plan and pension investment contracts expenses increased R$857 million, or 24.2% as compared to 2006, mainly as a result of the organic growth and higher focus on operational
  results shown in this segment, which led to (i) a higher commission expenses, which increased R$322 million, or 56.6%, as compared to 2006, (ii) an increase of R$192 million, or 19.0%, in insurance claims incurred as compared to 2006, (iii) a higher
  expenses from adjustments to insurance and private reserves for claims of R$240 million as compared to 2006, and (iv) a R$298 million increase in pension investment contract expenses. These increases were partially compensated by a decrease of R$195
  million or 73.9% as compared to 2006 in private retirement plans benefit expenses due to sales growth of new plans not yet paying benefits.

Other non-interest expenses. Other non interest expenses increased 18.2% or R$419 million in 2006 as compared to 2005. This increase was mainly due to:

- a R$160 million increase in service, revenue and other taxes expenses, as a consequence of increases on net interest income and services rendered;
- a R$95 million increase in our civil litigation expenses;
- a R$35 million increase in statutory profit sharing;
- a R$35 million increase in net expenses related to checks and billing;
- a R$32 million increase in uninsured losses of branch network; and
- a R$27 million increase in tax litigation expenses.

In 2007, other non interest expenses increased 38.4% or R$1,045 million as compared to 2006. This increase was mainly due to:

- a R$553 million increase in exchange losses on foreign investments mainly as a result of the higher appreciation of the real in 2007 as compared to 2006;
- a R$229 million increase in our civil litigation expenses;
- a R$101 million increase in tax litigation expenses, primarily due to (i) the widening of the calculation basis of PIS and COFINS in accordance with law 9,718, and (ii) the deductibility of interest and taxes thereon which collection is
    restrained; and
- a R$72 million increase in our credit card selling expenses as a result of the organic growth of our credit card business.

Income Tax

The amount of our income tax and social contribution expenses in 2006 was R$532 million, representing an increase of R$72 million as compared to 2005. This amount  is
  determined by calculating the amount resulting from the application of the combined statutory tax rate of the Brazilian income tax and social contribution (34%) on net profits adjusted to tax basis as determined under Brazilian tax law. In 2006, the
  effects resulting from such adjustments were: (a) we recognized R$325 million in tax benefits from Interest on Capital Stock, an increase of R$65 million as compared to 2005; (b) we incurred non-deductible losses from exchange rate variations on our
  foreign investments for an amount of R$98 million, which increased our income tax and social contribution expenses by R$33 million in 2006, an effect of R$18 million lower than 2005; and (c) we had an effect of R$8 million related to other permanent
  differences, mainly related to stock options valued at fair market value and non-taxable capital gains, a decrease of R$40 million as compared to 2005. For additional information, see Note 18 to our consolidated financial statements.

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In 2007, our effective income tax and social contribution expenses amounted to R$1,346 million, an increase of R$814 million as compared to 2006. The amount of the income tax and social contribution expenses is
determined by calculating the amount resulting from the application of the combined statutory tax rate of the Brazilian corporate income tax and social contribution (34%) on net profits adjusted tax basis as determined under Brazilian tax law. In
2007, the effects resulting from such adjustments were: (a) we recognized R$468 million in tax benefits from Interest on Capital Stock, an increase of R$143 million as compared to 2006; (b) we incurred non-deductible losses from exchange rate
variations on our foreign investments which increased our income tax and social contribution expenses in the amount of R$221 million in 2007, an increase of R$188 million as compared to the amount of such effect in 2006; (c) we recorded non-taxable gain on sale of shares of equity investeewhich tax benefits amounted to R$218   million, (d) we incurred unrecognized tax benefits-provision for contingencies, accounted as an increase in liability for income taxes payable, which increased our income tax and
social contribution expenses in the amount of R$48 million in 2007; and (e) we had an effect of R$63 million related to other permanent differences, a R$55 million increase as compared to 2006. For additional information, see Note 18 to our
consolidated financial statements.

Minority Interest

In 2006, our minority interest decreased R$9 million, or 5.7% as compared to 2005, mainly driven by a combined decrease of earnings in our subsidiaries with minority interest.

In 2007, our minority interest increased R$578 million, or 387.9% as compared to 2006, such increase was attributed to the earnings in our subsidiaries with minority interest and the admittance of a minority partner into our subsidiary, UPS (see Note 30 to our consolidated financial   statements). As a result, a minority interest was recognized on net income of   UPS, most significantly the gain on sale of shares of Redecard (see Note 23 to our consolidated financial statements).

5.B Liquidity and Capital Resources

Overview

Our asset and liability management policy is designed to ensure that our capital position is consistent with our risk profile and applicable regulatory standards and guidelines.  In particular, our policy is designed to
  avoid material mismatches between assets and liabilities, to optimize our risk-return ratio and to ensure that sufficient liquidity is available to honor withdrawals of deposits, make repayments of other liabilities at maturity, extend loans or other forms of credit to our customers, and to meet our own working capital needs.

We seek to ensure continued access to diversified sources of funding at efficient costs, within the framework of our assets and liabilities management policy, which sets limits with respect to risk factors, sensitivity,
  gaps and concentration in certain instruments, such as government securities. As a general rule, our main funding provider is the financial market, either in reais or in foreign currencies.  For additional information concerning capital and
  liquidity risk management, see Item 11. Quantitative and Qualitative Disclosures About Market Risk - Risk Management.

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Asset and liability management, as well as liquidity and capital resources, are considered at our financial committee monthly meetings. The financial committee discusses and evaluates our liquidity performance in order
to determine the minimum liquidity level we must maintain, and, if necessary, holds extraordinary meetings to evaluate our liquidity position in response to unexpected macroeconomic changes. The financial committee has pre-approved a contingency
plan that determines the appropriate procedures in the event of a liquidity crisis.

Our Treasury segment is responsible for managing our liquidity and sources of funding, including executing investments, in both reais and foreign currencies.  The Treasury segment maintains what we believe is a
  proper balance of maturity distributions and diversification of sources of funds.  Based upon our levels of resources and ability to access funding, we believe that our overall liquidity is sufficient to meet current obligations to customers and
  debt holders, to support expectations for future changes in asset and liability levels and to support our ordinary working capital needs.

Ratings

We are evaluated by the three main international rating companies: Moodys Investors Service (Moodys), S&P, and Fitch. The assigned ratings reflect our solvency, management quality and
  superior operating performance and, consequently, directly impact our cost of funding. The table below shows these assigned ratings:

|        |  |                                |  |                              |  |            |  |                |  |           |  |           
|------- |  | ------------------------------ |  | ---------------------------- |  | ---------- |  | -------------- |  | --------- |  | ----------
|        |  | Global Scale: Foreign Currency |  | Global Scale: Local Currency
|        |  |                                |  |                             
|        |  | Long Term                      |  | Long Term                    |  | Short Term |  | Financial      |  | Long Term |  | Short Term
|        |  | Debt                           |  | Deposits                     |  | Deposits   |  | Strength       |  | Deposits  |  | Deposits  
|        |  |                                |  |                              |  |            |  |                |  |           |  |           
|Moody's |  | Baa3                           |  | Ba2                          |  | NP         |  | B-             |  | A1        |  | P-1       
|       
|        |  | Foreign Currency               |  |                              |  |            |  | Local Currency
|        |  |                                |  |                              |  |            |  |               
|        |  | Long Term                      |  | Short Term                   |  |            |  |                |  | Long Term |  | Short Term
|        |  |                                |  |                              |  |            |  |                |  |           |  |           
|S&P     |  | BBB-                           |  | A-3                          |  |            |  |                |  | BBB-      |  | A-3       
|       
|        |  | Foreign Currency               |  |                              |  |            |  | Local Currency
|        |  |                                |  |                              |  |            |  |               
|        |  | Long Term                      |  | Short Term                   |  |            |  |                |  | Long Term |  | Short Term
|        |  |                                |  |                              |  |            |  |                |  |           |  |           
|Fitch   |  | BBB                            |  | F3                           |  |            |  |                |  | BBB       |  | F3        

Sources of Funding

Capital

The following table sets forth our capital composition at December 31, 2005, 2006 and 2007:

|                              |  |                      |  |        |  |       
|----------------------------- |  | -------------------- |  | ------ |  | ------
|                              |  | As of December 31,  
|                              |  | Consolidated        
|                              |  |                      |  |        |  |       
|                              |  | 2005                 |  | 2006   |  | 2007  
|                              |  |                      |  |        |  |       
|                              |  | ( in millions of R$)
|Shareholders Equity (Tier 1) |  | 9,534                |  | 10,439 |  | 13,037
|Subordinated Debt (Tier 2)    |  | 2,964                |  | 3,240  |  | 5,757 
|Minority Interest             |  | 855                  |  | 850    |  | 2,421 

Shareholders Equity

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Shareholders equity increased to R$10,439 million as of December 31, 2006, from R$9,534 million as of December 31, 2005. The increase primarily reflected R$1,951 million in net income earned in 2006, partially
offset by the provision of R$890 million of dividends/interest on shareholders equity.

Shareholders equity increased to R$13,037 million as of December 31, 2007, from R$10,439 million as of December 31, 2006. This increase occurred due to the R$3,560 million in net income earned in 2007, partially
  offset by the provision of R$1,349 million of dividends/interest on shareholders equity.

Subordinated Debt Issuances

In July 2005, we issued US$500 million in perpetual bonds through our Grand Cayman branch.  The perpetual bonds have no maturity date and pay a coupon of 8.7% on a quarterly basis. We can redeem these bonds upon
  approval of the Central Bank, on July 29, 2010, or on any interest payment date thereafter.  According to accounting practices adopted in Brazil, such bonds were approved by the Central Bank to become Tier 2 capital in March 2006, and therefore were
  not considered for purposes of the calculation of the Basel capital adequacy ratio in 2005.

Our Tier 2 subordinated debt increased R$276 million in 2006 as compared to 2005, mainly due to the issuance in December 2006 of R$500 million in subordinated time deposits, which were issued in local currency and can
  be redeemed after December 2011. On these deposits, we pay a rate of 104% of the interbank deposits interest rate, such deposits maturing in 2016. The increase derived from this issuance was partially offset by the appreciation of the real in
  the same period.

Throughout 2007, we issued R$2,955 million in subordinated time deposits.  The table below shows the characteristics of these issuances:

|              |  |               |  |                        |  |                           |  |                            
|------------- |  | ------------- |  | ---------------------- |  | ------------------------- |  | ---------------------------
|Issue Date    |  | Maturity date |  | Remuneration per annum |  | Principal amount in Reais |  | Outstanding amount in Reais
|              |  |               |  |                        |  |                           |  |                            
|May 2007      |  | May 2012      |  | 103.9% of CDI          |  | R$1,406 million           |  | R$1,508 million            
|July 2007     |  | July 2012     |  | CDI + 0.38%            |  | R$422 million             |  | R$444 million              
|August 2007   |  | August 2012   |  | CDI + 0.38%            |  | R$200 million             |  | R$209 million              
|August 2007   |  | August 2014   |  | CDI + 0.46%            |  | R$50 million              |  | R$52 million               
|October 2007  |  | October 2012  |  | IGPM + 7.33%           |  | R$291 million             |  | R$301 million              
|October 2007  |  | October 2012  |  | 103.8% of CDI          |  | R$93 million              |  | R$95 million               
|October 2007  |  | October 2014  |  | IGPM + 7.35%           |  | R$33 million              |  | R$35 million               
|October 2007  |  | October 2012  |  | CDI + 0.45%            |  | R$450 million             |  | R$461 million              
|December 2007 |  | December 2014 |  | CDI + 0.60%            |  | R$10 million              |  | R$10 million               
|             

As of December 31, 2007, our subordinated debt had increased by R$2,517 million as compared to December 31, 2006, due to the issuances listed above recorded as Tier 2 capital, partially mitigated by the appreciation of
  the real and by a debt that we fully redeemed in April 2007.

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Minority Interest

As of December 31, 2007, our minority interest had increased by R$1,571 million as compared to December 31, 2006, mainly as result of the admittance of a minority partner into our subsidiary, UPS.

Regulatory Capital

We are subject to risk-based capital adequacy guidelines and regulations issued by the Central Bank that are similar to the standards set forth in the Basel Accord.  Under Central Bank rules, we are currently required
  to maintain a capital adequacy ratio of 11.0% of total capital to total risk-adjusted assets, as calculated in accordance with accounting practices adopted in Brazil. As of December 31, 2007, our capital adequacy ratio was 14.7% . For additional
  information on capital adequacy requirement see Item 4.B.  Business Overview  Regulation and Supervision  Capital Adequacy Requirements.

We measure our capital compliance on a consolidated basis, because we believe it is the most accurate measure of our ability to withstand losses from our direct and indirect operations.

The following table shows our Basel capital adequacy ratio, as calculated in accordance with accounting practices adopted in Brazil, as well as the minimum regulatory capital required under Brazilian law, as of December 31, 2005, 2006 and 2007.
  For additional information on our Basel capital adequacy ratio, see Note 30 to our consolidated financial statements.

|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       
|----------------------------------------------- |  | ---------------------------------------- |  | -------- |  | ------ |  | ------ |  | ------ |  | ------
|                                                |  | As of December 31,                      
|                                                |  | Consolidated                            
|                                                |  |                                         
|                                                |  | Partial (1)                              |  | Full (2)
|                                                |  |                                          |  |         
|                                                |  | 2005                                     |  | 2006     |  | 2007   |  | 2005   |  | 2006   |  | 2007  
|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       
|                                                |  | ( in millions of R$, except percentages)
|Tier 1                                          |  | 13.3%                                    |  | 12.2%    |  | 10.4%  |  | 13.9%  |  | 12.9%  |  | 12.0% 
|Tier 2(3)                                       |  | 2.3%                                     |  | 3.8%     |  | 4.3%   |  | 2.2%   |  | 3.7%   |  | 4.3%  
|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       
|Total capital                                   |  | 15.6%                                    |  | 16.0%    |  | 14.7%  |  | 16.2%  |  | 16.6%  |  | 16.3% 
|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       
|Our regulatory capital                          |  | 10,992                                   |  | 13,080   |  | 16,600 |  | 11,732 |  | 13,871 |  | 18,393
|Minimum regulatory capital required             |  | 7,729                                    |  | 9,000    |  | 12,408 |  | 7,993  |  | 9,190  |  | 12,411
|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       
|                                               
|Excess over minimum regulatory capital required |  | 3,263                                    |  | 4,080    |  | 4,192  |  | 3,739  |  | 4,681  |  | 5,982 
|                                                |  |                                          |  |          |  |        |  |        |  |        |  |       

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Partial consolidation excludes non-financial subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) |  | Full consolidation includes both financial and non-financial subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) |  | The Central Bank adjusts the balance of Tier 2 capital to calculate the Basel capital adequacy ratio. Subordinated debt that matures more than five years into the future is accounted for at 100% of face value. For every year below five years, 20% of face value is deducted from the calculation. For example, a subordinated debt with a one-year maturity is included in the calculation at 20% of face value. As of December 31, 2007, the adjusted amount of subordinated debt used for the Basel capital adequacy ratio calculation was R$4,815 million.

Our regulatory capital increased from R$10,992 million as of December 31, 2005 to R$13,080 million as of December 31, 2006 on a partially consolidated basis (excluding non-financial subsidiaries). On a fully
  consolidated basis, our regulatory capital increased from R$11,732 million as of December 31, 2005 to R$13,871 million as of December 31, 2006. The minimum regulatory capital required on a partially consolidated basis increased in 2006, as compared
  to 2005, mainly due to the increase in our loan portfolio, which impacted our capital requirement for risk weighted assets. Our Basel capital adequacy ratio increased 0.4%, mainly as a result of the R$500 million of subordinated time deposits issued
  in local currency in December 2006 (which are due in 2016) and the approval in March 2006 as a Tier 2 capital of our perpetual non-cumulative junior subordinated securities (in accordance with accounting practices adopted in Brazil). Such impact was
  partially offset by the growth of our loan portfolio, contributing to a decrease of 1.5% in our Basel capital adequacy ratio.

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Our regulatory capital increased from R$13,080 million as of December 31, 2006 to R$16,600 million as of December 31, 2007, on a partially consolidated basis (excluding non financial subsidiaries). On a fully
  consolidated basis, our regulatory capital increased from R$13,871 million as of December 31, 2006 to R$18,393 million as of December 31, 2007.

The minimum regulatory capital required on a partially and fully consolidated basis also increased in 2007, as compared to 2006. As a consequence, our Basel capital adequacy ratio decreased 127 basis points. This
  decrease was mainly as a result of the growth of our loan portfolio, which impacted our capital requirement for risk weighted assets and contributed to a decrease of 3.9% in our Basel capital adequacy ratio. Such impact was partially offset by the
  issuance of R$2,955 million in subordinated time deposits recorded as Tier 2 capital (in accordance with accounting practices adopted in Brazil) and by net income of R$3,560 million earned in 2007 (offset by the provision of R$1,349 million of
  dividends/interest on shareholders equity).

|                                                                                                           |  |      
|---------------------------------------------------------------------------------------------------------- |  | -----
|Basel Capital Adequacy Ratio Impacts Year Ended December 31, 2006 (accounting practices adopted in Brazil) |  |      
|                                                                                                          
|Basel capital adequacy ratio at December 31, 2005                                                          |  | 15.6%
|Decrease related to risk weighted assets                                                                   |  | (1.5)
|Impact of the extraordinary goodwill amortization                                                          |  | (0.6)
|Change in market risk  interest rates and exchange portfolio                                              |  | (0.1)
|Increase related to shareholders equity                                                                   |  | 0.8  
|Tier 2                                                                                                     |  | 1.8  
|                                                                                                           |  |      
|Basel capital adequacy ratio at December 31, 2006                                                          |  | 16.0%
|                                                                                                          
|                                                                                                          
|Basel Capital Adequacy Ratio Impacts Year Ended December 31,                                               |  |      
|2007 (accounting practices adopted in Brazil)                                                              |  |      
|                                                                                                          
|Basel capital adequacy ratio at December 31, 2006                                                          |  | 16.0%
|Decrease related to risk weighted assets                                                                   |  | (3.9)
|Impact of the extraordinary goodwill amortization                                                          |  | (0.1)
|Change in market risk  interest rates and exchange portfolio                                              |  | (0.4)
|Increase related to shareholders equity                                                                   |  | 1.6  
|Tier 2                                                                                                     |  | 1.5  
|                                                                                                           |  |      
|Basel capital adequacy ratio at December 31, 2007                                                          |  | 14.7%

The growth of our loan portfolio from 2005 to 2007 reflects an improved outlook for Brazilian economic growth and the recovery of domestic demand.  Since our current Basel capital adequacy ratio is in excess of the
  minimum required ratio, we can continue to increase our risk-weighted assets, especially in connection with our loan portfolio.

In addition, the Central Bank limits the amount of investments in consolidated subsidiaries not engaged in banking, leasing or securities activities and in unconsolidated companies, premises and equipment and intangible
  assets to 50.0% of adjusted capital on a consolidated basis.  This limit is known as the fixed asset ratio.  As of December 31, 2007, our total investment in such assets was 34.6% of adjusted capital on a consolidated basis, lower than the Central
  Banks limit, according to accounting practices adopted in Brazil.

Third-Party Liabilities

The following table shows our third-party liabilities at December 31, 2005, 2006 and 2007:

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|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|------------------------------------------------- |  | ---------------------------------------- |  | ---------- |  | --------- |  | ---------- |  | --------- |  | ----------
|                                                  |  | As of December 31,                      
|                                                  |  |                                         
|                                                  |  | 2005                                     |  | % of total |  | 2006      |  | % of total |  | 2007      |  | % of total
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|Liabilities                                       |  | ( in millions of R$, except percentages)
|Deposits from customers:                          |  |                                          |  |            |  |           |  |            |  |           |  |           
|Demand deposits                                   |  | R$ 3,787                                 |  | 4.8%       |  | R$4,099   |  | 4.5%       |  | R$10,290  |  | 7.7%      
|Time deposits                                     |  | 26,011                                   |  | 32.7       |  | 24,393    |  | 26.7       |  | 23,601    |  | 17.8      
|Savings deposits                                  |  | 6,115                                    |  | 7.7        |  | 7,274     |  | 8.0        |  | 11,224    |  | 8.5       
|Deposits from banks                               |  | 23                                       |  | -          |  | 435       |  | 0.5        |  | 1,380     |  | 1.0       
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|Total deposits                                    |  | 35,936                                   |  | 45.2       |  | 36,201    |  | 39.7       |  | 46,495    |  | 35.0      
|Federal funds purchased and securities sold under |  |                                          |  |            |  |           |  |            |  |           |  |           
|repurchase agreements                             |  | 10,721                                   |  | 13.5       |  | 16,991    |  | 18.6       |  | 27,197    |  | 20.5      
|Import and export financings                      |  | 2,932                                    |  | 3.7        |  | 2,420     |  | 2.7        |  | 4,057     |  | 3.1       
|Other interbank borrowings                        |  | 235                                      |  | 0.3        |  | 533       |  | 0.6        |  | 3,452     |  | 2.6       
|Other                                             |  | 72                                       |  | 0.1        |  | 92        |  | 0.1        |  | 118       |  | 0.1       
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|Short-term borrowings                             |  | 3,239                                    |  | 4.1        |  | 3,045     |  | 3.4        |  | 7,627     |  | 5.8       
|Local onlendings                                  |  | 6,012                                    |  | 7.6        |  | 6,535     |  | 7.2        |  | 8,610     |  | 6.5       
|Euronotes                                         |  | 989                                      |  | 1.2        |  | 1,029     |  | 1.1        |  | 1,369     |  | 1.0       
|Debentures                                        |  | -                                        |  | -          |  | 765       |  | 0.8        |  | 2,747     |  | 2.1       
|Notes issued under securitization arrangements    |  | 2,137                                    |  | 2.7        |  | 1,644     |  | 1.8        |  | 1,621     |  | 1.2       
|Subordinated debt                                 |  | 2,964                                    |  | 3.7        |  | 3,240     |  | 3.5        |  | 5,757     |  | 4.3       
|Mortgage indebtedness                             |  | 514                                      |  | 0.6        |  | 1,272     |  | 1.4        |  | 418       |  | 0.3       
|Foreign onlendings                                |  | 143                                      |  | 0.2        |  | 64        |  | 0.1        |  | 8         |  | -         
|Agricultural notes                                |  | -                                        |  | -          |  | -         |  | -          |  | 1,052     |  | 0.8       
|Obligations under capital leases                  |  | 58                                       |  | 0.1        |  | 63        |  | 0.1        |  | 120       |  | 0.1       
|Other                                             |  | 33                                       |  | -          |  | 26        |  | -          |  | 12        |  | -         
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|Long-term debt                                    |  | 12,850                                   |  | 16.2       |  | 14,638    |  | 16.0       |  | 21,714    |  | 16.3      
|Other liabilities                                 |  | 16,683                                   |  | 21.0       |  | 20,399    |  | 22.3       |  | 29,780    |  | 22.4      
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           
|Total Liabilities                                 |  | R$ 79,429                                |  | 100.0%     |  | R$ 91,274 |  | 100.0%     |  | R$132,813 |  | 100.0%    
|                                                  |  |                                          |  |            |  |           |  |            |  |           |  |           

Deposits

Deposits are the most important source of funding for our banking operations. Our deposits consist primarily of real-denominated interest-bearing time and savings deposits and real-denominated
  non-interest-bearing demand deposits.

Our total deposits remained stable between December 31, 2005 and December 31, 2006, with a 0.7% increase, due to the growth in demand and savings deposits, which was offset by a 6.2% decrease in our time deposits. The
  decrease in our time deposits is mainly due to a shift in our short term funding strategy, focusing more on the issuance of Dibens Leasing debentures, posted mainly under repurchase agreements. The increase in our demand and savings deposits (8.2%
  and 19.0%, respectively) between December 31, 2005 and December 31, 2006, continues to demonstrate our focus in expanding our sources of low-cost funding.

Our total deposits increased 28.4% between December 31, 2006 and December 31, 2007, mostly attributed to (i) the 151.0% increase in demand deposits between December 31, 2006 and December 31, 2007, which was driven by
  the CPMF tax extinguishment, which caused the postponing of financial resources transfers, and also by (ii) the 54.3% increase in savings deposits. These increases were partially offset by the 3.2% decrease in our time deposits, which reflected our
  shift in funding strategy from time deposits to securities sold under repurchase agreement using Dibens Leasings debentures as collateral.

Federal Funds Purchased and Securities Sold Under Repurchase Agreements

Federal funds and securities sold under repurchase agreements increased 58.5% from R$10,721 million as of December 31, 2005 to R$16,991 million as of December 31, 2006. This growth reflects a change in our short term
  funding strategy, which begun focusing on repurchase agreements that use debentures as collateral. This source of funding can present volume volatility since such funding is directly impacted by market liquidity and our participation as counterparty
  on such transactions.

Federal funds and securities sold under repurchase agreements increased 60.1%, from R$16,991 million as of December 31, 2006 to R$27,197 million as of December 31, 2007 due to the continuance of our strategy to focus on
  repurchase agreements using debentures issued by Dibens Leasing as collateral.

Import and Export Financings

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Import and export financings from correspondent banks also represent an important source of funding for us. In general, these trade finance credit lines are denominated in U.S. dollars. Historically, we have funded our
foreign currency trade loans with foreign currency lines from correspondent banks.

Our import and export financings decreased 17.5% or R$512 million between December 31, 2005 and December 31, 2006, mainly due to the 8.7% appreciation of the real in the same period.

Our import and export financings increased 67.6% or R$1,637 million between December 31, 2006 and December 31, 2007, due to the continuous growth of Brazilian exports, and to the improvement of economic conditions in
  Brazil.

Other Sources of Funding

Euronotes

We are an active participant in the capital markets, especially in the euronotes market. We use the proceeds of these obligations primarily for general lending to our Brazilian clients. As of December 31, 2007, we had
  R$1,369 million of outstanding euronotes denominated in U.S. dollars and other foreign currencies, of which US$125 million were issued under our Medium Term Note program (MTN Program). Our MTN program is a relatively inexpensive source
  of funding and permits the issuance of up to US$2 billion (or its equivalent in other currencies) of securities with a maturity of more than 12 months.

The balance of outstanding Euronotes increased by R$40 million between December 31, 2005 and December 31, 2006 due to new issuances and the accrual of interest in 2006, partially offset by the appreciation of the real and maturities in the same period. In the twelve months following December 31, 2006, R$382 million of our total euronote obligations will mature. For additional information see Note 16 of our consolidated financial statement.

The balance of outstanding Euronotes increased by R$340 million between December 31, 2006 and December 31, 2007 due to new issuances and the accrual of interest in 2007, partially offset by the appreciation of the real and maturities in the same period. In the twelve months following December 31, 2007, R$1,037 million of our total obligation will mature. For additional information see Note 16 of our consolidated financial statement.

Debentures

In 2006, we started issuing debentures through Dibens Leasing directly to third parties, due to our auto financing funding strategy. Additionally, in 2007, our Commercial Bank started issuing pledges of debentures
  (Cédula de Debentures) to diversify our sources of funding. As of December 31, 2007, we had outstanding debentures in an aggregate amount of R$2,747 million, which represented an increase of 259.1% as compared to December 31, 2006.

Notes Issued Under Securitization Arrangements

We securitize U.S. dollar payment orders that we receive and process through our correspondent banks. We generally refer to these payment orders as Swift MT-100 payments.  UBB Diversified Payment Rights Finance Company,
  an exempted special purpose company established under the laws of the Cayman Islands, acquires these payment orders and uses them as an underlying asset for the issuance of notes in the international capital markets. Proceeds from the sale of notes
  are remitted to our subsidiary, Unibanco Cayman, as payment for the sale of the U.S. payment orders. The notes issued under securitization of U.S. dollar payment orders represent an additional source of funding for us.

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As of December 31, 2006 and December 31, 2007, we had R$1,644 million and R$1,621 million, respectively, in outstanding liabilities in connection with notes we have issued under securitization arrangements, a decrease
  of 23.1% and 1.4%, respectively as compared to December 31, 2005 and December 31, 2006. The main reason for these declines was the appreciation of the real during 2006 and 2007. For additional information see Note 16 of our consolidated
  financial statement.

Mortgage Indebtedness

As of December 31, 2006, we had R$1,272 million in mortgage indebtedness, as compared to R$514 million on December 31, 2005, mainly due to the fact that in 2006, we began issuing and negotiating real estate notes, which
  amounted to a balance of R$834 million as of December 31, 2006. Additionally, as of December 31, 2006, we had R$438 million in mortgage notes outstanding as compared to R$514 million of outstanding mortgage notes as of December 31, 2005. This
  decrease was primarily due to our use of other sources of funding.

As of December 31, 2007, we had R$418 million in mortgage indebtedness, as compared to R$1,272 million as of December 31, 2006. This decrease is due to the fact that our savings deposits increased by 54.3% and therefore
  our need to issue real estate and mortgage notes decreased for the same period.

Local and Foreign Onlendings

Local and foreign onlendings consists primarily of real-denominated funds borrowed from BNDES, and FINAME for loans extended to Brazilian clients for investments mainly in fixed assets, such as property and
  equipment.

On December 31, 2006, we had R$6,599 million in local and foreign onlendings outstanding, a 7.2% increase over 2005, mainly due to a disbursement of R$2,500 million in BNDES onlendings portfolio, consolidating our third
  place position in the BNDES overall ranking of financing agents, with a market share of 8.6%. This increase was partially offset by an 8.9% decrease in our FINAME onlendings portfolio.

On December 31, 2007, we had R$8,618 million in local and foreign onlendings outstanding, a 30.6% increase over 2006, mainly due to a disbursement of R$4,400 million in our BNDES onlendings portfolio. This disbursement
  maintained our third place position in the BNDES overall ranking of financing agents, with a growing market share of 11.6%. Our FINAME onlendings portfolio has also grown 44.0% in the same period. The increases in BNDES and FINAME onlendings were due to an increase in the demand for fixed-asset financing, driven by the growth of the Brazilian economy.

Agricultural Notes

In 2007, we started issuing agricultural notes, using agricultural credit receivables as collateral. These notes represent borrowings with original terms generally between 2 and 35 months and bear interbank deposits
  interest rates ranging from 87% to 92.5%. As of December 31, 2007, we had outstanding agricultural notes in an aggregate amount of R$1,052 million.

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Uses of Funding

The following table shows our assets at December 31, 2005, 2006 and 2007:

|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           
|------------------------------------------------------------------- |  | ---------------------------------------- |  | ---------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                                                                    |  | As of December 31,                      
|                                                                    |  |                                         
|                                                                    |  | 2005                                     |  | % of total |  | 2006       |  | % of total |  | 2007       |  | % of total
|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           
|Assets                                                              |  | ( in millions of R$, except percentages)
|Cash and due from banks                                             |  | R$ 1,158                                 |  | 1.3%       |  | R$1,304    |  | 1.3%       |  | R$ 4,444   |  | 3.0%      
|Interest-bearing deposits in other banks                            |  | 1,756                                    |  | 2.0        |  | 2,407      |  | 2.4        |  | 3,991      |  | 2.7       
|Federal funds sold and securities purchased under resale agreements |  | 1,541                                    |  | 1.7        |  | 7,928      |  | 7.7        |  | 25,253     |  | 17.0      
|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           
|Cash and cash equivalents                                           |  | 4,455                                    |  | 5.0        |  | 11,639     |  | 11.4       |  | 33,688     |  | 22.7      
|Interest-bearing deposits in other banks                            |  | 3,351                                    |  | 3.7        |  | 5,225      |  | 5.1        |  | 4,601      |  | 3.1       
|Federal funds sold and securities purchased under resale agreements |  | 8,473                                    |  | 9.4        |  | 6,585      |  | 6.4        |  | 5,815      |  | 3.9       
|Central Bank compulsory deposits                                    |  | 5,150                                    |  | 5.7        |  | 5,177      |  | 5.1        |  | 6,683      |  | 4.5       
|Trading assets, at fair value                                       |  | 11,623                                   |  | 12.9       |  | 9,904      |  | 9.7        |  | 12,459     |  | 8.4       
|Securities available for sale, at fair value                        |  | 5,471                                    |  | 6.1        |  | 7,286      |  | 7.1        |  | 11,019     |  | 7.4       
|Securities held to maturity, at cost                                |  | 2,486                                    |  | 2.8        |  | 1,576      |  | 1.5        |  | 1,312      |  | 0.9       
|Loans                                                               |  | 39,237                                   |  | 43.7       |  | 44,654     |  | 43.5       |  | 60,348     |  | 40.6      
|Allowance for loan losses                                           |  | (2,107)                                  |  | (2.3)      |  | (2,577)    |  | (2.5)      |  | (2,712)    |  | (1.8)     
|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           
|Net loans                                                           |  | 37,130                                   |  | 41.3       |  | 42,077     |  | 41.0       |  | 57,636     |  | 38.9      
|Investments in unconsolidated companies                             |  | 623                                      |  | 0.7        |  | 802        |  | 0.8        |  | 905        |  | 0.6       
|Premises and equipment, net                                         |  | 1,422                                    |  | 1.6        |  | 1,435      |  | 1.4        |  | 1,492      |  | 1.0       
|Goodwill                                                            |  | 1,233                                    |  | 1.4        |  | 1,471      |  | 1.4        |  | 1,469      |  | 1.0       
|Intangibles, net                                                    |  | 387                                      |  | 0.4        |  | 672        |  | 0.6        |  | 661        |  | 0.4       
|Other assets                                                        |  | 8,014                                    |  | 8.9        |  | 8,714      |  | 8.5        |  | 10,531     |  | 7.2       
|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           
|Total Assets                                                        |  | R$ 89,818                                |  | 100.0%     |  | R$ 102,563 |  | 100.0%     |  | R$ 148,271 |  | 100.0%    
|                                                                    |  |                                          |  |            |  |            |  |            |  |            |  |           

In accordance with our asset and liability management policy, most of our investments are in loans and securities portfolios, as well as cash and cash equivalents.  At December 31, 2005, our loan portfolio, securities
  portfolio and cash and cash equivalents represented 43.7%, 21.8% and 5.0% of our total assets, respectively, as compared to 43.5%, 18.3% and 11.4%, respectively, at December 31, 2006 and 40.6%, 16.7% and 22.7%, respectively, at December 31, 2007. In
  addition to cash and cash equivalents, we believe that our securities portfolio, which consists principally of Brazilian government securities, is an additional source of liquidity because these securities can be readily converted into cash.

Loans

The following table sets forth our loans, by segment, for 2005, 2006 and 2007:

|                                  |  |                                 |  |           |  |          
|--------------------------------- |  | ------------------------------- |  | --------- |  | ---------
|                                  |  | For the Year ended December 31,
|                                  |  |                                
|                                  |  | 2005                            |  | 2006      |  | 2007     
|                                  |  |                                 |  |           |  |          
|                                  |  | (in millions of Reais)         
|Retail                            |  | 21,669                          |  | 24,643    |  | 37,176   
|Wholesale                         |  | 16,926                          |  | 19,421    |  | 22,600   
|Wealth Management                 |  | 462                             |  | 506       |  | 750      
|Insurance                         |  | 818                             |  | 791       |  | 909      
|Adjustments and Reclassifications |  | (638)                           |  | (707)     |  | (1,087)  
|                                  |  |                                 |  |           |  |          
|Total Loans                       |  | R$ 39,237                       |  | R$ 44,654 |  | R$ 60,348
|                                  |  |                                 |  |           |  |          

Loans are one of our main sources of revenue.

In 2006 our total loans increased 13.8% or R$5,417 million, as compared to 2005. In 2006, we took a more conservative approach to credit concession, due to concern over the deterioration in consumer retail loans.
  However, an increase in our credit card and SMEs loans segments led our retail loans to increase 13.7% or R$2,974 million. In the Wholesale segment, our loans portfolio increased 14.7%, or R$2,495 million, mainly due to improved economic
  conditions. This increase was partially offset by the appreciation of the real, which affected our portfolio of loans indexed to or denominated in foreign currencies.

Our total loans increased by 35.1% or R$15,694 million in 2007 as compared to 2006. This increase demonstrates loan growth acceleration, especially with respect to individuals with lower risk portfolios, such as
  payroll-linked loans and auto financing, in addition to SMEs and credit card loan portfolios. This scenario led our Retail loan segment to increase 50.9% or R$12,533 million. In the Wholesale segment, our loans portfolio increased 16.4% or R$3,179
  million, due to continuous improvement of the Brazilian economic conditions, partially offset by the appreciation of the real, which affected our portfolio of loans indexed to or denominated in foreign currencies.

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Capital Expenditures

The following table sets forth our capital expenditures in 2005, 2006 and 2007:

|                                                |  |                                 |  |          |  |         
|----------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                |  | For the Year ended December 31,
|                                                |  |                                
|                                                |  | 2005                            |  | 2006     |  | 2007    
|                                                |  |                                 |  |          |  |         
|                                                |  | ( in millions of R$)           
|Land and buildings                              |  | R$   105                        |  | R$   9   |  | R$   8  
|Furniture and equipment                         |  | 38                              |  | 72       |  | 48      
|Leasehold improvements                          |  | 63                              |  | 55       |  | 47      
|Data processing                                 |  | 56                              |  | 87       |  | 157     
|Software developed or obtained for internal use |  | 113                             |  | 125      |  | 185     
|Other                                           |  | 20                              |  | 20       |  | -       
|                                                |  |                                 |  |          |  |         
|Total                                           |  | R$   395                        |  | R$   368 |  | R$   445
|                                                |  |                                 |  |          |  |         

In 2006, our capital expenditures decreased 6.8% or R$27 million, largely due a slowing down in the expansion of operations, given our decision to focus on our existing points of sale and stores. This decrease was
  partially offset by an R$34 million increase in capital expenditures for furniture and equipment, due to the continued remodeling of our existing branch network.

In 2007, our capital expenditures increased by 20.9% or R$77 million, due to expenditures related to data processing and software development or procurement of R$70 million and R$60 million, respectively. These
  increases are related to the expansion of our data processing capacity and improvements to our information technology infrastructure to support our businesses expansion.

During the period from 2005 to 2007, we incurred capital expenditures primarily in connection with initiatives designed to increase the efficiency of our operations, the services offered to our customers and our
  productivity.

We anticipate that our capital expenditure in 2008 and 2009, will be related to the expansion of our points of distribution, including branches, corporate-site branches and points of sale within retail partners, as well
  as to revitalize our existing distribution network. The objective of this expenditure is to increase the scale and network distribution of our retail financial products, while continuing to create value for our shareholders.

Changes in Cash Flows

The following table shows the principal variations in our cash flows during each of the three years indicated:

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|                                                     |  |                                 |  |              |  |             
|---------------------------------------------------- |  | ------------------------------- |  | ------------ |  | ------------
|                                                     |  | For the Year Ended December 31,
|                                                     |  |                                
|                                                     |  | 2005                            |  | 2006         |  | 2007        
|                                                     |  |                                 |  |              |  |             
|                                                     |  | ( in millions of R$)           
|Net cash provided by operating activities(1)         |  | R$    3,025                     |  | R$    11,079 |  | R$    5,290 
|Net cash used in investing activities(1)             |  | (20,686)                        |  | (9,369)      |  | (16,111)    
|Net cash provided by financing activities            |  | 6,417                           |  | 5,474        |  | 32,870      
|                                                     |  |                                 |  |              |  |             
|Net increase (decrease) in cash and cash equivalents |  | R$    (11,244)                  |  | R$    7,184  |  | R$    22,049
|                                                     |  |                                 |  |              |  |             

|    |                                                                                                                                                                                                                                   | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1) | The amounts of R$36 for 2005 and R$108 for 2006 were reclassified from investing activities to operating activities, due to reclassification of payroll management and financial resource administration services in these years.

2005

Net cash provided by operating activities

During 2005, our operating activities provided R$3,025 million in net cash, and consisted of:

  R$5,073 million provided by our net income adjusted by non-cash items; and

  R$2,845 million provided by an increase in other liabilities, offset by an increase of R$1,577 million in other assets and an increase of R$3,316 million in trading assets.

Net cash used in investing activities

During 2005, net cash used in investing activities was R$20,686 million, consisting mainly of:

  R$5,669 million used in purchase of securities available for sale, offset by R$3,244 million proceeds from sale of securities available for sale;

  R$8,695 million increase in federal funds sold and securities purchased under resale agreements; and

  R$8,591 million increase in loans.

Net cash provided by financing activities

During 2005, net cash provided by financing activities was R$6,417 million, consisting mainly of:

  R$3,846 million increase in federal funds purchased and securities sold under repurchase agreements;

  R$1,585 million increase in
  deposits; and

  R$1,240 million increase in borrowing under long-term debt arrangements net of repayments, mainly due to R$850 million increase in local onlendings, R$1,066 million increase from a new issuance of subordinated debt, offset by R$168 million
  decrease in euronotes and R$531 million decrease in notes issued under securitization arrangements.

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2006

Net cash provided by operating activities

During 2006, our operating activities provided R$11,079 million in net cash, and consisted of:

  R$5,463 million provided by our net income adjusted by non-cash items; and

  R$4,331 million provided by an increase in other liabilities, a decrease of R$135 million in other assets and a decrease of R$1,150 million in trading assets.

Net cash used in investing activities

During 2006, net cash used in investing activities was R$9,369 million, consisting mainly of:

  R$15,826 million used in purchase of securities available for sale, offset by R$13,637 million proceeds from sale of securities available for sale;

  R$1,557 million decrease in federal funds sold and securities purchased under resale agreements;

  R$1,636 million increase in deposits in other banks; and

  R$6,925 million increase in loans.

Net cash provided by financing activities

During 2006, net cash provided by financing activities was R$5,474 million, consisting mainly of:

  R$5,784 million increase in federal funds purchased and securities sold under repurchase agreements;

  R$148 million increase in
  deposits; and

  R$698 million increase in borrowings under long-term debt arrangements net of repayments, mainly due to R$523 million increase in local onlendings, R$276 million increase from a new issuance of subordinated debt, R$758 million increase in
  mortgage indebtedness, offset by R$493 million decrease in notes issued under securitization arrangements.

2007

Net cash provided by operating activities

During 2007, our operating activities provided R$5,290 million in net cash, and consisted of:

  R$4,811 million provided by our net income adjusted by non-cash items; and

  R$7,680 million provided by an increase in other liabilities, offset by an increase of R$5,184 million in other assets and an increase of R$2,017 million in trading assets.

Net cash used in investing activities

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During 2007, net cash used in investing activities was R$16,111 million, consisting mainly of:

  R$26,132 million used in purchase of securities available for sale, offset by R$22,569 million proceeds from sale of securities available for sale;

  R$802 million decrease in federal funds sold and securities purchased under resale agreements;

  R$804 million decrease in deposits in other banks;

  R$15,087 million increase in loans;

  R$1,489 million increase in Central
  Bank compulsory deposits; and

  R$2,639 million proceeds from sale of unconsolidated companies.

Net cash provided by financing activities

During 2007, net cash provided by financing activities was R$32,870 million, consisting mainly of:

  R$9,918 million increase in federal funds purchased and securities sold under repurchase agreements;

  R$10,661 million increase in
  deposits; and

  R$7,137 million increase in borrowings under long-term debt arrangements net of repayments, mainly due to R$2,075 million increase in local onlendings, R$2,517 million increase from a new issuance of subordinated debt, R$1,982 million
  increase in debentures, R$1,038 million increase in other long term debt, and R$340 million increase in euronotes, offset by R$854 million decrease in mortgage indebtedness and R$23 million decrease in notes issued under securitization arrangements.

Interest Rate Sensitivity

Managing interest rate sensitivity is a key component of our asset and liability management policy. Interest rate sensitivity is determined according to the maturity or repricing characteristics of interest-bearing
  assets and interest-bearing liabilities due to market interest rates. The interest rate sensitivity is offset when an equal amount of these assets or liabilities matures or reprices for that period. Any mismatch of interest-bearing assets and
  interest-bearing liabilities is known as a gap position.  This relationship is as of one particular date only, and significant swings can occur daily as a result of both market forces and management decisions.

Our interest rate sensitivity strategy takes into account:

  the balance between expected rates of return and risk;

  the overall exposure to interest rate risk; and

  the liquidity and capital requirements.

Our management monitors daily maturity mismatches in our positions on a daily basis and manages them within established limits, changing positions promptly as market outlook changes.

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The following tables set forth the repricing periods of our interest-bearing assets and interest-bearing liabilities as of December 31, 2007. The information at that date may not reflect interest rate gap positions at other times and may not
represent the future impact on our results. In addition, variations in interest rate sensitivity may exist within the repricing periods presented due to differing repricing dates within the period. Variations may also arise among the different
currencies in which interest rate positions are held.

|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|-------------------------------- |  | ----------------------- |  | ---------- |  | ----------- |  | ----------- |  | ----------- |  | ---------- |  | ---------- |  | ------------
|                                 |  | As of December 31, 2007
|                                 |  |                         | 
|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|                                 |  | Up to                   |  | 31 -90     |  | 91-180      |  | 181-360     |  | 1 - 3       |  | 3 - 5      |  | over       |  |             
|                                 |  | 30 days                 |  | days       |  | days        |  | days        |  | years       |  | years      |  | 5 years    |  | Total       
|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|                                
|Interest-bearing deposits        |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|in other banks                   |  | R$   2,916              |  | R$   752   |  | R$   1,104  |  | R$   1,842  |  | R$   1,384  |  | R$   594   |  | R$   -     |  | R$   8,592  
|Federal Funds sold and sec       |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|sec pur und resale agreements    |  | 25,578                  |  | 3,659      |  | 1,811       |  | 20          |  | -           |  | -          |  | -          |  | 31,068      
|Central bank compulsory deposits |  | 6,683                   |  | -          |  | -           |  | -           |  | -           |  | -          |  | -          |  | 6,683       
|Trading                          |  | 2,744                   |  | 767        |  | 488         |  | 2,266       |  | 3,501       |  | 1,494      |  | 1,199      |  | 12,459      
|Securities available for sale    |  | 546                     |  | 450        |  | 178         |  | 2,314       |  | 3,068       |  | 1,150      |  | 3,313      |  | 11,019      
|Securities held to maturity      |  | 9                       |  | 43         |  | 98          |  | -           |  | 259         |  | 190        |  | 713        |  | 1,312       
|Loans, net                       |  | 10,217                  |  | 9,864      |  | 7,487       |  | 9,581       |  | 13,287      |  | 4,614      |  | 2,586      |  | 57,636      
|Other Assets                     |  | 58                      |  | -          |  | -           |  | -           |  | -           |  | -          |  | -          |  | 58          
|                                 |  |                         | 
|                                 |  | R$   48,751             |  | R$ 15,535  |  | R$   11,166 |  | R$   16,023 |  | R$   21,499 |  | R$   8,042 |  | R$   7,811 |  | R$   128,827
|                                 |  |                         | 
|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|                                 |  | As of December 31, 2007
|                                 |  |                         | 
|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|                                 |  | Up to                   |  | 31 -90     |  | 91-180      |  | 181-360     |  | 1 - 3       |  | 3 - 5      |  | over       |  |             
|                                 |  | 30 days                 |  | days       |  | days        |  | days        |  | years       |  | years      |  | 5 years    |  | Total       
|                                 |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|                                
|Deposits from banks              |  | R$   1,380              |  | R$   -     |  | R$   -      |  | R$   -      |  | R$   -      |  | R$   -     |  | R$   -     |  | R$   1,380  
|Saving deposits                  |  | 11,224                  |  | -          |  | -           |  | -           |  | -           |  | -          |  | -          |  | 11,224      
|Time deposits                    |  | 1,891                   |  | 1,925      |  | 2,215       |  | 4,376       |  | 12,986      |  | 183        |  | 25         |  | 23,601      
|Federal Funds pur and sec        |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|sold und rep                     |  | 11,557                  |  | 1,943      |  | 2,920       |  | 2,618       |  | 7,180       |  | 977        |  | 2          |  | 27,197      
|Short term borrowings            |  | 1,661                   |  | 1,748      |  | 1,377       |  | 2,382       |  | 365         |  | 76         |  | 18         |  | 7,627       
|Long term debt                   |  | 605                     |  | 1,045      |  | 1,582       |  | 2,575       |  | 6,211       |  | 5,635      |  | 4,061      |  | 21,714      
|                                 |  |                         | 
|                                 |  | R$   28,318             |  | R$   6,661 |  | R$   8,094  |  | R$   11,951 |  | R$   26,742 |  | R$   6,871 |  | R$   4,106 |  | R$   92,743 
|                                 |  |                         | 
|                                
|Asset/liability gap              |  | 20,433                  |  | 8,874      |  | 3,072       |  | 4,072       |  | (5,243)     |  | 1,171      |  | 3,705      |  | 36,084      
|                                
|Cumulative gap                   |  | 20,433                  |  | 29,307     |  | 32,379      |  | 36,451      |  | 31,208      |  | 32,379     |  | 36,084     |  | 36,084      
|                                
|Ratio of cumulative gap to       |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|cumulative total interest        |  |                         |  |            |  |             |  |             |  |             |  |            |  |            |  |             
|earning assets                   |  | 15.9%                   |  | 22.7%      |  | 25.1%       |  | 28.3%       |  | 24.2%       |  | 25.1%      |  | 28.0%      |  |             

Exchange Rate Sensitivity

Most of our operations are denominated in reais.  However, at any given time, we usually have assets, liabilities and derivatives denominated in foreign currencies, principally U.S. dollars.  We enter into
  derivatives contracts, including swaps, futures and options, to manage our overall exposure, as well as to assist our customers with managing their exchange rate exposure. Central Bank regulations limit our maximum foreign currency exposure to 30%
  of our regulatory capital. As of December 31, 2007, our net foreign currency exposure represented 4.5% of our regulatory capital, according to Central Bank regulations. For additional information see Item 5. Operating and Financial Review and
  Prospects  Macroeconomic Factors Affecting Our Financial Condition and Results of Operations Effects of Government Regulation on Our Financial Conditions and Results of Operations  Capital Adequacy.

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As of December 31, 2007, the composition of our assets, liabilities, shareholders equity and derivative financial instruments by currency and term was as shown below. The information below may not reflect our net exposure as of such date
under the Central Banks guidelines, primarily because operations that mature during the following business day are not subject to changes in foreign currency as they are settled with an exchange rate from the previous day. In addition, the
information at that date may not reflect the net exposure at other times and may not represent the future impact on our results:

|                                           |  |                                         |  |                  |  |               |  |           
|------------------------------------------ |  | --------------------------------------- |  | ---------------- |  | ------------- |  | ----------
|                                           |  |                                         |  |                  |  |               |  |           
|                                           |  | As of December 31, 2007                
|                                           |  |                                        
|                                           |  | R$                                      |  | Foreign Currency |  | Total         |  | Percentage
|                                           |  |                                         |  |                  |  |               |  |           
|                                           |  | (in millions of R$, except percentages)
|Assets                                     |  |                                         |  |                  |  |               |  |           
|Cash and due from banks                    |  | R$    2,373                             |  | R$    2,071      |  | R$    4,444   |  | 3.0%      
|Loans, securities and other assets         |  | 118,862                                 |  | 20,983           |  | 139,845       |  | 94.3      
|Less than one year                         |  | 89,131                                  |  | 13,362           |  | 102,493       |  | 69.1      
|From one to three years                    |  | 18,349                                  |  | 3,150            |  | 21,499        |  | 14.5      
|More than three years                      |  | 11,382                                  |  | 4,471            |  | 15,853        |  | 10.7      
|Premises and equipment, net                |  | 1,492                                   |  | -                |  | 1,492         |  | 1.0       
|Investments in unconsolidated companies    |  | 905                                     |  | -                |  | 905           |  | 0.6       
|Goodwill and intangibles, net              |  | 2,130                                   |  | -                |  | 2,130         |  | 1.4       
|Nonperforming loans                        |  | 2,164                                   |  | 3                |  | 2,167         |  | 1.5       
|Allowance for loan losses                  |  | (2,712)                                 |  | -                |  | (2,712)       |  | (1.8)     
|                                           |  |                                         |  |                  |  |               |  |           
|                                          
|Total                                      |  | R$    125,214                           |  | R$    23,057     |  | R$    148,271 |  | 100.0%    
|                                           |  |                                         |  |                  |  |               |  |           
|Percentage of total assets                 |  | 84.4%                                   |  | 15.6%            |  | 100.0%        |  |           
|                                          
|Liabilities and shareholders Equity       |  |                                         |  |                  |  |               |  |           
|Demand Deposits - Non-interest bearing     |  | R$    9,697                             |  | R$    593        |  | R$    10,290  |  | 6.9%      
|Deposits, borrowings and other liabilities |  | 112,184                                 |  | 12,760           |  | 124,944       |  | 84.3      
|Less than one year                         |  | 79,160                                  |  | 8,065            |  | 87,225        |  | 58.8      
|From one to three years                    |  | 24,560                                  |  | 2,182            |  | 26,742        |  | 18.0      
|More than three years                      |  | 8,464                                   |  | 2,513            |  | 10,977        |  | 7.5       
|Shareholders equity                       |  | 13,037                                  |  | -                |  | 13,037        |  | 8.8       
|                                           |  |                                         |  |                  |  |               |  |           
|                                          
|Total                                      |  | R$    134,918                           |  | R$    13,353     |  | R$    148,271 |  | 100.0%    
|                                           |  |                                         |  |                  |  |               |  |           
|Percentage of total liabilities and        |  |                                         |  |                  |  |               |  |           
|shareholders equity                       |  | 91.0%                                   |  | 9.0%             |  | 100.0%        |  |           
|Derivative financial instruments           |  | R$    1,657                             |  | R$    338        |  | R$    1,995   |  |           
|Net exposure                               |  |                                         |  | R$    10,042     |  |               |  |           

5.C Research and Development, Patents and Licences, Etc.

We do not have any significant policies or projects relating to research and development, and we own no patents or licenses.

5.D Trend Information

After a period of economic instability and high inflation, Brazil underwent profound economic and financial changes during the last decade. In 2007, Brazilian macroeconomic indicators remained favorable due to economic
  growth and credit expansion, notwithstanding the uncertainty in respect of the U.S. economy caused by the subprime mortgage crisis and its consequences for the financial sector. Despite the high volatility in the financial markets, Brazilian
  interest rates fell to their lowest levels in history and Brazilian products are moving gradually closer to investment grade. During 2008, both S&P and Fitch upgraded the rating of Brazils long-term external debt to investment grade.  As a
  result, we believe continuing economic growth will offer foreign investors an attractive economic environment with reduced risk for creditors and favorable conditions for credit expansion within Brazil.

In an atmosphere of increased competitiveness with a relentless search for efficiency and products with greater added value, a successful financial institution will need greater volume, economies-of-scale, the best
  quality services, a pioneering spirit and innovation.



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For us, future business development will focus on the expansion of our branch network, further improvements to the composition of our funding, development of our mortgage loan portfolio, cross-selling, a larger client
  base, and an increased offering of retail credit in conjunction with continued growth in income and GDP. In the Wholesale segment, given ever-decreasing spreads, future growth will rely on an increasing number of transactions and new opportunities in the capital markets, such as IPOs.  In the Treasury segment, we intend to continue to manage our balance sheet structure to maximize opportunities for profit and the funding needs of the Commercial Bank. In the
  Wealth Management segment, the strategy is to maintain our focus on products with high added value, such as equity funds and credit assets. In our Insurance and Pension Plans segment, we expect to maintain our leadership position in the insurance
market and to focus on our growth on the private individual and pension plans markets due to the trend away from closed pension fund plans and towards open pension fund plans.

We believe that our constant search for efficiency along with greater volume of revenue will enable us to realize our goals of (i) increased profitability and payouts to our shareholders, (ii) creation of new employment
and (iii) contribution to Brazils development.

5.E. Off-Balance Sheet Arrangements

We and our subsidiaries have entered into several types of off-balance sheet arrangements, including lines and letters of credit, financial guarantees, and certain derivative and hedging transactions (until 2006). We have no
  off-balance sheet entities or off-balance sheet arrangements that we believe are reasonably likely to have a material adverse effect on our liquidity or the availability of, or the requirements for capital resources.

Notional Amounts of our Derivatives

We use derivative financial instruments to manage our overall exposures and to assist our clients in managing their exposure, with respect to market risks and currency exchange rate and interest rate fluctuations. We
  also enter into derivative contracts for trading purposes to take advantage of market opportunities.

The following table presents the notional amount and the credit risk value of derivative positions held for trading purposes at December 31, 2007. For additional information, see Note 27 to our consolidated financial
  statements.

|                                      |  |              |  |            
|------------------------------------- |  | ------------ |  | -----------
|                                      |  | 2007        
|                                      |  |             
|                                     
|                                      |  | Notional     |  | Credit Risk
|                                      |  |              |  |            
|Interest rates:                       |  |              |  |            
|Swap contracts                        |  | R$    19,404 |  | R$    671  
|Future contracts - purchased position |  | 50,298       |  | -          
|Future contracts - sold position      |  | (49,637)     |  | -          
|Forward contracts                     |  | 910          |  | 68         
|Option contracts - purchase option    |  | 145,062      |  | 573        
|Option contracts - sale option        |  | 111,571      |  | -          
|Foreign currency:                     |  |              |  |            
|Swap contracts                        |  | 3,690        |  | 53         
|Future contracts - purchased position |  | 1,215        |  | -          
|Future contracts - sold position      |  | (8,360)      |  | -          
|Forward contracts                     |  | 12,790       |  | 105        
|Option contracts - purchase option    |  | 49,068       |  | 180        
|Option contracts - sale option        |  | 61,104       |  | -          
|Exchange:                             |  |              |  |            
|Forward contracts                     |  | 304          |  | 301        
|Equity securities:                    |  |              |  |            
|Option contracts - purchase option    |  | 1,825        |  | 44         
|Option contracts - sale option        |  | 22           |  | -          

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Non-hedging transactions

Interest rate and currency swaps are contracts in which a series of interest rate cash flows of a single currency or interest or principal payments in two different currencies are exchanged for a contractual period. The
  notional amount represents the basis on which the cash flows are determined. The original maturity on these contracts at December 31, 2007 ranges from two days to twelve years. The risks associated with swaps relate to the potential inability or
  unwillingness of the counterparties to perform according to the contractual terms and the risk associated with changes in market conditions, due to movements in interest rates and the exchange rate of currencies. At December 31, 2007, we had
  liabilities related to interest rate and currency swaps in the amount of R$1,839 million that was classified as Other liabilities.

Interest rate and currency futures and forwards contracts are contracts for the delayed delivery of an instrument at a specified price or yield. The notional amounts represent the face value of the underlying instrument
  for which daily cash settlements of the price movements are made for the future contracts. Maturities of these contracts at December 31, 2007 range from two days to twelve years. The credit risk associated with future and forwards contracts is
  minimized due to daily or monthly cash settlements and by entering into transactions with a select number of high-quality institutions. At December 31, 2007, we had liabilities related to interest rate, currency and exchange forwards in the amount
  of R$770 million that was classified as Other liabilities.

Options are contracts which (i) transfer, modify, or reduce interest rate risk, or (ii) allow us to purchase or sell a currency in exchange for the payment of a premium at inception of the contract. As a purchaser of
  options, we pay a premium and as the writer of options, receive a premium in exchange for bearing the risk of unfavorable movements in future interest rates and market prices for the underlying currency. At December 31, 2007, we had liabilities
  related to interest rate, currency and equity securities options in the amount of R$906 million that was classified as Other liabilities.

Hedging transactions

During 2007, we recognized a cumulative adjustment of R$129 million as a loss in Trading Income, net, with a related income tax effect of R$44 million as a loss to Deferred Tax Expense, to correct for errors
  arising from a misapplication of cash flow hedge accounting in our previously issued consolidated financial statements for years ended December 31, 2005 and 2006. See Note 1 to our consolidated financial statements for further information about the
  adjustment.

This error had no impact on any asset or liability, total net shareholders ́ equity or total net cash flow from operations reported for either prior or current years and does not alter our trends or materially
  impact disclosed financial ratios. There is also no effect on our expected cash flow and risk management policies because the derivatives are still part of our trading portfolio for risk management purposes. In addition, this discontinuance of our
  cash flow hedge accounting does not impact our dividend payments because our dividends are based on our Brazilian GAAP Financial Statements.

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As of January 1, 2007, we discontinued the application of cash flow hedge accounting in our consolidated financial statements.  The discontinuance of cash flow hedge accounting did not impact our compliance with our
internal risk management policies. We continue to use derivative instruments as economic hedges as a part of our risk management strategies.

Financial Guarantees

As part of our lending operations, we enter into various off-balance sheet credit instruments with our customers, which are summarized below:

|                                                     |  |                     |  |           |  |         |  |         |         |         |           |         
|---------------------------------------------------- |  | ------------------- |  | --------- |  | ------- |  | ------- | ------- | ------- | --------- | --------
|                                                     |  | Contractual amounts
|                                                     |  |                    
|                                                     |  | As of December 31, 
|                                                     |  |                    
|                                                     |  |                     |  | Less than |  | 1 to 3  |  | 3 to 5  | After 5 |         | No stated
|                                                    
|                                                     |  | 2007                |  | 1 year    |  | years   |  | years   |         | years   |           | maturity
|                                                     |  |                     |  |           |  |         |  |         |         |         |           |         
|                                                    
|                                                     |  |                     |  |           |  |         |  |         |         |         |           |         
|Co-obligation for credit assignment                  |  | R$    20            |  | R$    3   |  | R$    - |  | R$    - |         | R$    - |           | R$    17
|Guarantees                                           |  | 14,835              |  | 3,785     |  | 2,173   |  | 997     |         | 7,466   |           | 414     
|Standby letters of credit and other letter of credit |  | 222                 |  | 222       |  | -       |  | -       |         | -       |           | -       

Co-obligations for credit assignments are assignments of credit in which we continue to have a co-payment obligation in the event of default by borrower.

Standby letters of credit and guarantees are our conditional commitments to guarantee the performance of a customer to a third party in borrowing arrangements. Other letters of credit are issued to support transactions
  on behalf of customers.

Additionally, at December 31, 2007, we have contractual amounts of R$33,270 million, of unfunded commitments to extend credit for a specified time period to lend to customers who have complied with predetermined
  contractual conditions. These contracts have maturities of less than one year and can be renewed.

The maximum potential credit risk of these contracts is equal to the contractual amounts shown above if the counterparty does not perform under the respective contract. Generally, these contracts expire without being
  drawn upon; therefore, the contractual amounts are not indicative of the actual credit exposure or future cash flow requirements for such commitments. To mitigate credit risk, we may require the counterparty to pledge collateral in the form of cash,
  securities or other assets to support the extension of credit similar to the collateral required for our lending operations.

5.F. Tabular Disclosure of Contractual Obligations

Contractual Obligations

Our contractual obligations as of December 31, 2007 are summarized as follows:

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|                                               |  |                     |  |                    |  |              |  |                        |  |                  
|---------------------------------------------- |  | ------------------- |  | ------------------ |  | ------------ |  | ---------------------- |  | -----------------
|                                               |  |                     |  |                    |  |              |  | Payments due by period
|                                               |  |                     |  |                    |  |              |  |                       
|Contractual obligations(2)                     |  | Total               |  | Less than one year |  | 1 to 3 years |  | 3 to 5 years           |  | More than 5 years
|                                               |  |                    
|                                               |  | (in millions of R$)
|                                               |  |                    
|Time Deposits                                  |  | R$ 23,601           |  | R$ 10,407          |  | R$ 12,986    |  | R$ 183                 |  | R$ 25            
|Euronotes                                      |  | 1,369               |  | 1,129              |  | 238          |  | (4)                    |  | 6                
|Foreign onlendings                             |  | 8                   |  | 2                  |  | 5            |  | 1                      |  | -                
|Local onlending                                |  | 8,610               |  | 2,817              |  | 3,453        |  | 1,600                  |  | 740              
|Mortgage indebtedness (1)                      |  | 418                 |  | 418                |  | -            |  | -                      |  | -                
|Notes issued under securitization arrangements |  | 1,621               |  | 20                 |  | 65           |  | -                      |  | 1,536            
|Debentures                                     |  | 2,747               |  | 416                |  | 1,116        |  | 514                    |  | 701              
|Subordinated Debt                              |  | 5,757               |  | 14                 |  | 1,152        |  | 3,513                  |  | 1,078            
|Agricultural notes                             |  | 1,052               |  | 941                |  | 111          |  | -                      |  | -                
|Obligations under capital leases               |  | 120                 |  | 38                 |  | 71           |  | 11                     |  | -                
|Other                                          |  | 12                  |  | 10                 |  | 2            |  | -                      |  | -                
|Total debt obligations                         |  | R$ 45,315           |  | R$ 16,212          |  | R$ 19,199    |  | R$ 5,818               |  | R$ 4,086         

|_______________
|---------------
|(1)            
|(2)            

Asset and liability management, as well as liquidity and capital resources, are considered at our financial committee monthly meetings. The financial committee discusses and evaluates our liquidity performance in order
  to determine the minimum liquidity level we must maintain, and, if necessary, holds extraordinary meetings to evaluate our liquidity position in response to unexpected macroeconomic changes. The financial committee has pre-approved a contingency
  plan that determines the appropriate procedures in the event of a liquidity crisis.

Additionally, in accordance with our asset and liability management policy, most of our investments are in loans and securities portfolio, as well as cash and cash equivalents. In addition to cash and cash equivalents,
  we believe that our securities portfolio, which consists principally of Brazilian government securities, is also an additional source of liquidity because these securities can be readily converted into cash.

In 2007, R$10,407 million of our time deposits will mature in less than one year and based on our historical experience we expect they will rollover.

For additional information related to contractual obligation see Note 16 to our consolidated financial statements.

Other commitments

We lease many properties under standard real estate leases that can be canceled at our option.  These leases include renewal options and escalation clauses for rent adjustments to reflect changes in price indices.
  Expenses of real estate leases were and R$229 million in 2007.

During 2004, we sold many properties used as branches and subsequently rented them for the purpose of continuing our operations. As of December 31, 2007 the future liabilities for the payment of leases related to
  financing, through 2009, totalized R$1 million.

SELECTED STATISTICAL INFORMATION

The following information is included for analytical purposes and should be read in connection with our U.S. GAAP Financial Statements.

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Average Consolidated Balance Sheet and Interest Rate Data

The table below presents the average consolidated balances for our interest-bearing assets and interest-bearing liabilities, the related interest income and expense amounts and the average yields and rates for each
  period. The average balances were calculated from the month end principal balances together with the related accrued interest balances. see Note 2(b) to our consolidated financial statements.

We have separated certain liabilities into domestic and international currencies. The domestic balances represent liabilities denominated in reaiswhile the international balances represent liabilities
  denominated in currencies other than reais, primarily the U.S. dollar. We did not separate asset balances into domestic and international currencies, as substantially all of our assets are denominated in reais.

All nonperforming loans are also nonaccrual loans and they have been excluded from Loans in the average balance and included as non-interest-earning assets.

The accrual of interest on Brazilian financial assets and liabilities typically includes nominal interest rates and a monetary correction component. Such monetary correction may be related to an inflation index, changes
  in foreign exchange rates (usually U.S. Dollar) or other floating interest rate. The interest rate and monetary correction are applied at the end of each month to the principal balance of each operation. The updated value becomes the new basis for
  the accrual of the next months interest and monetary correction, and so forth, until settled. As a result, it is not practical (and it would not reflect the actual return on our investments) to segregate only the interest rate component for
  purposes of showing our average consolidated balance sheet and interest rate data. On the other hand, for prospective financial information, we have only considered the interest rate component, as we cannot predict the effects of monetary correction
  up to the maturity date.

Brazilian tax law does not currently provide income tax exemptions for interest earned on any investment securities. Therefore, interest income has not been presented on a tax-equivalent basis. Additionally, fees
  received for loans are included in interest income on loans. We do not consider these amounts to be significant.

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|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|-------------------------------------------------------------------------------- |  | --------------------------------------- |  | ------------ |  | ---------- |  | ------------ |  | ------------ |  | ---------- |  | ------------- |  | ------------ |  | ----------
|                                                                                 |  | As of December 31,                     
|                                                                                 |  |                                        
|                                                                                 |  | 2005                                    |  | 2006         |  |            |  | 2007         |  |             
|                                                                                 |  |                                         |  |              |  |           
|                                                                                 |  | Average                                 |  |              |  | Average    |  | Average      |  |              |  | Average    |  | Average       |  |              |  | Average   
|                                                                                 |  | balance                                 |  | Interest     |  | yield/rate |  | balance      |  | Interest     |  | yield/rate |  | balance       |  | Interest     |  | yield/rate
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|                                                                                 |  | (in millions of R$, except percentages)
|Interest-bearing assets:                                                         |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Interesting bearing deposits in other banks                                      |  | R$    3,879                             |  | R$    436    |  | 11.2%      |  | R$    5,812  |  | R$    644    |  | 11.1%      |  | R$    7,334   |  | R$    1,039  |  | 14.2%     
|Federal funds sold and securities purchased 
            under resale agreements |  | 10,549                                  |  | 2,069        |  | 19.6       |  | 13,152       |  | 1,809        |  | 13.8       |  | 20,569        |  | 2,184        |  | 10.6      
|Central Bank compulsory deposits                                                 |  | 3,826                                   |  | 569          |  | 14.9       |  | 4,012        |  | 486          |  | 12.1       |  | 4,453         |  | 425          |  | 9.5       
|Trading assets                                                                   |  | 8,658                                   |  | 1,176        |  | 13.6       |  | 11,401       |  | 2,295        |  | 20.1       |  | 10,045        |  | 983          |  | 9.8       
|Securities available for sale (1)                                                |  | 3,511                                   |  | 1,128        |  | 32.1       |  | 6,790        |  | 898          |  | 13.2       |  | 11,236        |  | 1,644        |  | 14.6      
|Securities held to maturity                                                      |  | 3,267                                   |  | 386          |  | 11.8       |  | 2,534        |  | 229          |  | 9.0        |  | 2,256         |  | 201          |  | 8.9       
|Loans                                                                            |  | 33,310                                  |  | 9,354        |  | 28.1       |  | 39,245       |  | 10,105       |  | 25.7       |  | 48,883        |  | 9,765        |  | 20.0      
|Other interest-bearing assets                                                    |  | 49                                      |  | 4            |  | 8.2        |  | 52           |  | 4            |  | 7.7        |  | 56            |  | 3            |  | 5.4       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total interest-bearing assets                                                    |  | 67,049                                  |  | 15,122       |  | 22.6       |  | 82,998       |  | 16,470       |  | 19.8       |  | 104,832       |  | 16,244       |  | 15.5      
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Non-interest-bearning assets:                                                    |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Cash and due from banks                                                          |  | 1,458                                   |  |              |  |            |  | 1,863        |  |              |  |            |  | 2,331         |  |              |  |           
|Central Bank compulsory deposits                                                 |  | 1,162                                   |  |              |  |            |  | 1,192        |  |              |  |            |  | 1,031         |  |              |  |           
|Nonperforming loans                                                              |  | 1,382                                   |  |              |  |            |  | 2,012        |  |              |  |            |  | 2,192         |  |              |  |           
|Allowance for loan losses                                                        |  | (1,753)                                 |  |              |  |            |  | (2,295)      |  |              |  |            |  | (2,514)       |  |              |  |           
|Investments in unconsolidated companies                                          |  | 626                                     |  |              |  |            |  | 693          |  |              |  |            |  | 881           |  |              |  |           
|Premises and equipment                                                           |  | 1,390                                   |  |              |  |            |  | 1,410        |  |              |  |            |  | 1,456         |  |              |  |           
|Goodwill and intangibles                                                         |  | 1,632                                   |  |              |  |            |  | 2,307        |  |              |  |            |  | 2,318         |  |              |  |           
|Other assets                                                                     |  | 7,682                                   |  |              |  |            |  | 9,122        |  |              |  |            |  | 9,617         |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total non-interest bearing assets                                                |  | 13,579                                  |  |              |  |            |  | 16,304       |  |              |  |            |  | 17,312        |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total assets                                                                     |  | R$    80,628                            |  | R$    15,122 |  | 18.8%      |  | R$    99,302 |  | R$    16,470 |  | 16.6%      |  | R$    122,144 |  | R$    16,244 |  | 13.3%     
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|                                                                                
|Interest-bearing liabilities                                                     |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Time deposits:                                                                   |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | R$    24,502                            |  | R$    4,177  |  | 17.0%      |  | R$    25,983 |  | R$    3,567  |  | 13.7%      |  | R$    20,430  |  | R$    2,230  |  | 10.9%     
|International                                                                    |  | 856                                     |  | 43           |  | 5.0        |  | 1,209        |  | 99           |  | 8.2        |  | 1,436         |  | 123          |  | 8.6       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 25,358                                  |  | 4,220        |  | 16.6       |  | 27,192       |  | 3,666        |  | 13.5       |  | 21,866        |  | 2,353        |  | 10.8      
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Savings deposits:                                                                |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | 5,658                                   |  | 415          |  | 7.3        |  | 5,535        |  | 345          |  | 6.2        |  | 8,374         |  | 393          |  | 4.7       
|International                                                                    |  | 472                                     |  | 1            |  | 0.2        |  | 461          |  | 1            |  | 0.2        |  | 466           |  | 1            |  | 0.2       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 6,130                                   |  | 416          |  | 6.8        |  | 5,996        |  | 346          |  | 5.8        |  | 8,840         |  | 394          |  | 4.5       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Deposits from banks:                                                             |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | 72                                      |  | 14           |  | 19.4       |  | 175          |  | 40           |  | 22.9       |  | 800           |  | 81           |  | 10.1      
|International                                                                    |  | 43                                      |  | 5            |  | 11.6       |  | 7            |  | 1            |  | 14.3       |  | 10            |  | -            |  | -         
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 115                                     |  | 19           |  | 16.5       |  | 182          |  | 41           |  | 22.5       |  | 810           |  | 81           |  | 10.0      
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Federal funds purchased and securities                                           |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|sold under repurchase agreements                                                 |  | 7,194                                   |  | 1,037        |  | 14.4       |  | 14,459       |  | 1,714        |  | 11.9       |  | 23,272        |  | 2,358        |  | 10.1      
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Short-term borrowings:                                                           |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | 17                                      |  | 3            |  | 17.6       |  | 1,084        |  | (94)         |  | (8.7)      |  | 1,266         |  | (44)         |  | (3.5)     
|International                                                                    |  | 2,669                                   |  | (119)        |  | (4.5)      |  | 290          |  | 103          |  | 35.5       |  | 3,609         |  | 196          |  | 5.4       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 2,686                                   |  | (116)        |  | (4.3)      |  | 1,374        |  | 9            |  | 0.7        |  | 4,875         |  | 152          |  | 3.1       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Long-term debt:                                                                  |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | 6,138                                   |  | 418          |  | 6.8        |  | 9,795        |  | 606          |  | 6.2        |  | 13,100        |  | 98           |  | 0.7       
|International                                                                    |  | 5,597                                   |  | 551          |  | 9.8        |  | 4,472        |  | 513          |  | 11.5       |  | 3,772         |  | 307          |  | 8.1       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 11,735                                  |  | 969          |  | 8.3        |  | 14,267       |  | 1,119        |  | 7.8        |  | 16,872        |  | 405          |  | 2.4       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total interest-bearing liabilities                                               |  | 53,218                                  |  | 6,545        |  | 12.3       |  | 63,470       |  | 6,895        |  | 10.9       |  | 76,535        |  | 5,743        |  | 7.5       
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Non-interest-bearing liabilities:                                                |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Demand deposits:                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Domestic                                                                         |  | 2,982                                   |  |              |  |            |  | 3,493        |  |              |  |            |  | 3,832         |  |              |  |           
|International                                                                    |  | 504                                     |  |              |  |            |  | 702          |  |              |  |            |  | 585           |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total                                                                            |  | 3,486                                   |  |              |  |            |  | 4,195        |  |              |  |            |  | 4,417         |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Other non-interest- bearing liabilities                                          |  | 14,901                                  |  |              |  |            |  | 21,636       |  |              |  |            |  | 29,159        |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total non-interest-bearing liabilities                                           |  | 18,387                                  |  |              |  |            |  | 25,831       |  |              |  |            |  | 33,576        |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total liabilities                                                                |  | 71,605                                  |  | 6,545        |  | 9.1%       |  | 89,301       |  | 6,895        |  | 7.7%       |  | 110,111       |  | 5,743        |  | 5.2%      
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Shareholders' equity                                                             |  | 9,023                                   |  |              |  |            |  | 10,001       |  |              |  |            |  | 12,033        |  |              |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           
|Total liabilities and shareholders' equity                                       |  | R$    80,628                            |  | R$    6,545  |  |            |  | R$    99,302 |  | R$    6,895  |  |            |  | R$    122,144 |  | R$    5,743  |  |           
|                                                                                 |  |                                         |  |              |  |            |  |              |  |              |  |            |  |               |  |              |  |           

|________________
|----------------
|(1)             



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Changes in Interest Income and Expenses  Volume and Rate Analysis

The following table shows the allocation of the changes in our interest income and expense between average volume and changes in the average yields/rates for 2006 compared to 2005 and for 2007 compared to 2006. Volume
  and rate variances have been calculated based on movements of average balances over the period and changes in average interest yield/rates on interest-bearing assets and interest-bearing liabilities. The net change attributable to changes in both
  volume and rate has been allocated to the change due to volume and the change due to rate on a proportional basis.

|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|------------------------------------------- |  | --------------------- |  | --------------------- |  | ----------- |  | ----------- |  | ------------- |  | -------------
|                                            |  | 2006/2005             |  | 2007/2006            
|                                            |  |                       |  |                      
|                                            |  | Increase / (decrease) |  | Increase / (decrease)
|                                            |  | due to changes in:    |  | due to changes in:   
|                                            |  |                       |  |                      
|                                            |  | Volume                |  | yield/rate            |  | Net change  |  | Volume      |  | yield/rate    |  | Net change   
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|                                            |  | (in millions of R$)  
|Interest-bearing assets:                    |  |                       |  |                       |  |             |  |             |  |               |  |              
|Interest-bearing deposits in other banks    |  | R$    214             |  | R$    (6)             |  | R$    208   |  | R$    191   |  | R$    204     |  | R$    395    
|Federal funds sold and securities purchased |  |                       |  |                       |  |             |  |             |  |               |  |              
|under resale agreement                      |  | 442                   |  | (702)                 |  | (260)       |  | 855         |  | (480)         |  | 375          
|Central Bank compulsory deposits            |  | 27                    |  | (110)                 |  | (83)        |  | 50          |  | (111)         |  | (61)         
|Trading assets                              |  | 444                   |  | 675                   |  | 1,119       |  | (247)       |  | (1,065)       |  | (1,312)      
|Securities available for sale               |  | 673                   |  | (903)                 |  | (230)       |  | 642         |  | 104           |  | 746          
|Securities held to maturity                 |  | (77)                  |  | (80)                  |  | (157)       |  | (25)        |  | (3)           |  | (28)         
|Loans                                       |  | 1,572                 |  | (821)                 |  | 751         |  | 2,191       |  | (2,531)       |  | (340)        
|Other interest-bearing assets               |  | -                     |  | -                     |  | -           |  | -           |  | (1)           |  | (1)          
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total interest-bearing assets               |  | R$    3,266           |  | R$    (1,918)         |  | R$    1,348 |  | R$    3,815 |  | R$    (4,041) |  | R$    (226)  
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|                                           
|Interest-bearing liabilities:               |  |                       |  |                       |  |             |  |             |  |               |  |              
|Time deposits:                              |  |                       |  |                       |  |             |  |             |  |               |  |              
|Domestic                                    |  | R$    240             |  | R$    (850)           |  | R$    (610) |  | R$    (683) |  | R$    (655)   |  | R$    (1,338)
|International                               |  | 22                    |  | 34                    |  | 56          |  | 19          |  | 5             |  | 24           
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total                                       |  | 260                   |  | (814)                 |  | (554)       |  | (647)       |  | (666)         |  | (1,313)      
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Savings deposits:                           |  |                       |  |                       |  |             |  |             |  |               |  |              
|Domestic                                    |  | (9)                   |  | (61)                  |  | (70)        |  | 147         |  | (100)         |  | 47           
|International                               |  | -                     |  | -                     |  | -           |  | -           |  | -             |  | -            
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total                                       |  | (9)                   |  | (61)                  |  | (70)        |  | 139         |  | (91)          |  | 48           
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Deposits from banks:                        |  |                       |  |                       |  |             |  |             |  |               |  |              
|Domestic                                    |  | 23                    |  | 3                     |  | 26          |  | 74          |  | (33)          |  | 41           
|International                               |  | (5)                   |  | 1                     |  | (4)         |  | -           |  | (1)           |  | (1)          
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total                                       |  | 18                    |  | 4                     |  | 22          |  | 49          |  | (9)           |  | 40           
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Federal funds purchased and securities sold |  |                       |  |                       |  |             |  |             |  |               |  |              
|under repurchase agreements                 |  | 889                   |  | (212)                 |  | 677         |  | 922         |  | (278)         |  | 644          
|Short-term borrowings:                      |  |                       |  |                       |  |             |  |             |  |               |  |              
|Domestic                                    |  | (87)                  |  | (10)                  |  | (97)        |  | (14)        |  | 65            |  | 51           
|International                               |  | 20                    |  | 202                   |  | 222         |  | 249         |  | (157)         |  | 92           
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total                                       |  | 27                    |  | 98                    |  | 125         |  | 58          |  | 85            |  | 143          
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Long-term debt:                             |  |                       |  |                       |  |             |  |             |  |               |  |              
|Domestic                                    |  | 229                   |  | (41)                  |  | 188         |  | 154         |  | (662)         |  | (508)        
|International                               |  | (121)                 |  | 83                    |  | (38)        |  | (72)        |  | (134)         |  | (206)        
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total                                       |  | 109                   |  | 41                    |  | 150         |  | 174         |  | (888)         |  | (714)        
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              
|Total interest-bearing liabilities          |  | R$    1,169           |  | R$    (819)           |  | R$    350   |  | R$    1,244 |  | R$    (2,396) |  | R$    (1,152)
|                                            |  |                       |  |                       |  |             |  |             |  |               |  |              



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Net Interest Margin and Spread

The following table shows our average interest-bearing assets, average interest-bearing liabilities, net interest income and the comparative net interest margin and net interest spread for 2005, 2006 and 2007.

|                                                       |  |                                         |  |             |  |             
|------------------------------------------------------ |  | --------------------------------------- |  | ----------- |  | ------------
|                                                       |  | For the Year Ended December 31,        
|                                                       |  |                                        
|                                                       |  | 2005                                    |  | 2006        |  | 2007        
|                                                       |  |                                         |  |             |  |             
|                                                       |  | (in millions of R$, except percentages)
|                                                      
|Total average interest-bearing assets                  |  | R$   67,049                             |  | R$   82,998 |  | R$   104,832
|Total average interest - bearing liabilities           |  | 53,218                                  |  | 63,470      |  | 76,535      
|Net interest income (1)                                |  | R$   8,577                              |  | R$   9,575  |  | R$   10,501 
|Average yield on average interest - bearing assets     |  | 22.6%                                   |  | 19.8%       |  | 15.5%       
|Average rate on average interest - bearing liabilities |  | 12.3                                    |  | 10.9        |  | 7.5         
|Net interest spread (2)                                |  | 10.3                                    |  | 8.9         |  | 8.0         
|Net interest margin (3)                                |  | 12.8%                                   |  | 11.5%       |  | 10.0%       

|_______________
|---------------
|(1)            
|(2)            
|(3)            

Returns on Equity and Assets

The following table shows certain of our financial data for the periods indicated:

|                                                                     |  |                                         |  |             |  |            
|-------------------------------------------------------------------- |  | --------------------------------------- |  | ----------- |  | -----------
|                                                                     |  | For the Year Ended December 31,        
|                                                                     |  |                                        
|                                                                     |  | 2005                                    |  | 2006        |  | 2007       
|                                                                     |  |                                         |  |             |  |            
|                                                                     |  | (in millions of R$, except percentages)
|                                                                    
|Net income                                                           |  | R$   1,650                              |  | R$   1,951  |  | R$   3,560 
|Average total assets                                                 |  | 80,628                                  |  | 99,302      |  | 122,144    
|Average shareholders' equity                                         |  | R$   9,023                              |  | R$   10,001 |  | R$   12,033
|Net income as a percentage of average total assets                   |  | 2.0%                                    |  | 2.0%        |  | 2.9%       
|Net income as a percentage of average shareholders' equity           |  | 18.3                                    |  | 19.5        |  | 29.6       
|Dividends payout ratio common and preferred (1)                      |  | 44.0                                    |  | 45.6        |  | 37.9       
|Average shareholders ́ equity as a percentage of average total assets |  | 11.2%                                   |  | 10.1%       |  | 9.9%       

|_______________
|---------------
|(1)            

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Table of Contents

Securities Portfolio

General

The following table shows our portfolio of trading assets, securities available for sale and securities held to maturity as of December 31, 2005, 2006 and 2007. The amounts exclude our investments in unconsolidated
  companies. See Note 11 to our consolidated financial statements. According to U.S. GAAP, trading assets and securities available for sale are stated at fair value and securities held to maturity are stated at amortized cost. See Notes 2(d), 2(e),
  2(f), 6, 7, 8 and 27 to our consolidated financial statements.

|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|--------------------------------------------------------------------------- |  | --------------------------------------- |  | ------ |  | ---------- |  | ------ |  | ----------- |  | ------
|                                                                            |  | As of December 31,                     
|                                                                            |  |                                        
|                                                                            |  |                                         |  | % of   |  |            |  | % of   |  |             |  | % of  
|                                                                            |  | 2005                                    |  | total  |  | 2006       |  | total  |  | 2007        |  | total 
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|                                                                            |  | (in millions of R$, except percentages)
|Trading Assets:                                                             |  |                                         |  |        |  |            |  |        |  |             |  |       
|Federal government securities                                               |  | R$   9,465                              |  | 81.5%  |  | R$   6,948 |  | 70.1%  |  | R$   6,331  |  | 50.9% 
|Brazilian sovereign bonds (2)                                               |  | 79                                      |  | 0.7    |  | 594        |  | 6.0    |  | 146         |  | 1.2   
|Securities of foreign governments                                           |  | 236                                     |  | 2.0    |  | 389        |  | 3.9    |  | 1,758       |  | 14.1  
|Corporate debt securities                                                   |  | 396                                     |  | 3.4    |  | 363        |  | 3.7    |  | 453         |  | 3.6   
|Bank debt securities                                                        |  | 107                                     |  | 0.9    |  | 97         |  | 1.0    |  | 28          |  | 0.2   
|Mutual funds (1)                                                            |  | 398                                     |  | 3.4    |  | 514        |  | 5.2    |  | 629         |  | 5.0   
|Shares                                                                      |  | 97                                      |  | 0.8    |  | 229        |  | 2.3    |  | 1,119       |  | 9.0   
|Derivative financial instruments                                            |  | 845                                     |  | 7.3    |  | 770        |  | 7.8    |  | 1,995       |  | 16.0  
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Total                                                                       |  | R$   11,623                             |  | 100.0% |  | R$   9,904 |  | 100.0% |  | R$   12,459 |  | 100.0%
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Trading assets as a percentage of Total 
             assets                |  | 12.9%                                   |  |        |  | 9.7%       |  |        |  | 8.4%        |  |       
|Securities Available For Sale:                                              |  |                                         |  |        |  |            |  |        |  |             |  |       
|Federal government securities                                               |  | R$   489                                |  | 8.9%   |  | 2,716      |  | 37.3%  |  | R$ 4,798    |  | 43.6% 
|Brazilian sovereign bonds (2)                                               |  | 2,374                                   |  | 43.4   |  | 2,162      |  | 29.7   |  | 1,763       |  | 16.0  
|Securities of foreign governments                                           |  | -                                       |  | -      |  | 272        |  | 3.7    |  | 1,486       |  | 13.5  
|Corporate debt securities                                                   |  | 2,230                                   |  | 40.8   |  | 1,869      |  | 25.6   |  | 2,349       |  | 21.3  
|Bank debt securities                                                        |  | 283                                     |  | 5.2    |  | 121        |  | 1.7    |  | 167         |  | 1.5   
|Shares                                                                      |  | 92                                      |  | 1.7    |  | 140        |  | 1.9    |  | 451         |  | 4.1   
|Mutual funds (1)                                                            |  | 3                                       |  | -      |  | 6          |  | 0.1    |  | 5           |  | -     
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Total                                                                       |  | R$   5,471                              |  | 100.0% |  | R$   7,286 |  | 100.0% |  | R$   11,019 |  | 100.0%
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Securities available for sale as 
             a percentage of total assets |  | 6.1%                                    |  |        |  | 7.1%       |  |        |  | 7.4%        |  |       
|Securities held to maturity:                                                |  |                                         |  |        |  |            |  |        |  |             |  |       
|Federal government securities                                               |  | R$   1,091                              |  | 43.9%  |  | R$   469   |  | 29.8%  |  | R$   506    |  | 38.6% 
|Brazilian sovereign bonds (2)                                               |  | 1,240                                   |  | 49.8   |  | 993        |  | 63.0   |  | 783         |  | 59.7  
|Corporate debt securities                                                   |  | 74                                      |  | 3.0    |  | 57         |  | 3.6    |  | 5           |  | 0.4   
|Bank debt securities                                                        |  | 81                                      |  | 3.3    |  | 57         |  | 3.6    |  | 18          |  | 1.3   
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Total                                                                       |  | R$   2,486                              |  | 100.0% |  | R$   1,576 |  | 100.0% |  | R$   1,312  |  | 100.0%
|                                                                            |  |                                         |  |        |  |            |  |        |  |             |  |       
|Securities held to maturity as 
             a percentage of total assets   |  | 2.8%                                    |  |        |  | 1.5%       |  |        |  | 0.9%        |  |       

|_______________
|---------------
|(1)            
|(2)            

At December 31, 2005, 2006 and 2007 we held no securities of a single issuer or related group of companies whose the aggregate book value and market value exceeded 10% of our shareholders equity, except for the
  R$14,738 million, R$13,882 million and R$14,327 million of investment in Brazilian government securities and Brazilian sovereign bonds representing 154.6%, 133.0% and 109.9% of our shareholders equity, respectively.

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Table of Contents

Maturity Distribution

The following table shows the maturity distribution and average yields as of December 31, 2007 for our trading assets, securities available for sale and securities held to maturity. Brazilian tax law does not currently
  provide income tax exemptions for interest earned on any investment securities. Therefore interest income has not been presented on a tax-equivalent basis.

|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|--------------------------------- |  | --------------------------------------- |  | ---------------- |  | ------------------- |  | ------------------ |  | ---------- |  | ----- |  | ---------- |  | ----- |  | ----------- |  | -----
|                                  |  | As of December 31, 2007                
|                                  |  |                                        
|                                  |  | Due in between 1 year                   |  | Due in between 1 |  | Due in between 5 to |  | Due after 10 years |  | Total     
|                                  |  | or less                                 |  | and 5 years      |  | 10 years            |  |                    |  |           
|                                  |  |                                         |  |                  |  |                     |  |                    |  |           
|                                  |  |                                         |  | Yield            |  |                     |  | Yield              |  |            |  | Yield |  |            |  | Yield |  |             |  | Yield
|                                  |  | R$                                      |  | % (3)            |  | R$                  |  | % (3)              |  | R$         |  | % (3) |  | R$         |  | % (3) |  | R$          |  | % (3)
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|                                  |  | (in millions of R$, except percentages)
|Trading Assets:                   |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Federal government securities     |  | R$   6,331                              |  | 10.1%            |  | R$   -              |  | 0.0%               |  | R$   -     |  | 0.0%  |  | R$   -     |  | 0.0%  |  | R$   6,331  |  | 10.1%
|Brazilian sovereign bonds         |  | 146                                     |  | 10.1             |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 146         |  | 10.1 
|Securities of foreign governments |  | 1,758                                   |  | 14.4             |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 1,758       |  | 14.4 
|Corporate debt securities         |  | 453                                     |  | 7.3              |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 453         |  | 7.3  
|Bank debt securities              |  | 28                                      |  | 7.6              |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 28          |  | 7.6  
|Mutual funds (1)                  |  | 629                                     |  | -                |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 629         |  | -    
|Shares                            |  | 1,119                                   |  | -                |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 1,119       |  | -    
|Derivative financial instruments  |  | 1,050                                   |  | -                |  | 818                 |  | -                  |  | 117        |  | -     |  | 10         |  | -     |  | 1,995       |  | -    
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Total (3)                         |  | R$   11,514                             |  | 10.9%            |  | R$   818            |  | 0.0%               |  | R$   117   |  | 0.0%  |  | R$   10    |  | 0.0%  |  | R$   12,459 |  | 10.9%
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Securities Available for Sale:(2) |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Federal government securities     |  | R$   1,173                              |  | 11.0%            |  | R$   2,877          |  | 11.0%              |  | R$   427   |  | 8.7%  |  | R$   321   |  | 7.4%  |  | R$   4,798  |  | 10.5%
|Brazilian sovereign bonds         |  | 35                                      |  | 11.5             |  | 98                  |  | 10.8               |  | 341        |  | 8.9   |  | 1,289      |  | 10.3  |  | 1,763       |  | 10.1 
|Securities of foreign governments |  | 1,486                                   |  | 8.8              |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 1,486       |  | 8.8  
|Corporate debt securities         |  | 241                                     |  | 6.9              |  | 1,227               |  | 10.6               |  | 671        |  | 11.1  |  | 210        |  | 10.1  |  | 2,349       |  | 10.3 
|Bank debt securities              |  | 97                                      |  | 4.9              |  | 16                  |  | 7.2                |  | 54         |  | 9.5   |  | -          |  | -     |  | 167         |  | 6.6  
|Shares                            |  | 451                                     |  | -                |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 451         |  | -    
|Mutual funds (1)                  |  | 5                                       |  | -                |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 5           |  | -    
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Total (3)                         |  | R$   3,488                              |  | 9.4%             |  | R$   4,218          |  | 10.9%              |  | R$   1,493 |  | 9.9%  |  | R$   1,820 |  | 9.8%  |  | R$   11,019 |  | 10.1%
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Securities held to maturity:      |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Federal government securities     |  | R$   -                                  |  | 0.0%             |  | R$   -              |  | 0.0%               |  | R$   -     |  | 0.0%  |  | R$   506   |  | 9.1%  |  | R$   506    |  | 9.1% 
|Brazilian sovereign bonds         |  | 128                                     |  | 10.2             |  | 448                 |  | 11.2               |  | 92         |  | 10.3  |  | 115        |  | 12.8  |  | 783         |  | 11.1 
|Corporate debt securities         |  | 5                                       |  | 13.0             |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 5           |  | 13.0 
|Bank debt securities              |  | 18                                      |  | 5.8              |  | -                   |  | -                  |  | -          |  | -     |  | -          |  | -     |  | 18          |  | 5.8  
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      
|Total (3)                         |  | R$   151                                |  | 9.8%             |  | R$   448            |  | 11.2%              |  | R$   92    |  | 10.3% |  | R$   621   |  | 9.8%  |  | R$   1,312  |  | 10.3%
|                                  |  |                                         |  |                  |  |                     |  |                    |  |            |  |       |  |            |  |       |  |             |  |      

|_______________
|---------------
|(1)            
|(2)            
|(3)            

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Table of Contents

The following table presents our trading assets, securities available for sale and securities held to maturity by currency as of December 31, 2005, 2006 and 2007.

|                                    |  |                     |  |                                       |  |                             |  |            
|----------------------------------- |  | ------------------- |  | ------------------------------------- |  | --------------------------- |  | -----------
|                                    |  | At fair value       |  | At amortized cost                     |  |                            
|                                    |  |                     |  |                                       |  |                            
|                                    |  | Trading assets      |  | Securities 
       available for sale |  | Securities held to maturity |  | Total      
|                                    |  |                     |  |                                       |  |                             |  |            
|                                    |  | (in millions of R$)
|As of December 31, 2005             |  |                     |  |                                       |  |                             |  |            
|Brazilian currency (reais)          |  | R$   10,961         |  | R$   1,604                            |  | R$   1,805                  |  | R$   14,370
|Indexed by foreing currency (1)     |  | 67                  |  | -                                     |  | 520                         |  | 587        
|Denominated in foreign currency (1) |  | 595                 |  | 3,867                                 |  | 161                         |  | 4,623      
|                                    |  |                     |  |                                       |  |                             |  |            
|Total                               |  | R$   11,623         |  | R$   5,471                            |  | R$   2,486                  |  | R$   19,580
|                                    |  |                     |  |                                       |  |                             |  |            
|                                   
|As of December 31, 2006             |  |                     |  |                                       |  |                             |  |            
|Brazilian currency (reais)          |  | R$   8,739          |  | R$   4,849                            |  | R$   467                    |  | R$   14,055
|Indexed by foreing currency (1)     |  | -                   |  | -                                     |  | -                           |  | -          
|Denominated in foreign currency (1) |  | 1,165               |  | 2,437                                 |  | 1,109                       |  | 4,711      
|                                    |  |                     |  |                                       |  |                             |  |            
|Total                               |  | R$   9,904          |  | R$   7,286                            |  | R$   1,576                  |  | R$   18,766
|                                    |  |                     |  |                                       |  |                             |  |            
|                                   
|As of December 31, 2007             |  |                     |  |                                       |  |                             |  |            
|Brazilian currency (reais)          |  | R$   11,554         |  | R$   9,413                            |  | R$   506                    |  | R$   21,473
|Indexed by foreing currency (1)     |  | -                   |  | -                                     |  | -                           |  | -          
|Denominated in foreign currency (1) |  | 905                 |  | 1,606                                 |  | 806                         |  | 3,317      
|                                    |  |                     |  |                                       |  |                             |  |            
|Total                               |  | R$   12,459         |  | R$   11,019                           |  | R$   1,312                  |  | R$   24,790
|                                    |  |                     |  |                                       |  |                             |  |            

|_______________
|---------------
|(1)            

Central Bank Compulsory Deposits

We are required to maintain certain deposits with the Central Bank. The following shows the amounts of these deposits at December 31, 2005, 2006 and 2007.

|                     |  |                                         |  |            |  |             |  |            |  |             |  |           
|-------------------- |  | --------------------------------------- |  | ---------- |  | ----------- |  | ---------- |  | ----------- |  | ----------
|                     |  | As of December 31,                     
|                     |  |                                        
|                     |  | 2005                                    |  | 2006       |  | 2007       
|                     |  |                                         |  |            |  |            
|                     |  |                                         |  | % of total |  |             |  | % of total |  |             |  | % of total
|                     |  |                                         |  | compulsory |  |             |  | compulsory |  |             |  | compulsory
|                     |  | R$                                      |  | deposits   |  | R$          |  | deposits   |  | R$          |  | deposits  
|                     |  |                                         |  |            |  |             |  |            |  |             |  |           
|                     |  | (in millions of R$, except percentages)
|                    
|Type of deposits:    |  |                                         |  |            |  |             |  |            |  |             |  |           
|Non-interest-earning |  | R$    1,087                             |  | 21.1%      |  | R$    987   |  | 19.1%      |  | R$    1,100 |  | 16.5%     
|Interest-earning     |  | 4,063                                   |  | 78.9       |  | 4,190       |  | 80.9       |  | 5,583       |  | 83.5      
|                     |  |                                         |  |            |  |             |  |            |  |             |  |           
|Total                |  | R$    5,150                             |  | 100.0%     |  | R$    5,177 |  | 100.0%     |  | R$    6,683 |  | 100.0%    
|                     |  |                                         |  |            |  |             |  |            |  |             |  |           

At December 31, 2006 and 2007 we had also R$3,161 and R$4,260 of federal government securities, linked to the Central Bank in the form of compulsory deposits, recorded as trading assets in the amount of
  R$1,264 in 2007 (note 6), and securities available for sale in the amount of R$27 in 2006 and R$1,880 in 2007 (note 7), and federal funds sold and securities purchased under resale agreements in the amount of R$3,134 in 2006 and
  R$1,116 in 2007.

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Loans

The following table shows gross loans outstanding under our loan portfolio by category of the borrowers principal business sector. Substantially all of our loans are to borrowers domiciled in Brazil and are
  denominated in reais. Additionally, approximately half of our loan portfolio is indexed to Brazilian base interest rates (SELIC) or to the U.S. dollar.

|                                                       |  |                    |  |                     |  |              |  |              |  |             
|------------------------------------------------------ |  | ------------------ |  | ------------------- |  | ------------ |  | ------------ |  | ------------
|                                                       |  | As of December 31,
|                                                       |  |                   
|                                                       |  | 2003               |  | 2004                |  | 2005         |  | 2006         |  | 2007        
|                                                       |  |                    |  |                     |  |              |  |              |  |             
|                                                       |  |                    |  | (in millions of R$) |  |             
|Type of Loans                                          |  |                    |  |                     |  |              |  |              |  |             
|Commercial:                                            |  |                    |  |                     |  |              |  |              |  |             
|Industrial and other                                   |  | R$    13,122       |  | R$    15,263        |  | R$    19,049 |  | R$    22,549 |  | R$    30,169
|Import financing                                       |  | 759                |  | 1,291               |  | 1,369        |  | 1,503        |  | 1,461       
|Export financing                                       |  | 2,510              |  | 1,804               |  | 2,076        |  | 1,548        |  | 2,480       
|Real estate loans, primarily residential housing loans |  | 844                |  | 1,052               |  | 1,284        |  | 1,404        |  | 1,644       
|Direct lease financing                                 |  | 471                |  | 639                 |  | 826          |  | 1,907        |  | 6,334       
|Individuals:                                           |  |                    |  |                     |  |              |  |              |  |             
|Overdraft                                              |  | 795                |  | 804                 |  | 779          |  | 660          |  | 658         
|Financing                                              |  | 3,703              |  | 4,524               |  | 6,009        |  | 5,533        |  | 5,830       
|Credit card                                            |  | 1,862              |  | 3,676               |  | 5,031        |  | 5,957        |  | 7,912       
|Agricultural                                           |  | 812                |  | 1,050               |  | 1,120        |  | 1,315        |  | 1,693       
|Nonperforming loans                                    |  | 1,161              |  | 1,274               |  | 1,694        |  | 2,278        |  | 2,167       
|Allowance for loan losses                              |  | (1,317)            |  | (1,560)             |  | (2,107)      |  | (2,577)      |  | (2,712)     
|                                                       |  |                    |  |                     |  |              |  |              |  |             
|Loans, net                                             |  | R$    24,722       |  | R$    29,817        |  | R$    37,130 |  | R$    42,077 |  | R$    57,636
|                                                       |  |                    |  |                     |  |              |  |              |  |             

The loans categories shown above are as follows:

Commercial Commercial loans include loans to corporate customers, including small businesses, as well as the financing of imports for corporate customers. Additionally, we make advances to corporate
  exporters under trade exchange contracts. Generally, these loans have short-to medium-term maturities.

Real estate  Real estate loans primarily consist of mortgage loans to individuals for residences, which generally have long-term maturities, as well as mortgage loans to construction companies, which
  generally have medium-term maturities.

Direct lease financing Direct lease contracts consist primarily of leases of equipment and automobiles to both corporate and individual borrowers.

Individuals Loans to individuals include lines of credit to individuals as a result of overdrafts on their related deposit accounts under pre-approved credit limits. Additionally, we finance personal loans
  for various needs and credit card for individuals.

Agricultural Agricultural loans represent loans to borrowers who operate in the agricultural business, including farming, produce, livestock and forestry.

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Nonperforming Loans

The following table shows our nonperforming loans, together with certain asset quality ratios for the years 2003 through 2007. We consider all loans 60 days or more overdue as nonperforming and subject to review for
  impairment. Lower-balance homogenous loans, such as overdrafts, credit card receivables, residential housing loans and consumer installment loans, are aggregated for purposes of evaluating impairment. Higher-balance loans are assessed based on the
  risk characteristics of each individual borrower. We do not have any material restructured loans. Charge-off normally occurs if no payment is received within 360 days.

|                                                                                                                                         |  |                                          |  |             |  |             |  |             |  |            
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- |  | ----------- |  | ----------- |  | ----------- |  | -----------
|                                                                                                                                         |  | As of or for the Year Ended December 31,
|                                                                                                                                         |  |                                         
|                                                                                                                                         |  | 2003                                     |  | 2004        |  | 2005        |  | 2006        |  | 2007       
|                                                                                                                                         |  |                                          |  |             |  |             |  |             |  |            
|                                                                                                                                         |  | (in millions of R$, except percentages) 
|                                                                                                                                        
|Nonperforming loans                                                                                                                      |  | R$   1,161                               |  | R$   1,274  |  | R$   1,694  |  | R$   2,278  |  | R$   2,167 
|Foreclosed assets, net of reserves                                                                                                       |  | 95                                       |  | 44          |  | 71          |  | 168         |  | 147        
|                                                                                                                                         |  |                                          |  |             |  |             |  |             |  |            
|Total nonperforming loans and foreclosed assets                                                                                          |  | R$   1,256                               |  | R$   1,318  |  | R$   1,765  |  | R$   2,446  |  | R$   2,314 
|                                                                                                                                         |  |                                          |  |             |  |             |  |             |  |            
|Allowance for loan losses                                                                                                                |  | 1,317                                    |  | 1,560       |  | 2,107       |  | 2,577       |  | 2,712      
|Total loans                                                                                                                              |  | R$   26,039                              |  | R$   31,377 |  | R$   39,237 |  | R$   44,654 |  | R$   60,348
|                                                                                                                                        
|Nonperforming loans as a percentage of total loans                                                                                       |  | 4.5%                                     |  | 4.1%        |  | 4.3%        |  | 5.1%        |  | 3.6%       
|Nonperforming loans and foreclosed assets as a 
             percentage of total loans                                                   |  | 4.8                                      |  | 4.2         |  | 4.5         |  | 5.5         |  | 3.8        
|Allowance for loan losses as a percentage of total loans                                                                                 |  | 5.1                                      |  | 5.0         |  | 5.4         |  | 5.8         |  | 4.5        
|Allowance for loan losses as a percentage of 
             nonperforning loans                                                           |  | 113                                      |  | 122         |  | 124         |  | 113         |  | 125        
|Allowance for loan losses as a percentage of 
             nonperforming loans and foreclosed assets                                     |  | 105                                      |  | 118         |  | 119         |  | 105         |  | 117        
|Net charge-offs during the period as percentage 
             of average loans outstanding (including 
             nonperforming loans) |  | 3.8%                                     |  | 2.5%        |  | 3.8%        |  | 3.8%        |  | 3.5%       

Credit Approval Process

For a discussion of our approval process for retail and wholesale loans, including credit card loans, see Item 11  Quantitative and Qualitative Disclosures about Market Risk  Additional Risks 
  Credit Risk.

Risks of the Loan Portfolio by Category

Credit Risk  Lending

For a discussion of credit risk  lending, see Item 11  Quantitative and Qualitative Disclosures about Market Risk  Additional Risks  Credit Risk.

Indexation

Substantially all of our loan portfolio is denominated in reais. However, a portion of the portfolio is indexed to or denominated in foreign currencies, primarily the U.S. dollar, which at December 31, 2005, 2006 and
  2007 represented, 17.6%, 18.1% and 16.2%, respectively, of our total loan portfolio. Our main loan transactions denominated in or indexed to the U.S. dollar consist of onlending of eurobonds and export and import financing.

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Table of Contents

Maturity and Interest Rate Sensitivity of Loans

The following tables show the maturity distribution of our loan portfolio by category as well as the interest rate sensitivity of our loan portfolio by maturity distribution.

|                                                                 |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             
|---------------------------------------------------------------- |  | ---------------------- |  | ----------- |  | ----------- |  | ----------- |  | ------------ |  | ----------- |  | ------------ |  | ----------- |  | ------------ |  | ------------- |  | ------------
|                                                                 |  | As of December 31,2007
|                                                                 |  |                       
|                                                                 |  |                        |  | Due in      |  | Due in      |  | Due in      |  | Due in       |  | Due in      |  |              |  |             |  |              |  |               |  |             
|                                                                 |  | Due in                 |  | between     |  | between     |  | between     |  | between      |  | between     |  | Due          |  | No          |  | Total        |  | Allowance     |  |             
|                                                                 |  | 30 days                |  | 31-90       |  | 91-180      |  | 181-360     |  | 1 and 3      |  | 3 and 5     |  | after        |  | stated      |  | gross        |  | for loans     |  | Total       
|                                                                 |  | or less                |  | days        |  | days        |  | days        |  | years        |  | years       |  | 5 years      |  | maturity    |  | loans        |  | losses        |  |             
|                                                                 |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |              
|                                                                 |  | (In millions of R$)   
|Type of Loan                                                     |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             
|Commercial:                                                      |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             
|Industrial and other                                             |  | R$    4,879            |  | R$    4,646 |  | R$    3,774 |  | R$    4,850 |  | R$    7,381  |  | R$    2,881 |  | R$     1,828 |  | R$    399   |  | R$    30,638 |  | R$    (542)   |  | R$    30,096
|Import financing                                                 |  | 151                    |  | 207         |  | 299         |  | 402         |  | 349          |  | 53          |  | -            |  | -           |  | 1,461        |  | (1)           |  | 1,460       
|Export financing                                                 |  | 279                    |  | 765         |  | 370         |  | 453         |  | 306          |  | 197         |  | 104          |  | 8           |  | 2,482        |  | (4)           |  | 2,478       
|Real estate loans, primarily 
         residential housing loans |  | 76                     |  | 136         |  | 165         |  | 232         |  | 394          |  | 207         |  | 502          |  | 9           |  | 1,721        |  | (46)          |  | 1,675       
|Direct lease financing                                           |  | 247                    |  | 456         |  | 639         |  | 1,208       |  | 3,025        |  | 902         |  | 13           |  | 41          |  | 6,531        |  | (276)         |  | 6,255       
|Individuals:                                                     |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             
|Overdraft                                                        |  | 312                    |  | 353         |  | -           |  | -           |  | -            |  | -           |  | -            |  | 119         |  | 784          |  | (114)         |  | 670         
|Financing                                                        |  | 1,359                  |  | 684         |  | 853         |  | 1,218       |  | 1,561        |  | 268         |  | 89           |  | 190         |  | 6,222        |  | (503)         |  | 5,719       
|Credit card                                                      |  | 3,617                  |  | 2,435       |  | 1,026       |  | 582         |  | 11           |  | -           |  | -            |  | 1,142       |  | 8,813        |  | (1,195)       |  | 7,618       
|Agricultural                                                     |  | 98                     |  | 182         |  | 361         |  | 636         |  | 260          |  | 106         |  | 50           |  | 3           |  | 1,696        |  | (31)          |  | 1,665       
|                                                                 |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             
|Total                                                            |  | R$    11,018           |  | R$    9,864 |  | R$    7,487 |  | R$    9,581 |  | R$    13,287 |  | R$    4,614 |  | R$    2,586  |  | R$    1,911 |  | R$    60,348 |  | R$    (2,712) |  | R$    57,636
|                                                                 |  |                        |  |             |  |             |  |             |  |              |  |             |  |              |  |             |  |              |  |               |  |             

Credit card loans require minimum payment, which ranges from 15% to 20% of the outstanding balance and the remaining balances may be rolled-over at the customers discretion.

|                      |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            
|--------------------- |  | ---------------------- |  | ----------- |  | ----------- |  | ----------- |  | ----------- |  | ---------- |  | ---------- |  | ---------- |  | -----------
|                      |  | As of December 31,2007
|                      |  |                       
|                      |  |                        |  | Due in      |  | Due in      |  | Due in      |  | Due in      |  | Due in     |  |            |  |            |  |            
|                      |  | Due in                 |  | between     |  | between     |  | between     |  | between     |  | between    |  | Due        |  | No         |  | Total      
|                      |  | 30 days                |  | 31-90       |  | 91-180      |  | 181-360     |  | 1 and 3     |  | 3 and 5    |  | after      |  | stated     |  | gross      
|                      |  | or less                |  | days        |  | days        |  | days        |  | years       |  | years      |  | 5 years    |  | maturity   |  | loans      
|                      |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            
|                      |  | (In millions of R$)   
|Loans to customers by |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            
|maturity subject to:  |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            
|Variable rates        |  | R$   3,103             |  | R$    3,693 |  | R$    2,795 |  | R$    3,603 |  | R$   5,766  |  | R$   2,976 |  | R$   2,330 |  | R$    326  |  | R$   24,592
|Fixed rates           |  | 7,915                  |  | 6,171       |  | 4,692       |  | 5,978       |  | 7,521       |  | 1,638      |  | 256        |  | 1,585      |  | 35,756     
|                      |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            
|Total                 |  | R$   11,018            |  | R$   9,864  |  | R$    7,487 |  | R$    9,581 |  | R$   13,287 |  | R$   4,614 |  | R$   2,586 |  | R$   1,911 |  | R$   60,348
|                      |  |                        |  |             |  |             |  |             |  |             |  |            |  |            |  |            |  |            

Foreign Country Loans Outstanding

Cross-border outstanding loans at December 31, 2007 in each foreign country account are set forth in the following table:

|                |  |            |  |                  
|--------------- |  | ---------- |  | -----------------
|Foreign Country |  | Loans, net |  | % of total assets
|                |  |            |  |                  
|               
|               
|Cayman Island   |  | R$   1,999 |  | 1.35%            
|Paraguay        |  | 668        |  | 0.45             
|Luxembourg      |  | 64         |  | 0.04             
|                |  |            |  |                  
|Total           |  | R$ 2,731   |  | 1.84%            
|                |  |            |  |                  

Additionally, our deposit base is primarily comprised of Brazilian-based customers, and the amount of deposits outside of Brazil is not considered significant (less than 10% of total deposits).

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Table of Contents

Loans by Economic Activity

The following table shows activity in our allowance for loan losses for 2003, 2004, 2005, 2006 and 2007.

|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|----------------------------------------------------------- |  | --------------------------------------- |  | --------- |  | ----------- |  | --------- |  | ----------- |  | ---------
|                                                            |  | As of December 31,                     
|                                                            |  |                                        
|                                                            |  | 2005                                    |  | 2006      |  | 2007       
|                                                            |  |                                         |  |           |  |            
|                                                            |  | Loan                                    |  | % of loan |  | Loan        |  | % of loan |  | Loan        |  | % of loan
|                                                            |  | portfolio                               |  | portfolio |  | portfolio   |  | portfolio |  | portfolio   |  | portfolio
|                                                            |  |                                         |  |           |  |            
|                                                            |  | (in millions of R$, except percentages)
|Manufacturing                                               |  |                                         |  |           |  |             |  |           |  |             |  |          
|Electricty, gas and water                                   |  | R$   2,530                              |  | 6.7%      |  | R$   3,366  |  | 7.9%      |  | R$   3,486  |  | 6.0%     
|Paper, pulp, paper and wood products                        |  | 1,487                                   |  | 4.0       |  | 1,463       |  | 3.5       |  | 1,604       |  | 2.8      
|Food, beverages and tobacco                                 |  | 1,339                                   |  | 3.6       |  | 1,986       |  | 4.7       |  | 2,269       |  | 3.9      
|Automobile industry                                         |  | 2,100                                   |  | 5.6       |  | 1,276       |  | 3.0       |  | 773         |  | 1.3      
|Production of machines and equipment                        |  | 892                                     |  | 2.4       |  | 638         |  | 1.5       |  | 1,180       |  | 2.0      
|Chemical and pharmaceutical                                 |  | 912                                     |  | 2.4       |  | 769         |  | 1.8       |  | 997         |  | 1.7      
|Basic metal industries                                      |  | 963                                     |  | 2.6       |  | 1,281       |  | 3.0       |  | 1,262       |  | 2.2      
|Petroleum                                                   |  | 389                                     |  | 1.0       |  | 469         |  | 1.1       |  | 755         |  | 1.3      
|Extractive                                                  |  | 395                                     |  | 1.0       |  | 501         |  | 1.2       |  | 958         |  | 1.6      
|Textiles, clothing and leather goods                        |  | 463                                     |  | 1.2       |  | 345         |  | 0.8       |  | 582         |  | 1.0      
|Electronic and communication 
             equipment        |  | 95                                      |  | 0.3       |  | 206         |  | 0.5       |  | 307         |  | 0.5      
|Rubber and plastic                                          |  | 203                                     |  | 0.5       |  | 229         |  | 0.5       |  | 360         |  | 0.6      
|Production of metal goods                                   |  | 152                                     |  | 0.4       |  | 280         |  | 0.7       |  | 297         |  | 0.5      
|Electric and electronic                                     |  | 175                                     |  | 0.5       |  | 223         |  | 0.5       |  | 162         |  | 0.3      
|Other manufacturing industries                              |  | 20                                      |  | 0.1       |  | 301         |  | 0.7       |  | 271         |  | 0.5      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Subtotal                                                    |  | 12,115                                  |  | 32.3      |  | 13,333      |  | 31.4      |  | 15,263      |  | 26.2     
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Retailers                                                   |  |                                         |  |           |  |             |  |           |  |             |  |          
|Retail                                                      |  | 2,172                                   |  | 5.8       |  | 3,365       |  | 7.9       |  | 3,070       |  | 5.3      
|Wholesale                                                   |  | 1,598                                   |  | 4.3       |  | 1,916       |  | 4.5       |  | 3,403       |  | 5.8      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Subtotal                                                    |  | 3,770                                   |  | 10.1      |  | 5,281       |  | 12.4      |  | 6,473       |  | 11.1     
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Financial sevice                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Financial companies                                         |  | 1,169                                   |  | 3.1       |  | 1,438       |  | 3.4       |  | 4,196       |  | 7.3      
|Insurance companies and private 
             pension funds |  | 2                                       |  | -         |  | 75          |  | 0.2       |  | 7           |  | -        
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Subtotal                                                    |  | 1,171                                   |  | 3.1       |  | 1,513       |  | 3.6       |  | 4,203       |  | 7.3      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Residential construction loans                              |  | 313                                     |  | 0.8       |  | 461         |  | 1.1       |  | 653         |  | 1.1      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Other services:                                             |  |                                         |  |           |  |             |  |           |  |             |  |          
|Transportation                                              |  | 1,787                                   |  | 4.8       |  | 2,423       |  | 5.7       |  | 4,314       |  | 7.4      
|Post office and telecommunications                          |  | 1,265                                   |  | 3.3       |  | 950         |  | 2.2       |  | 699         |  | 1.2      
|Construction                                                |  | 417                                     |  | 1.1       |  | 556         |  | 1.3       |  | 1,213       |  | 2.1      
|Real estate services                                        |  | 481                                     |  | 1.3       |  | 424         |  | 1.0       |  | 763         |  | 1.3      
|Agricultural                                                |  | 400                                     |  | 1.1       |  | 344         |  | 0.8       |  | 11          |  | -        
|Associative activities                                      |  | 209                                     |  | 0.6       |  | 114         |  | 0.3       |  | 219         |  | 0.4      
|Education                                                   |  | 129                                     |  | 0.3       |  | 118         |  | 0.3       |  | 118         |  | 0.2      
|Health and social services                                  |  | 160                                     |  | 0.4       |  | 191         |  | 0.5       |  | 303         |  | 0.5      
|Cultural and sport leisure activities                       |  | 47                                      |  | 0.1       |  | 35          |  | 0.1       |  | 175         |  | 0.3      
|Lodging and catering services                               |  | 128                                     |  | 0.3       |  | 140         |  | 0.3       |  | 165         |  | 0.3      
|Other                                                       |  | 1,091                                   |  | 2.9       |  | 1,256       |  | 3.0       |  | 2,278       |  | 4.0      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Subtotal                                                    |  | 6,114                                   |  | 16.2      |  | 6,551       |  | 15.5      |  | 10,258      |  | 17.7     
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|                                                           
|Agriculture, livestock, forestry and 
             fishing  |  | 892                                     |  | 2.4       |  | 1,060       |  | 2.5       |  | 1,710       |  | 2.9      
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Individuals:                                                |  |                                         |  |           |  |             |  |           |  |             |  |          
|Consumer loans                                              |  | 11,828                                  |  | 31.5      |  | 10,624      |  | 25.1      |  | 5,714       |  | 9.9      
|Residential mortgage loans                                  |  | 971                                     |  | 2.6       |  | 939         |  | 2.2       |  | 1,005       |  | 1.7      
|Lease financing                                             |  | 141                                     |  | 0.4       |  | 857         |  | 2.0       |  | 4,211       |  | 7.2      
|Other                                                       |  | 228                                     |  | 0.6       |  | 1,757       |  | 4.2       |  | 8,691       |  | 14.9     
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Subtotal                                                    |  | 13,168                                  |  | 35.1      |  | 14,177      |  | 33.5      |  | 19,621      |  | 33.7     
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          
|Total                                                       |  | R$   37,543                             |  | 100.0%    |  | R$   42,376 |  | 100.0%    |  | R$   58,181 |  | 100.0%   
|                                                            |  |                                         |  |           |  |             |  |           |  |             |  |          

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Table of Contents

Classification of Loan Portfolio

The following table shows the current classification of our loan portfolio by risk category, with AA representing minimum credit risk and H representing extremely high credit risk. At December 31, 2005, 2006 and 2007,
  92.5%, 93.7% and 95.7%, respectively of our loan portfolio were classified in the categories AA to C, which represent loans on full accrual status.

|                    |  |                         |  |                         |  |                         |  |           |  |               |  |               |  |           |  |               |  |              
|------------------- |  | ----------------------- |  | ----------------------- |  | ----------------------- |  | --------- |  | ------------- |  | ------------- |  | --------- |  | ------------- |  | -------------
|                    |  | As of December 31, 2005 |  | As of December 31, 2006 |  | As of December 31, 2007
|                    |  |                         |  |                         |  |                        
|Risk                |  | Loans                   |  | Nonperforming           |  | Allowance for           |  | Loans     |  | Nonperforming |  | Allowance for |  | Loans     |  | Nonperforming |  | Allowance for
|level               |  |                         |  | loans                   |  | loan losses             |  |           |  | loans         |  | loan losses   |  |           |  | loans         |  | loan losses  
|                    |  |                         |  |                         |  |                         |  |           |  |               |  |               |  |           |  |               |  |              
|(in millions of R$)
|AA                  |  | R$ 16,662               |  | R$   -                  |  | R$   80                 |  | R$ 19,536 |  | R$   10       |  | R$   115      |  | R$ 26,224 |  | R$   32       |  | R$   10      
|A                   |  | 14,508                  |  | -                       |  | 191                     |  | 16,898    |  | 8             |  | 334           |  | 25,488    |  | 9             |  | 126          
|B                   |  | 3,133                   |  | -                       |  | 116                     |  | 3,482     |  | 3             |  | 104           |  | 4,712     |  | 3             |  | 47           
|C                   |  | 1,931                   |  | 45                      |  | 243                     |  | 1,838     |  | 60            |  | 173           |  | 1,235     |  | 63            |  | 106          
|D                   |  | 919                     |  | 311                     |  | 253                     |  | 245       |  | 361           |  | 188           |  | 235       |  | 297           |  | 375          
|E                   |  | 102                     |  | 247                     |  | 167                     |  | 100       |  | 241           |  | 184           |  | 94        |  | 246           |  | 340          
|F                   |  | 94                      |  | 225                     |  | 167                     |  | 75        |  | 234           |  | 173           |  | 53        |  | 201           |  | 254          
|G                   |  | 120                     |  | 191                     |  | 163                     |  | 36        |  | 199           |  | 159           |  | 36        |  | 186           |  | 222          
|H                   |  | 74                      |  | 675                     |  | 727                     |  | 166       |  | 1,162         |  | 1,147         |  | 104       |  | 1,130         |  | 1,232        
|                    |  |                         |  |                         |  |                         |  |           |  |               |  |               |  |           |  |               |  |              
|Total               |  | R$    37,543            |  | R$   1,694              |  | R$   2,107              |  | R$ 42,376 |  | R$   2,278    |  | R$   2,577    |  | R$ 58,181 |  | R$   2,167    |  | R$   2,712   
|                    |  |                         |  |                         |  |                         |  |           |  |               |  |               |  |           |  |               |  |              

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Table of Contents

Allowance for Loan Losses

The following table shows activity in the allowance for loan losses for 2003, 2004, 2005, 2006 and 2007.

|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- |  | ------------- |  | ------------- |  | ------------- |  | -------------
|                                                                                                                                  |  | As of or for the Year Ended December 31,
|                                                                                                                                  |  |                                         
|                                                                                                                                  |  | 2003                                     |  | 2004          |  | 2005          |  | 2006          |  | 2007         
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|                                                                                                                                  |  | (in millions of R$)                     
|Balance at beginning of period                                                                                                    |  | R$    1,389                              |  | R$    1,317   |  | R$    1,560   |  | R$    2,107   |  | R$    2,577  
|Charge-offs:                                                                                                                      |  |                                          |  |               |  |               |  |               |  |              
|Commercial:                                                                                                                       |  |                                          |  |               |  |               |  |               |  |              
|Industrial and other                                                                                                              |  | (366)                                    |  | (236)         |  | (340)         |  | (382)         |  | (541)        
|Import end export financing                                                                                                       |  | (25)                                     |  | -             |  | (1)           |  | -             |  | -            
|Real estate loans, primarily residential housing loans                                                                            |  | (21)                                     |  | (54)          |  | (24)          |  | (15)          |  | (33)         
|Direct lease financing                                                                                                            |  | (1)                                      |  | (1)           |  | (2)           |  | (4)           |  | (3)          
|Individuals:                                                                                                                      |  |                                          |  |               |  |               |  |               |  |              
|Overdraft                                                                                                                         |  | (79)                                     |  | (76)          |  | (70)          |  | (128)         |  | (144)        
|Financing                                                                                                                         |  | (412)                                    |  | (256)         |  | (415)         |  | (437)         |  | (469)        
|Credit card                                                                                                                       |  | (426)                                    |  | (494)         |  | (590)         |  | (876)         |  | (822)        
|Agricultural                                                                                                                      |  | -                                        |  | -             |  | -             |  | -             |  | (4)          
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Total charge-offs                                                                                                                 |  | R$    (1,330)                            |  | R$    (1,117) |  | R$    (1,442) |  | R$    (1,842) |  | R$    (2,016)
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Recoveries:                                                                                                                       |  |                                          |  |               |  |               |  |               |  |              
|Commercial:                                                                                                                       |  |                                          |  |               |  |               |  |               |  |              
|Industrial and other                                                                                                              |  | R$    83                                 |  | R$    249     |  | R$    34      |  | R$    95      |  | R$    60     
|Import end export financing                                                                                                       |  | 10                                       |  | -             |  | -             |  | -             |  | -            
|Real estate loans, primarily residential housing loans                                                                            |  | 1                                        |  | 9             |  | 6             |  | 10            |  | 10           
|Direct lease financing                                                                                                            |  | 2                                        |  | 4             |  | 1             |  | 5             |  | 2            
|Individuals:                                                                                                                      |  |                                          |  |               |  |               |  |               |  |              
|Overdraft                                                                                                                         |  | 17                                       |  | 5             |  | 2             |  | 5             |  | 17           
|Financing                                                                                                                         |  | 148                                      |  | 55            |  | 40            |  | 94            |  | 62           
|Credit card                                                                                                                       |  | 116                                      |  | 90            |  | 36            |  | 70            |  | 65           
|Agricultural                                                                                                                      |  | -                                        |  | -             |  | -             |  | 3             |  | -            
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Total recoveries                                                                                                                  |  | R$    377                                |  | R$    412     |  | R$    119     |  | R$    282     |  | R$    216    
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Net charge-offs                                                                                                                   |  | R$    (953)                              |  | R$    (705)   |  | R$    (1,323) |  | R$    (1,560) |  | R$    (1,800)
|Provision for loan losses                                                                                                         |  | 881                                      |  | 948           |  | 1,870         |  | 2,030         |  | 1,935        
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Balance at the end of period                                                                                                      |  | R$    1,317                              |  | R$    1,560   |  | R$    2,107   |  | R$    2,577   |  | R$    2,712  
|                                                                                                                                  |  |                                          |  |               |  |               |  |               |  |              
|Ratio of net charge-offs during the period to
     avarege loans outstanding including nonperforming
     loans during the period |  | 3.8%                                     |  | 2.5%          |  | 3.8%          |  | 3.8%          |  | 3.5%         

The following table shows our provision for loan losses, loan charge-offs and loan recoveries for 2005, 2006 and 2007:

|                          |  |                                         |  |              |  |              |  |           |  |          
|------------------------- |  | --------------------------------------- |  | ------------ |  | ------------ |  | --------- |  | ---------
|                          |  | For the Year Ended December 31,         |  | % Change    
|                          |  |                                         |  |             
|                          |  | 2005                                    |  | 2006         |  | 2007         |  | 2006/2005 |  | 2007/2006
|                          |  |                                         |  |              |  |              |  |           |  |          
|                          |  | (in millions of R$, except percentages)
|Provision for loan losses |  | R$   1,870                              |  | R$   2,030   |  | R$   1,935   |  | 8.6%      |  | (4.7)%   
|Loan charge-offs          |  | (1,442)                                 |  | (1,842)      |  | (2,016)      |  | 27.7      |  | 9.4      
|Total recoveries          |  | 119                                     |  | 282          |  | 216          |  | 137.0     |  | (23.4)   
|                          |  |                                         |  |              |  |              |  |           |  |          
|Net charge-offs           |  | R$   (1,323)                            |  | R$   (1,560) |  | R$   (1,800) |  | 17.9%     |  | 15.4 %   
|                          |  |                                         |  |              |  |              |  |           |  |          
|Provision to loans (1)    |  | 5.4%                                    |  | 4.9%         |  | 3.8%         |  |           |  |          

|_______________
|---------------
|(1)            

For information regarding the allowance for loan losses, provision for loan losses, loan charge-offs, loan recoveries and nonperforming loans, see Item 5.A. Operating Results.

Allocation of the Allowance for Loan Losses

The following table shows our allocation of the allowance for loan losses as of December 31, 2003, 2004, 2005, 2006 and 2007. The allocated amount of the allowance is expressed as a percentage of the related loan amount
  with the corresponding percentage of the loan category to total loans.

130

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|                             |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|---------------------------- |  | --------------------------------------- |  | ---------- |  | ---------- |  | ---------- |  | ---------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                             |  | As of December 31,                     
|                             |  |                                        
|                             |  | 2003                                    |  | 2004       |  | 2005      
|                             |  |                                         |  |            |  |           
|                             |  |                                         |  | Allocated  |  | Loans      |  |            |  | Allocated  |  | Loans      |  |            |  | Allocated  |  | Loans     
|                             |  |                                         |  | allowance  |  | category   |  |            |  | allowance  |  | category   |  |            |  | allowance  |  | category  
|                             |  |                                         |  | as a       |  | as a       |  |            |  | as a       |  | as a       |  |            |  | as a       |  | as a      
|                             |  |                                         |  | percentage |  | percentage |  |            |  | percentage |  | percentage |  |            |  | percentage |  | percentage
|                             |  | Allocated                               |  | of total   |  | of total   |  | Allocated  |  | of total   |  | of total   |  | Allocated  |  | of total   |  | of total  
|                             |  | allowance                               |  | loans      |  | loans      |  | allowance  |  | loans      |  | loans      |  | allowance  |  | loans      |  | loans     
|                             |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|                             |  | (in millions of R$, except percentages)
|Type of Loan:                |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|Commercial:                  |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|Industrial and other         |  | R$   638                                |  | 2.5%       |  | 51.9%      |  | R$   869   |  | 2.8%       |  | 49.8%      |  | R$   910   |  | 2.3%       |  | 49.4%     
|Import financing             |  | 10                                      |  | -          |  | 2.9        |  | 2          |  | -          |  | 4.1        |  | 3          |  | -          |  | 3.5       
|Export financing             |  | 10                                      |  | -          |  | 9.6        |  | 10         |  | -          |  | 5.8        |  | 8          |  | -          |  | 5.3       
|Real estate loans, primarily |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|residential housing loans    |  | 32                                      |  | 0.1        |  | 3.5        |  | 37         |  | 0.1        |  | 3.6        |  | 29         |  | 0.1        |  | 3.5       
|Direct lease financing       |  | 16                                      |  | 0.1        |  | 1.9        |  | 18         |  | 0.1        |  | 2.1        |  | 45         |  | 0.1        |  | 2.2       
|Individuals:                 |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|Overdraft                    |  | 61                                      |  | 0.2        |  | 3.3        |  | 53         |  | 0.2        |  | 3.0        |  | 99         |  | 0.3        |  | 2.5       
|Financing                    |  | 297                                     |  | 1.2        |  | 15.6       |  | 302        |  | 1.0        |  | 15.4       |  | 536        |  | 1.4        |  | 16.6      
|Credit card                  |  | 202                                     |  | 0.8        |  | 8.2        |  | 230        |  | 0.7        |  | 12.8       |  | 448        |  | 1.1        |  | 14.1      
|Agricultural                 |  | 51                                      |  | 0.2        |  | 3.1        |  | 39         |  | 0.1        |  | 3.4        |  | 29         |  | 0.1        |  | 2.9       
|                             |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           
|Total                        |  | R$   1,317                              |  | 5.1%       |  | 100.0%     |  | R$   1,560 |  | 5.0%       |  | 100.0%     |  | R$   2,107 |  | 5.4%       |  | 100.0%    
|                             |  |                                         |  |            |  |            |  |            |  |            |  |            |  |            |  |            |  |           

|                             |  |                                         |  |            |  |            |  |             |  |            |  |           
|---------------------------- |  | --------------------------------------- |  | ---------- |  | ---------- |  | ----------- |  | ---------- |  | ----------
|                             |  | As of December 31,                     
|                             |  |                                        
|                             |  | 2006                                    |  | 2007      
|                             |  |                                         |  |           
|                             |  |                                         |  | Allocated  |  | Loans      |  |             |  | Allocated  |  | Loans     
|                             |  |                                         |  | allowance  |  | category   |  |             |  | allowance  |  | category  
|                             |  |                                         |  | as a       |  | as a       |  |             |  | as a       |  | as a      
|                             |  |                                         |  | percentage |  | percentage |  |             |  | percentage |  | percentage
|                             |  | Allocated                               |  | of total   |  | of total   |  | Allocated   |  | of total   |  | of total  
|                             |  | allowance                               |  | loans      |  | loans      |  | allowance   |  | loans      |  | loans     
|                             |  |                                         |  |            |  |            |  |             |  |            |  |           
|                             |  | (in millions of R$, except percentages)
|Type of Loan:                |  |                                         |  |            |  |            |  |             |  |            |  |           
|Commercial:                  |  |                                         |  |            |  |            |  |             |  |            |  |           
|Industrial and other         |  | R$    1,145                             |  | 2.6%       |  | 52.0%      |  | R$    542   |  | 0.9%       |  | 50.8%     
|Import financing             |  | 3                                       |  | -          |  | 3.3        |  | 1           |  | -          |  | 2.4       
|Export financing             |  | 15                                      |  | -          |  | 3.5        |  | 4           |  | -          |  | 4.1       
|Real estate loans, primarily |  |                                         |  |            |  |            |  |             |  |            |  |           
|residential housing loans    |  | 38                                      |  | 0.1        |  | 3.4        |  | 46          |  | 0.1        |  | 2.9       
|Direct lease financing       |  | 43                                      |  | 0.1        |  | 4.4        |  | 276         |  | 0.5        |  | 10.8      
|Individuals:                 |  |                                         |  |            |  |            |  |             |  |            |  |           
|Overdraft                    |  | 115                                     |  | 0.3        |  | 1.8        |  | 114         |  | 0.2        |  | 1.3       
|Financing                    |  | 501                                     |  | 1.1        |  | 13.5       |  | 503         |  | 0.8        |  | 10.3      
|Credit card                  |  | 698                                     |  | 1.6        |  | 15.1       |  | 1,195       |  | 2.0        |  | 14.6      
|Agricultural                 |  | 19                                      |  | -          |  | 3.0        |  | 31          |  | -          |  | 2.8       
|                             |  |                                         |  |            |  |            |  |             |  |            |  |           
|Total                        |  | R$    2,577                             |  | 5.8%       |  | 100.0%     |  | R$    2,712 |  | 4.5%       |  | 100.0%    
|                             |  |                                         |  |            |  |            |  |             |  |            |  |           

Average Deposit Balances and Interest Rates

The following table shows the average balance of deposits together with the average interest rate paid for each period presented.

|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|--------------------------------- |  | ---------------------------------------- |  | --------------------------------------- |  | ------------ |  | ------- |  | ------------ |  | -------
|                                  |  | As of or for the Year Ended December 31,
|                                  |  |                                         
|                                  |  | 2005                                     |  | 2006                                    |  | 2007        
|                                  |  |                                          |  |                                         |  |             
|                                  |  | Average                                  |  | Average                                 |  | Average      |  | Average |  | Average      |  | Average
|                                  |  | balance                                  |  | rate                                    |  | balance      |  | rate    |  | balance      |  | rate   
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Domestic deposits:                |  |                                          |  | (in millions of R$, except percentages) |  |              | 
|Non-interest-bearing deposits:    |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Demand deposits                   |  | R$    2,982                              |  | - %                                     |  | R$    3,493  |  | -       |  | R$    3,832  |  | -      
|Interest - Bearing deposits:      |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Deposits from banks               |  | 72                                       |  | 19.4                                    |  | 175          |  | 22.9    |  | 800          |  | 10.1   
|Savings deposits                  |  | 5,658                                    |  | 7.3                                     |  | 5,535        |  | 6.2     |  | 8,374        |  | 4.7    
|Time deposits                     |  | 24,502                                   |  | 17.0                                    |  | 25,983       |  | 13.7    |  | 20,430       |  | 10.9   
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Total interest - bearing deposits |  | 30,232                                   |  | 15.2                                    |  | 31,693       |  | 12.5    |  | 29,604       |  | 9.1    
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Total domestic deposits           |  | 33,214                                   |  | 13.9                                    |  | 35,186       |  | 11.2    |  | 33,436       |  | 8.1    
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|International deposits(1):        |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Non-interest-bearing deposits:    |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Demand deposits                   |  | R$    504                                |  | - %                                     |  | R$    702    |  | -       |  | R$    585    |  | -      
|Interest - Bearing deposits:      |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Deposits from banks               |  | 43                                       |  | 11.6                                    |  | 7            |  | 14.3    |  | 10           |  | -      
|Savings deposits                  |  | 472                                      |  | 0.2                                     |  | 461          |  | 0.2     |  | 466          |  | 0.2    
|Time deposits                     |  | 856                                      |  | 5.0                                     |  | 1,209        |  | 8.2     |  | 1,436        |  | 8.6    
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Total interest-bearing deposits   |  | 1,371                                    |  | 3.6                                     |  | 1,677        |  | 6.0     |  | 1,912        |  | 6.5    
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Total international deposits      |  | 1,875                                    |  | 2.6                                     |  | 2,379        |  | 4.2     |  | 2,497        |  | 5.0    
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        
|Total deposits                    |  | R$    35,089                             |  | 13.3%                                   |  | R$    37,565 |  | 10.8%   |  | R$    35,933 |  | 7.9%   
|                                  |  |                                          |  |                                         |  |              |  |         |  |              |  |        

|_______________
|---------------
|(1)            



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Maturity of Deposits

The following table shows the maturity distribution of our deposits at December 31, 2007.

|                                 |  |                         |  |             |  |             |  |              |  |             
|-------------------------------- |  | ----------------------- |  | ----------- |  | ----------- |  | ------------ |  | ------------
|                                 |  | As of December 31, 2007
|                                 |  |                        
|                                 |  |                         |  | Due in      |  | Due in      |  |              |  |             
|                                 |  | Due in                  |  | between     |  | between     |  | Due          |  |             
|                                 |  | 3 months                |  | 3 and 6     |  | 6 months    |  | After        |  |             
|                                 |  | or less                 |  | months      |  | and 1 year  |  | 1 year       |  | Total       
|                                 |  |                         |  |             |  |             |  |              |  |             
|                                 |  | (In millions of R$)    
|Domestic Deposits:               |  |                         |  |             |  |             |  |              |  |             
|Non-interest-bearing deposits:   |  |                         |  |             |  |             |  |              |  |             
|Demand deposits                  |  | R$    9,697             |  | R$    -     |  | R$    -     |  | R$    -      |  | R$    9,697 
|Interest-bearing deposits:       |  |                         |  |             |  |             |  |              |  |             
|Deposits from banks              |  | 1,324                   |  | -           |  | -           |  | -            |  | 1,324       
|Savings deposits                 |  | 10,778                  |  | -           |  | -           |  | -            |  | 10,778      
|Time deposits                    |  | 2,475                   |  | 2,173       |  | 4,273       |  | 13,065       |  | 21,986      
|                                 |  |                         |  |             |  |             |  |              |  |             
|Total Interest-bearing deposits: |  | 14,577                  |  | 2,173       |  | 4,273       |  | 13,065       |  | 34,088      
|                                 |  |                         |  |             |  |             |  |              |  |             
|Total domestic deposits          |  | 24,274                  |  | 2,173       |  | 4,273       |  | 13,065       |  | 43,785      
|                                 |  |                         |  |             |  |             |  |              |  |             
|International Deposits(1)        |  |                         |  |             |  |             |  |              |  |             
|Non-interest-bearing deposits:   |  |                         |  |             |  |             |  |              |  |             
|Demand deposits                  |  | 593                     |  | -           |  | -           |  | -            |  | 593         
|Interest-bearing deposits:       |  |                         |  |             |  |             |  |              |  |             
|Deposits from banks              |  | 56                      |  | -           |  | -           |  | -            |  | 56          
|Savings deposits                 |  | 446                     |  | -           |  | -           |  | -            |  | 446         
|Time deposits                    |  | 1,341                   |  | 42          |  | 103         |  | 129          |  | 1,615       
|                                 |  |                         |  |             |  |             |  |              |  |             
|Total Interest-bearing deposits: |  | 1,843                   |  | 42          |  | 103         |  | 129          |  | 2,117       
|                                 |  |                         |  |             |  |             |  |              |  |             
|Total international deposits     |  | 2,436                   |  | 42          |  | 103         |  | 129          |  | 2,710       
|                                 |  |                         |  |             |  |             |  |              |  |             
|Total deposits                   |  | R$    26,710            |  | R$    2,215 |  | R$    4,376 |  | R$    13,194 |  | R$    46,495
|                                 |  |                         |  |             |  |             |  |              |  |             

|_______________
|---------------
|(1)            

The following table shows the maturity of outstanding deposits with balances in excess of US$100,000.00 (or its equivalent) issued by us at December 31, 2007.

|                                             |  |                     |  |              
|-------------------------------------------- |  | ------------------- |  | -------------
|                                             |  | Currency           
|                                             |  |                    
|                                            
|                                             |  | Domestic            |  | International
|                                             |  |                     |  |              
|                                             |  | (In millions of R$)
|                                            
|Maturity within 3 months                     |  | R$   1,522          |  | R$   1,341   
|Maturity after 3 months but within 6 months  |  | 797                 |  | 42           
|Maturity after 6 months but within 12 months |  | 2,745               |  | 103          
|Maturity after 12 months                     |  | 14,646              |  | 129          
|                                             |  |                     |  |              
|Total deposits in excess of US$100,000       |  | R$   19,710         |  | R$   1,615   
|                                             |  |                     |  |              

Capital

Specific regulatory capital requirements are discussed in Item 4.B. Business Overview  Regulation and Supervision.

Minimum Capital Requirements

The following table shows our actual capital compared to the minimum capital required by the Central Bank rules and presented in accordance with accounting principles adopted in Brazil.

|                                                |  |                           |  |                        |  |             |  |             |  |             |  |            
|----------------------------------------------- |  | ------------------------- |  | ---------------------- |  | ----------- |  | ----------- |  | ----------- |  | -----------
|                                                |  | As of December 31,       
|                                                |  |                          
|                                                |  | Partial Consolidation (1) |  | Full Consolidation (2)
|                                                |  |                           |  |                        | 
|                                                |  | 2005                      |  | 2006                   |  | 2007        |  | 2005        |  | 2006        |  | 2007       
|                                                |  |                           |  |                        |  |             |  |             |  |             |  |            
|                                                |  | (In millions of R$)      
|Our Regulatory Capital                          |  | R$   10,992               |  | R$   13,080            |  | R$   16,600 |  | R$   11,732 |  | R$   13,871 |  | R$   18,393
|Minimum Regulatory Capital Required             |  | 7,729                     |  | 9,000                  |  | 12,408      |  | 7,993       |  | 9,190       |  | 12,411     
|                                                |  |                           |  |                        |  |             |  |             |  |             |  |            
|Excess Over Minimum regulatory Capital Required |  | R$   3,263                |  | R$   4,080             |  | R$   4,192  |  | R$   3,739  |  | R$   4,681  |  | R$   5,982 
|                                                |  |                           |  |                        |  |             |  |             |  |             |  |            

132

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|_______________
|---------------
|(1)            
|(2)            

For additional information on capital  minimum capital requirements see note 30 to our consolidated financial statements and Item 5.B. Liquidity and Capital Resources  Sources of Funding  Capital.

Short-term Borrowings

The following table presents a summary of our primary short-term borrowings for the periods indicated.

|                                             |  |                                          |  |              |  |             
|-------------------------------------------- |  | ---------------------------------------- |  | ------------ |  | ------------
|                                             |  | As of or for the Year Ended December 31,
|                                             |  |                                         
|                                             |  | 2005                                     |  | 2006         |  | 2007        
|                                             |  |                                          |  |              |  |             
|                                             |  | (in millions of R$, except percentages) 
|Federal Funds Purchased and Securities       |  |                                          |  |              |  |             
|Sold Under Repurchase Agreements:            |  |                                          |  |              |  |             
|Amount outstanding                           |  | R$    10,721                             |  | R$    16,991 |  | R$    27,197
|Maximum amount outstanding during the period |  | 10,721                                   |  | 17,939       |  | 27,666      
|Weighted average interest rate at period-end |  | 18.0 %                                   |  | 13.2 %       |  | 11.1 %      
|Average amount outstanding during period     |  | 7,194                                    |  | 14,459       |  | 23,272      
|Weighted average interest rate               |  | 14.4 %                                   |  | 11.9 %       |  | 10.1 %      
|Import and Export Financing:                 |  |                                          |  |              |  |             
|Amount outstanding                           |  | R$    2,932                              |  | R$    2,420  |  | R$    4,057 
|Maximum amount outstanding during the period |  | 2,932                                    |  | 2,932        |  | 4,222       
|Weighted average interest rate at period-end |  | 4.6 %                                    |  | 6.7 %        |  | 6.9 %       
|Average amount outstanding during period     |  | 2,378                                    |  | 2,440        |  | 3,372       
|Weighted average interest rate               |  | (5.3) %                                  |  | (0.3) %      |  | 4.2 %       
|Other Interbank Borrowings:                  |  |                                          |  |              |  |             
|Amount outstanding                           |  | R$    235                                |  | R$    533    |  | R$    3,452 
|Maximum amount outstanding during the period |  | 340                                      |  | 803          |  | 3,452       
|Weighted average interest rate at period-end |  | 4.0 %                                    |  | 5.5 %        |  | 5.3 %       
|Average amount outstanding during period     |  | 273                                      |  | 363          |  | 1,502       
|Weighted average interest rate               |  | 1.7 %                                    |  | 4.6 %        |  | 0.8 %       
|Other:                                       |  |                                          |  |              |  |             
|Amount outstanding                           |  | R$    72                                 |  | R$    92     |  | R$    118   
|                                             |  |                                          |  |              |  |             
|Total                                        |  | R$    13,960                             |  | R$    20,036 |  | R$    34,824
|                                             |  |                                          |  |              |  |             



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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A Directors and Senior Management

Unibanco

We are managed by our:

- Board of Directors (Conselho de Administração), consisting of nine Directors, including one Chairman and one Vice-Chairman chosen by the Board of Directors; and
- Board of Officers (Diretoria), consisting of eighty-eight Officers, including one Chief Executive Officer, four Vice Presidents, eleven Executive Officers, thirty- three Officers and thirty-nine Deputy Officers.

The Board of Directors is our decision-making body and determines our general corporate guidelines and policies by:

- establishing our corporate strategy;
- reviewing our business plans; and
- supervising and monitoring the activities of our Executive Officers.

The Board of Officers has the power to act on our behalf in accordance with our bylaws and it is responsible for the management and supervision of our corporate activities by ensuring compliance with our general
corporate guidelines and policies.

At our March 27, 2008 Ordinary Shareholders Meeting, eight former Directors were reelected, one former Director was not reelected and one new Director was elected.

Pursuant to Brazilian law, the election of each member of our Board of Directors and Board of Officers must be approved by the Central Bank. The former Directors and Officers hold such positions upon expiration of their
term until they are reelected or a successor is invested. The reelections of the former Directors and the election of Mr. Falconi Campos are still pending Central Bank approval.

As of May 31, 2008, our Directors and Executive Officers are:

|                                       |  |                         |  |                   
|-------------------------------------- |  | ----------------------- |  | ------------------
|Directors                              |  | Position                |  | Date of Birth     
|                                       |  |                         |  |                   
|                                      
|Pedro Sampaio Malan                    |  | Chairman                |  | February 19, 1943 
|Pedro Moreira Salles                   |  | Vice Chairman           |  | October 20, 1959  
|Israel Vainboim                        |  | Director                |  | June 1, 1944      
|Joaquim Francisco de Castro Neto       |  | Director                |  | March 30, 1944    
|Pedro Luiz Bodin de Moraes             |  | Director                |  | July 13, 1956     
|João Dionisio Filgueira Barreto Amoêdo |  | Director                |  | October 22, 1962  
|Francisco Eduardo de Almeida Pinto     |  | Director                |  | December 14, 1958 
|Guilherme Affonso Ferreira             |  | Director                |  | May 09, 1951      
|Vicente Falconi Campos                 |  | Director                |  | September 30, 1940
|                                      
|                                      
|Executive Officers                     |  | Position                |  | Date of Birth     
|                                       |  |                         |  |                   
|                                      
|Pedro Moreira Salles                   |  | Chief Executive Officer |  | October 20, 1959  
|Demosthenes Madureira de Pinho Neto    |  | Vice President          |  | January 28, 1960  

|                                     |  |                   |  |                   
|------------------------------------ |  | ----------------- |  | ------------------
|Marcio de Andrade Schettini          |  | Vice President    |  | May 22, 1964      
|Geraldo Travaglia Filho              |  | Vice President    |  | May 26, 1951      
|José Castro Araújo Rudge             |  | Vice President    |  | September 25, 1957
|Celso Scaramuzza                     |  | Executive Officer |  | December 3, 1952  
|Claudia Politanski                   |  | Executive Officer |  | August 31,1970    
|Daniel Luiz Gleizer                  |  | Executive Officer |  | February 23,1960  
|Ivo Luiz de Sá Freire Vieitas Júnior |  | Executive Officer |  | June 14, 1964     
|José Roberto Haym                    |  | Executive Officer |  | October 12, 1959  
|Marcos de Barros Lisboa              |  | Executive Officer |  | August 2, 1964    
|Nicolau Ferreira Chacur              |  | Executive Officer |  | July 24, 1964     
|Raphael Afonso Godinho de Carvalho   |  | Executive Officer |  | February 28, 1966 
|Roberto Lamy                         |  | Executive Officer |  | April 9, 1958     
|Rogério Carvalho Braga               |  | Executive Officer |  | January 30, 1956  
|Rogério Paulo Calderón Peres         |  | Executive Officer |  | February 02,1962  

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The biographies of our Directors and Executive Officers are summarized below:

Directors

Pedro Sampaio Malan  Mr. Malan was elected Vice Chairman of our Board of Directors in 2003 and Chairman of our Board of Directors on April 30, 2004. Mr. Malan served as Brazils Minister of Finance from 1995
to 2002, as Chairman of the Central Bank from 1993 to 1994 and as Special Council Executive Officer and Chief Negotiator for External Debt Issues of the Ministry of Finance from 1991 to 1993 and as an Executive Director of the World Bank from 1986
to 1990 and again from 1992 to 1993. Presently, he also serves as a member of the Board of Directors of Globex Utilidades S.A.  Ponto Frio, Alcoa Alumínios S.A., EDB  Energias do Brasil S.A. and IASCF  International
Accounting Standards Committee Foundation. He received a degree in Electrical Engineering from the Polytechnic School of the Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro and received a Ph.D. in Economics
from University of Berkeley, California.

Pedro Moreira Salles  Mr. Moreira Salles joined us in 1989 and became Chairman of our Board of Directors in 1997 after serving as Vice Chairman for almost six years. On April 30, 2004, Mr. Moreira Salles was
elected Chief Executive Officer and continued to serve as Vice Chairman of our Board of Directors. Presently, Mr. Moreira Salles also serves as a member of the Board of Directors of Unibanco Holdings S.A., Unibanco AIG Seguros S.A. Instituto
Unibanco, Brasil Warrant Administração de Bens e Empresas S.A., Brasil Warrant Participações S.A. and E. Johnston Representação e Participações S.A. He holds a B.A. in Economics and History
from the University of California, Los Angeles, where he graduated Magna Cum Laude. He also attended the graduate program in International Relations at Yale University and the OPM  Owners/President Management Program at Harvard University.

Francisco Eduardo de Almeida Pinto  Mr. Almeida Pinto was elected as a member of our Board of Directors in 2007 and as a member of the Board of Directors of Unibanco AIG Seguros S.A., in 2008. In 1984, he joined
Banco da Bahia Investimentos (presently Banco BBM S.A.) where he acted, among other positions, as Chief Treasurer, from 1989 to 1990, Chief Financial Officer from 1991 to 1993 and later, Chief Executive Officer from 1994 to 1995. Mr. Almeida Pinto
served as Director of Monetary Policy for the Central Bank from 1993 to 1994. He led the process of structuring Unibanco Asset Management at 1995. From 1998 to 2002, he acted as Chief Executive Officer of BBA Capital DTVM S.A. and its successor BBA
Icatu Investimentos DTVM S.A. He graduated in Economics at Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro.

Guilherme Affonso Ferreira - Mr. Ferreira was elected to our Board of Directors in 2007 and he has also been a member of Unibanco Holdings Board of Directors since 1994. He joined Bahema S.A. in 1976 where he held
different positions until 1987, when he became Chief Executive Officer, a position he held until 1991. Mr. Ferreira was also Officer from 1978 to 1980, and Chief Executive Officer from 1981 to 1987 of Bahema Agropecuaria S.A.. He is presently Chief Executive Officer of Bahema Participações S.A., a position he has held since 1991, and member of the Board of Directors
of Eternit S.A., Signatura Lazard Assessoria Financeira Ltda., HSBC Administração de Serviços Para Fundos de Pensão Ltda., Rio Bravo Investimentos S.A., Tavex Algodonera S.A. and Cia Brasileira de
Distribuição. Mr. Ferreira graduated from the Polytechnic School at the University of São Paulo (Escola Politecnica da Universidade de São Paulo) and later took courses in Economics and Politics at Macalester College of
Saint Paul and in Management at James Cook University.

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Israel Vainboim  Mr. Vainboim joined us in 1969 and has held several positions in the areas of banking investments, leasing and credit. He became a member of our Board of Directors in 1988. Mr. Vainboim also
serves as Chairman of our Audit Committee, Chairman of the Board of Directors of Unibanco Holdings, a Director of Unibanco AIG Seguros S.A., a Director of Banco Investcred Unibanco S.A., among other subisidiaries. He also serves as a member of the
Board of Directors of Souza Cruz S.A., Iochpe Maxion S.A., E-bit Tecnologia em Marketing S.A. and Vinhedo Investimentos Ltda.. He received a B.S. in Mechanical Engineering from the National School of Engineering, Rio de Janeiro and a MBA from
Stanford University.

Joaquim Francisco de Castro Neto  Mr. Castro Neto joined us in 1973 as Chief Executive Officer of FINASUL and has since held several senior positions, including, Vice President of the Technology, Marketing,
Operations and Vice President of Retail Business. He was appointed to serve as Executive President of our Retail Business Group in March 1998, position occupied until July, 2004. Mr. Castro served as a member of the Boards of Credicard, Orbitall,
Prever, Banco Dibens, TecBan and VISA Latin America and Caribean. On April 30, 2004, he was elected to serve as a member of our Board of Directors. He also serves as a member of the Board of Directors of Cia Hipotecária Unibanco Rodobens and
Dibens Leasing, among other subsidiaries. He also serves as a member of the Board of Directors of Magazine Luiza S.A. and Redecard. Mr. Castro Neto holds a Business Management degree from Getúlio Vargas Foundation (Fundação
Getúlio Vargas) and holds a specialization in Sales Management, Marketing and Development of New Products from IMEDE.

Pedro Luiz Bodin de Moraes  Mr. Bodin de Moraes was elected to our Board of Directors in 2003. He is a partner of Icatu Holding and he was also a partner and a managing director of Banco Icatu from 1993 to 2002.
Before that, he served as a Board Member at the Central Bank, from 1991 to 1992 and as a Director at the BNDES, from 1990 to 1991. He received a B.A. and a M.A. in Economics from the Catholic University (Pontifícia Universidade
Católica) of Rio de Janeiro and a Ph.D. in Economics from the Massachusetts Institute of Technology (MIT).

João Dionísio Amoêdo  Mr. Amoêdo joined us in May 2004 as Vice President, becoming responsible for Corporate and Treasury operations until March 2005, when he was elected to our Board of
Directors. He began his career at Citibank, worked as a senior Officer at Banco BBA-Creditanstalt S.A. and served as Chief Executive Officer of Fináustria CFI e Leasing. Mr. Amoêdo holds a degree in Business from the Catholic University
(Pontifícia Universidade Católica) of Rio de Janeiro and a degree in Civil Engineering from the Federal University of Rio de Janeiro (Universidade Federal do Rio de Janeiro).

Vicente Falconi Campos  Mr. Falconi Campos began his career as an engineer at Compania Siderúrgica Mannesmann. He served as professor at the Universidade Federal de Minas Gerais, from 1964 to 1992. He also
worked in the Fundação Christiano Ottoni and was one of the founders of Fundação de Desenvolvimento Gerencial. Presently, he is a member of the Board of Directors of AmBev-Compania de Bebidas das Americas since 1997 and
of Sadia S.A. since 2002. Mr. Falconi Campos graduated in Engineering at the Federal University of Minas Gerais (Universidade Federal de Minas Gerais).  He also holds a Master of Science (M.Sc.) and a PhD degree, both in Engineering from the
Colorado School of Mines.

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Executive Officers

Pedro Moreira Salles  Please refer to the biography set forth above.

Demosthenes Madureira de Pinho Neto  Mr. Madureira de Pinho Neto was General-Coordinator of Monetary and Financial Policy at the Ministry of Finance in 1993 and Director of the Central Bank of Brazil from 1997 to
1999. He was also an Executive Officer of Unibanco and Unibanco Asset Management from 1994 to 1997, Chief Executive Officer of Dresdner Asset Management, from 1999 to 2002 and Vice-President of National Association of Investment Banks
(Associação Nacional de Bancos de Investimento  ANBID), from 2000 to 2003. Currently, he is Vice-President of Unibanco, responsible for Wholesale and Private banking, and also Chief Executive Officer of Unibanco Asset Management.
He also was a professor of economics and finance at the Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro, Getulio Vargas Foundation (Fundação Getulio Vargas) of São Paulo and Brazilian
Institute of Capital Markets (Instituto Brasileiro de Mercado de Capitais  IBMEC) of São Paulo. He received a BA and MA in Economics from the Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro and
Ph.D. in Economics from the University of California at Berkeley.

Marcio de Andrade Schettini  Mr. Schettini has been our Executive Vice President since 2004. He is responsible for the commercial bank and retail divisions. He is also a current member of the Board of Directors of
Redecard S.A.. Presently, he is, among others positions in our subsidiaries, a Chief Officer of Banco Fininvest S.A., Hipercard Banco Múltiplo and Unicard Banco Múltiplo S.A. and Chairman of Banco Investcred Unibanco S.A. He holds a
Bachelors degree in Electrical Engineering and a Masters in Science degree in Finance from the Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro, where he specialized in Mathematical Modeling. He also
attended the Owner/President Management Program at Harvard University.

Geraldo Travaglia Filho  Mr. Travaglia joined us in 1979 and is our Chief Financial Officer and our Vice President since April 30, 2004. Previously, he served as Executive Officer from 1996 to 2004. From 2000 to
2002, he was in charge of the development of the Internet Banking program; from 1998 to 2000, served as the Executive Officer in charge of marketing and products for the retail banking group; from 1996 to 1997, was responsible for the integration of
branches, systems and operations of Banco Nacional; from 1994 to 1995, conducted the reengineering program of Unibanco; and from 1989 to 1993, he served as the banks Controller. Mr. Travaglia holds a specialization in Banking from The Wharton
School of the University of Pennsylvania. He also holds a Business Administration degree from the University of São Paulo (Universidade de São Paulo  USP).

José Castro Araújo Rudge  Mr. Rudge joined us in 1995, when Unibanco purchased Banco Nacional. Prior to joining us, he worked for nine years at Sul América Seguros and from 1985 to 1987 he was
an Officer of Bradesco Seguros, responsible for the management of the insurance activities of the State of São Paulo and Bradescos international operations. He was also President of Nacional Seguros from 1987 to 1995. He was elected to
serve as our Vice President at Unibanco on April 30, 2004. In 2005, he joined the Board of Directors of Brazilian Reinsurance Institute (Instituto de Resseguros do Brasil). On March, 2007, he assumed the Unibanco Human Resource and Communication
Vice-Presidency. Presently, he is Chief Executive Officer of Unibanco AIG Seguros S.A. and AIG Brasil Companhia de Seguros. He holds a degree in Business Administration from the Business School of São Paulo (Faculdade de
Administração de São Paulo).

Celso Scaramuzza  Mr. Scaramuzza joined us in 1977 and has been serving as a member of our Board of Executive Officers since 1994. Mr. Scaramuzza served as our Vice President from August 1997 to April 2004. Since
January 1998, he has been responsible for our private banking business, both onshore and offshore. He received a bachelor degree in Administration from the Armando Álvares Penteado Foundation (Fundação Armando Álvares Penteado) of São Paulo.

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Daniel Luiz Gleizer  Mr. Gleizer was elected to serve as an Executive Officer for the Risk Management and Macro Economic Research on April 30, 2004. He is responsible for the Treasury Area since March 2005. Mr.
Gleizer began his career with the International Monetary Fund and had taken on positions with several financial institutions, such as Deutsche Bank and Credit Suisse First Boston. Mr. Gleizer served as Deputy Governor at the International Area of
Central Bank of Brazil from 1999 to 2002. Mr. Gleizer holds a degree in Economics from the Federal University of Rio de Janeiro (Universidade Federal do Rio de Janeiro), an M.A. in Economics from the University of Illinois, Urbana-Champaign and a
Ph.D. in Economics from the University of California, Berkeley.

Ivo Luiz de Sá Freire Vieitas Junior  Mr. Vieitas joined us in December 1998 and after serving several years as an Officer for corporate finance, he currently serves as the Executive Officer responsible for
all activities related to Hipercard. Prior to joining us, he had worked at Indosuez W.I. Carr Securities (Credit Agricole). He graduated in Mechanical Engineering from the Federal University of Rio de Janeiro (Universidade Federal do Rio de Janeiro)
and holds an MBA from the J.L. Kellogg School of Management.

José Roberto Haym  Mr. Haym joined Unibanco AIG Seguros in 1992 as its Retail Sales Officer and subsequently performed activities in the Products, Operations and Claims areas. He was appointed Unibanco
AIG ́s Executive Vice President in 1999 and held that position until he was transferred to Unibanco in 2004. In June 2004, he was appointed Executive Officer for the corporate segment of Unibanco. From March 2005 until March 2007, he was also
responsible for the management of Unibanco ́s retail business in the City of São Paulo. Starting in March 2007, his responsibilities also include managing the mortgage business and the payroll-linked loans. Before joining Unibanco, Mr.
Haym worked at Citibank for nine years at its Consumer Bank. He holds an economics degree from the Federal University of Rio de Janeiro (Universidade Federal do Rio de Janeiro) and an MBA in Finance from Columbia University.

Marcos de Barros Lisboa  Mr. Lisboa was elected as our Executive Officer in 2006. From 2001 to 2003, he was Academic Director of the Graduate School of Economics (Escola de Pós Graduação em
Economia  EPGE) of Getúlio Vargas Foundation of Rio de Janeiro (Fundação Getulio Vargas do Rio de Janeiro). He was also Secretary of Economic Policy at Finance Ministry from 2003 to 2005 and Chief Executive Officer of
Brazilian Reinsurance Institute (Instituto de Resseguros do Brasil) from 2005 to 2006. He also was elected as member of the Boards of Directors of AIG Brasil Cia. de Seguros and Unibanco AIG Seguros S.A. in 2008. He holds a Bachelors degree
and a Masters degree in Economics from Rio de Janeiro Federal University (Universidade Federal do Rio de Janeiro) and a PhD in Economics from University of Pennsylvania, United States of America. Mr. Lisboa held academic posts in the U.S. and
Brazil, including at the Department of Economics at Stanford University and at the Getulio Vargas Foundation (Fundação Getulio Vargas) of São Paulo.

Nicolau Ferreira Chacur  Mr. Chacur joined Unibanco in 2004 and he is responsible for the commercial area of the wholesale bank. He began his career in Banco BBA Creditanstalt S.A. He also worked for Banco
Itaú BBA S.A. as a Commercial Officer. He holds a law degree from the Law School of the University of São Paulo (Universidade de São Paulo) and a degree (Diplôme) from LInstitut dEtudes Politiques of Paris.

Raphael Afonso Godinho de Carvalho  Mr. Carvalho previously worked for Nationwide Marítima Vida e Previdência as Senior Vice President. He was also the Officer of private pension and insurance in
Canada Life Pactual Previdência e Seguros/Banco Pactual S.A. Presently, he is, the Executive Officer responsible for the Fininvest operations. Mr. Carvalho has a degree in mathematics, with emphasis in Computer Systems, from the Federal
University of Rio de Janeiro (Universidade Federal do Rio de Janeiro), and holds an MBA in Finance from the Institute of Administration and Management of the Catholic University (Pontifícia Universidade Católica) of Rio de Janeiro.

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Roberto Lamy  Mr. Lamy joined us in 1979 and has been our Executive Officer since 2004. Mr. Lamy held several senior positions in Unibanco, our subsidiaries and Febraban. Presently, he is an officer of Banco
Dibens S.A., Banco Fininvest S.A., Hipercard Banco Múltiplo S.A. and Unicard Banco Múltiplo S.A., among other Unibanco subsidiaries. He was a University professor and author of a book. He holds a Production Engineering degree and a
degree in Mechanical Engineering from the Industrial Engineering School (Faculdade de Engenharia Industrial-FEI).

Rogério Carvalho Braga  Mr. Braga joined us in 1999 as President Officer of Unibanco Companhia de Capitalização S.A. In January of 2000, he became the head of the Human Resources area, serving
in that capacity for two years. He was promoted to Executive Officer of Unibanco in February of 2002 at the same time when he was appointed head of the Product and Marketing division of our retail bank. On July 2004, Mr. Braga was nominated
President of Banco Dibens and head of the auto finance division, as well as our mortgage and home finance businesses. One year later, he added the responsibility for a fourth of our branch network. During 2004, Mr. Braga also served as Director of
Brazilian Banks Association (Federação Brasileira de Bancos  FEBRABAN), appointed by Unibanco. Mr. Braga holds a Law degree from the Catholic University (Pontifícia Universidade Católica) of São Paulo
and an MBA from Pepperdine University.

Claudia Politanski  Ms. Politanski joined us in 1991 and presently serves as our General Counsel, being our Legal and Tax Executive Officer. She received a degree in Law from the University of São Paulo
(Universidade de São Paulo) and holds a LL.M. degree from the University of Virginia and a MBA granted by Dom Cabral Foundation (Fundação Dom Cabral) Minas Gerais.

Rogério Paulo Calderón Peres  Mr. Calderón Peres was elected our Executive Officer in 2007. He was Vice President of Bunge Fertilizantes S.A., Officer of Bunge Brasil S.A. and member of the
Board of Directors of Fosfertil, Ultrafertil e Fertifos. He also was a professor at Getúlio Vargas Foundation (Fundação Getúlio Vargas).  Presently he is a Chief Executive Officer of Banco Único S.A. Mr.
Calderón holds a Business Management degree from Getúlio Vargas Foundation (Fundação Getúlio Vargas) and an Accounting degree from Paulo Eiró Foundation (Fundação Paulo Eiró) and holds a
E-Business Education Series from Darden Graduate School of Business Administration da University of Virginia.

Unibanco Holdings

- Unibanco Holdings is managed by its:
- Board of Directors (Conselho de Administração), consisting of three Directors, including one Chairman and one Vice Chairman; and
- Board of Officers (Diretoria), consisting of four Officers, including one Chief Officer and three Officers.

The Board of Directors is Unibanco Holdings decision-making body. It determines Unibanco Holdings general corporate guidelines and policies by:

- establishing its corporate strategy;
- reviewing its business plans; and
- supervising and monitoring the activities of its Officers.

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The Board of Officers is elected by the Board of Directors and is responsible for the management and supervision of Unibanco Holdings corporate activities. It follows and ensures compliance with Unibanco
Holdings general corporate guidelines and policies. The members of the Board of Officers have the power to act on behalf of Unibanco Holdings pursuant to its bylaws.

As of May 31, 2008, the Directors and Officers of Unibanco Holdings are:

|                            |  |                         |  |                  
|--------------------------- |  | ----------------------- |  | -----------------
|Directors                   |  | Position                |  | Date of Birth    
|                            |  |                         |  |                  
|                           
|Israel Vainboim             |  | Chairman                |  | June 1, 1944     
|Pedro Moreira Salles        |  | Vice Chairman           |  | October 20, 1959 
|Guilherme Affonso Ferreira  |  | Director                |  | May 9, 1951      
|                           
|Officers                    |  | Position                |  | Date of Birth    
|                            |  |                         |  |                  
|                           
|Pedro Moreira Salles        |  | Chief Executive Officer |  | October 20, 1959 
|Geraldo Travaglia Filho     |  | Officer                 |  | May 26, 1951     
|José Lucas Ferreira de Melo |  | Officer                 |  | December 30, 1956
|Marcelo Orticelli           |  | Officer                 |  | March 20, 1965   

Each Director is elected for a one-year term by the general shareholders meeting and they may be re-elected to subsequent terms. If a Director resigns, they remain in office, or their position remains vacant,
until the election of their successor. The current Directors of Unibanco Holdings were elected at the Ordinary Shareholders meeting held on March 27, 2008.

At the Unibanco Holdings level, there is a Shareholders Agreement between Bahema Group (Bahema) and E. Johnston Representação e Participações S.A (E. Johnston),
a company controlled by the Moreira Salles family. In accordance with this agreement, Bahema is entitled to elect one of Unibanco Holdings three directors. The remainder of the members of the Board of Directors is elected by E. Johnston. Mr.
Guilherme Afonso Ferreira was elected by Bahema at the Ordinary Shareholders meeting held on March 27, 2008. For a description of Unibanco Holdings major shareholders see Item 7.A  Major Shareholders.

The members of the Board of Officers of Unibanco Holdings are elected for one-year terms and they may be re-elected to subsequent terms. If an Officer resigns, they remain in office, or their position remains vacant,
until the election of their successor. All members of the Board of Officers of Unibanco Holdings were elected at the Board of Directors meeting held on March 27, 2008.

The biographies of Mr. José Lucas Ferreira de Melo and Mr. Marcelo Orticelli, the only members of the administrative body of Unibanco Holdings who are not members of our Board of Directors or our Board of
Executive Officers, are summarized below:

José Lucas Ferreira de Melo  Mr. Ferreira de Melo joined us as an Executive Officer in 1999. From April 8, 2005 to March 15, 2007, he served as Vice President responsible for the legal, auditing, risk,
compliance and institutional relationships areas. Prior joining us, he served as a Director at the Comissão de Valores Mobiliários (Securities Commission of Brazil) in 1992 and as a partner of  PricewaterhouseCoopers Auditores Independentes until 1997. He holds an Accounting
degree from the University of Federal District (Universidade do Distrito Federal).

Marcelo Luis Orticelli  Mr. Orticelli has been working with us for 19 years, developing, planning and controlling activities and specifically improving human resources improvements. After serving as a Deputy
Officer, in March 2005, he was elected to serve as an Officer for the risk management area. Mr. Oticelli holds a Business Management degree from the Catholic University (Pontifícia Universidade Católica) of São Paulo and a
Masters degree from Getúlio Vargas Foundation (Fundação Getúlio Vargas) in cooperation with the University of Texas.

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6.B Compensation

Unibanco

Compensation

Our shareholders establish the maximum annual aggregate compensation of our directors, members of the Audit Committee and officers at their annual shareholders meeting. We are not required under Brazilian law to
disclose on an individual basis the compensation of our directors, members of the Audit Committee and officers, and we do not otherwise publicly disclose this information.

In 2007, the maximum aggregate compensation approved for members of our Board of Directors, Board of Officers and Audit Committee was:

- R$ 7 million for all of our directors and Audit Committee members; and
- R$170 million for all of our officers.

For the year ended December 31, 2007, our directors, Audit Committee members and officers (109 persons as of such date) were collectively paid approximately R$152.63 million for their services. The directors and
officers of all our companies received aggregate compensation of approximately R$ 181.80 million for the year ended December 31, 2007.

For 2008, the maximum aggregate compensation approved for the members of our Board of Directors, Board of Officers and Audit Committee members is:

- R$10 million for all of our directors and Audit Committee members; and
- R$210 million for all of our officers.

The compensation due to the members of our Board of Directors, Board of Officers and Audit Committee is paid monthly. In addition, the maximum aggregate compensation mentioned herein includes the amounts to be paid
under our bonus program. The criteria for granting and paying bonus compensation varies according to the activities performed by the different areas and therefore, the payment of the bonus may vary in accordance with the department and activities
performed by each member.

Our directors, Audit Committee members and officers may participate in the same pension plan available to all of our employees. The total amount paid to provide pension, retirement and similar benefits for all of our
employees in 2007 was R$ 25.75 million and from January 1, 2008 through March 31, 2008 was R$ 12.31 million.

Executives Stock Option Plan

On October 31, 2001, our shareholders and Unibanco Holdings ́shareholders approved a stock option plan. Under this plan, we began granting stock options, with a vesting period of at least three years, on January
21, 2002. Through this stock option plan we are able to offer our officers, directors, superintendents and, in exceptional cases, managers or individuals with equivalent positions (collectively, Executives), the opportunity to own
Unibancos shares and Units and to thereby benefit from increases in the value of our stock. The objective of the stock option plan is to foster high performance and a long-term commitment from our management, in addition to attracting,
retaining and motivating our Executives.

On April 8, 2005, our shareholders approved an amendment to the stock option plan which provides that (i) Executives may not exercise their options or sell their relevant shares or Units when we or Unibanco Holdings are
prohibited by law from selling our own shares or

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Units; (ii) option exercises may be fulfilled with treasury shares or with shares issued in capital increases; and (iii) the exercise period for options may be extended under limited circumstances from five to eight years.

At the Extraordinary Shareholders Meeting, held on March 21, 2007, a new amendment in the current stock option plan was approved. As a result of the amendments, our stock option plan allows the granting of two
kinds of stock options: (i) the regular stock options; and (ii) the bonus stock options.

Regular Stock Options

Regular stock options are granted to certain Executives for a price based on the market price of our shares or Units at the date of such grant. A special committee, composed of four to six members elected by the
President of the Board of Officers of Unibanco, as well as of one member of the Board of Directors of Unibanco Holdings, is responsible for establishing the vesting period of the stock options, which shall be between two and eight years, as well as
other specific characteristics of each grant, such as the beneficiaries and the number and amount of options. This committee may not grant options that in any year would represent more than 1% of our total authorized capital and there may not be
outstanding options representing, in the aggregate, more than 10% of our total authorized capital at any time.

As of December 31, 2007, we had granted 26,899,862 stock options (excluding any cancelled stock options), of which 13,419,962 stock options remain outstanding and 13,479,900 stock options have been exercised. Options
may be exercised for Units at an average price of R$8.11 per option, which includes the adjustment for the share bonus that took place in July 2006. The exercise period for these options began on January 21, 2005 and will end on March 21,
2013.  During 2007, our Executives exercised 5,721,728 options.  For the year ended December 31, 2007, we recognized R$ 66 million of compensation expenses related to our stock option plan.

Bonus Stock Options

Under this partnership program, Executives that are selected to participate in this program (Partners) may invest a percentage of their respective bonus compensation to acquire shares or Units of Unibanco or
Unibanco Holdings (Acquired Shares or Units). For each Acquired Share or Unit, the Partner receives a certain amount of Bonus Options, which are options to acquire shares or Units subject to defined vesting conditions. The
Bonus Options can be exercised by the Partner after maintaining the ownership of the Acquired Shares or Units for a period of 3 to 5 years.

On July 10, 2007, 54 executives were selected to be Partners of Unibanco. As of December 31, 2007, there were 53 partners, and 51 of those partners have had already acquired 947,851 Acquired Shares or Units and had received
1,226,808 Bonus Options. The exercise period for these options will begin on September 3, 2010 and will remain in effect until September 3, 2012.

Unibanco Holdings

The shareholders of Unibanco Holdings establish the annual maximum aggregate compensation of directors and officers at their annual shareholders meeting.  We are not required under Brazilian law to disclose on an
individual basis the compensation of our directors and officers, and we do not otherwise publicly disclose this information.

In both 2007 and 2008, the maximum aggregate compensation approved for Unibanco Holdings Board of Directors and Board of Officers was:

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- R$480 thousand per year for the members of the Board of Directors of Unibanco Holdings as a group; and
- R$2.04 million per year for the members of the Board of Officers of Unibanco Holdings as a group.

In 2007, the directors and officers of Unibanco Holdings (collectively 6 persons as of December 31, 2007) received, for services in all capacities to Unibanco Holdings, aggregate compensation of approximately R$20.7
thousand. This amount also includes discretionary bonuses based on the profitability of Unibanco Holdings.

6.C Board Practices

For information concerning the election of our and Unibanco Holdings directors and officers and their respective terms of office, please see Item 6A. Directors, Senior Management and Employees 
Directors and Senior Management.

Our and Unibanco Holdings directors and officers have not entered into any service contract with us or any of our subsidiaries providing for benefits upon termination of employment.

Neither we nor Unibanco Holdings have a remuneration committee.

Audit Committees

According to Central Bank regulations, the audit committee is required to be a body created by shareholder resolution, which must be separate from the board of directors. Notwithstanding the requirement of separate
bodies, the members of the audit committee may be members of the board of directors, provided that they meet certain independence requirements. In addition, under Brazilian law, the hiring of the independent auditor is a right that is reserved
exclusively for the board of directors of a company.

Pursuant to our bylaws and to the Central Bank regulations, on April 30, 2004, we established an Audit Committee, which acts as the audit committee for all our affiliates and subsidiaries, except for Unibanco Holdings,
which has its own audit committee.

The primary function of our Audit Committees is to assist our boards of directors in fulfilling their oversight responsibilities by analyzing and ensuring our compliance with applicable laws and regulation, as well as
our Code of Ethics. Our Audit Committees also supervises the integrity of our financial statements and internal controls systems, including the processing of confidential, anonymous information or denunciation from employees, shareholders,
suppliers, clients and interesting parties, regarding frauds, questionable accounting or auditing matters.

Among other things, our and Unibanco Holdings Audit Committee is responsible for:

- recommending to the respective Board of Directors, and in the case of Unibanco, to each of our consolidated subsidiaries Board of Directors, the appointment of and, if necessary, the replacement of, the respective independent auditors;
- overseeing the work of our independent auditors;
- reviewing our financial statements, before the publication of such documents, including the explanatory notes, management reports and independent auditors report and in the case of Unibanco, the reports issued by the independent auditors of
each of our consolidated subsidiaries;

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- analyzing the effectiveness of our internal and independent audit procedures and the compliance by management with the audit policies and procedures established by the internal and independent auditors; and
- meeting with our management and our independent and internal auditors, and in the case of Unibanco, the management and the independent and internal auditors of each of our consolidated subsidiaries, in order to verify their compliance with audit
committee recommendations.

For more information about the regulation of audit committees, see Item 4.B Business Overview Regulation and Supervision Regulations Independent Accountants and Audit Committees and
Item 16.D  Exemptions from the Listing Standards for Audit Committees.

Unibanco

Our bylaws require that our Audit Committee be composed of three to five members, each of whom is elected by our shareholders to a five-year maximum term of office. Our Board of Directors elects our Audit
Committees Chairman.  The members of our Audit Committee may be replaced as follows:  (i) in case of a temporary replacement, the Chairman of our Audit Committee will be replaced by another member chosen by the Chairman, and (ii) in the case
of a vacancy, such position would be filled by an individual appointed by our Board of Directors. A substitute member will serve on the Audit Committee until such time as our shareholders elect a replacement member to the Audit Committee.

On November 25, 2004, our Board of Directors approved the Audit Committees charter. Our Board of Directors believes that the establishment of the Audit Committee has strengthened our internal controls and
corporate governance and they rely on the activities performed by the Audit Committee to assist with their oversight and administration of our business and operations.

The following individuals were elected to five-year terms as members of our Audit Committee at our April 30, 2004 Ordinary Shareholders Meeting: Gabriel Jorge Ferreira, Eduardo Augusto de Almeida Guimarães
and Guy Almeida Andrade. At our March 21, 2007 Ordinary Shareholders Meeting, the following individuals were elected to join our Audit Committee until the term of office of the abovementioned members has expired: Israel Vainboim and
Rogério Paulo Calderón Peres. Mr. Peres subsequently resigned on June 27, 2007. The Central Bank approved the election of Mr. Vainboim, a member of our Board of Directors, and he became the President of our Audit Committee on September
27, 2007.

Except for Mr. Ferreira, who is a director of one of our affiliates, and Mr. Vainboim, who is also a member of our Board of Directors, the members of our Audit Committee are compensated by us for their post as members
of the audit committee and do not receive any other compensation from our affiliates.  Please note that in accordance with Central Bank regulations, Audit Committee members who also serve on the Board of Directors may choose to receive compensation
for their service on the Audit Committee or their service on the Board of Directors, but not both.

Our Audit Committee holds, since its creation, meetings at least once a month and also meets whenever our corporate interests so require. Our Audit Committee remains in compliance with our bylaws. The decisions of the
Audit Committee are taken by a majority of votes at a meeting where a majority of the elected members of the Audit Committee are present. In the event of a tie, the Chairman, in addition to his own vote, is entitled to cast the tie-breaking vote.

Except for the fact that (i) each of our audit committee members is not required to be also a member of our Board of Directors and (ii) our Board of Directors, upon the advice of
our Audit Committee, retains the power to appoint the independent auditor, our Audit Committee is comparable to, and performs the functions of, audit committees of U.S. companies.

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Unibanco Holdings

Unibanco Holdings is not required by Brazilian Law to have its own audit committee. Notwithstanding the foregoing, Unibanco Holdings has an Audit Committee, which was established by Unibanco Holdings ́ Board of
Directors in order to comply with the requirements set forth in Rule 10A-3 of the Securities Exchange Act of 1934 and the NYSE Listed Company Manual.

Pursuant to the internal regulations of Unibanco Holdings, Unibanco Holdings Audit Committee is composed of one member who is elected by Unibanco Holdings Board of Directors.

Mr. Israel Vainboim, who is also a member of our Audit Committee and of our Board of Directors and the Chairman of Unibanco Holdings Board of Directors, was elected as the sole member of Unibanco Holdings
Audit Committee at Unibanco Holdings March 21, 2007 Board of Directors Meeting.

Ombudsman

On September 27, 2007 our Board of Directors approved the creation of our Ombudsman ́s Office.  Mr. Marcos de Barros Lisboa is the director responsible for the Ombudsman ́s Office and Mrs. Cristiana de Andrade
Pinciroli Pascual is our Ombudswoman.

The Ombudsman ́s Office will serve as a means of communication between our clients and us and among its responsibilities will be:

- the receipt and analysis of, and response to, client complaints,
- the mediation of potential conflicts, and
- the assurance of strict compliance with legal and regulatory protections of consumers rights.

In addition, the Ombudsmans Office will report to the internal auditors, the Audit Committee and the Board of Directors, at the end of each semester, on the activities of the Ombudsmans Office.

6.D Employees

Unibanco

Our human resources area, known as Pessoas (People), is committed to promoting professional growth and aligning the interests of our employees with our strategic objectives. Unibanco People develops tools
for improving the process of managing our employees, focusing on professional training and development, capturing and attracting new talent, developing incentive and recognition programs and improving relations between our in-house community
(employees) and the external community (government entities and unions).

As of December 31, 2007, we had 34,215 employees, an increase of 3.8% from 32,956 in December 2006.

The following table shows the number of our employees grouped by business area:

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|                          |  |                                        |  |        |  |       
|------------------------- |  | -------------------------------------- |  | ------ |  | ------
|                          |  | Number of Employees as of December 31,
|                          |  |                                       
|Area                      |  | 2005                                   |  | 2006   |  | 2007  
|                          |  |                                        |  |        |  |       
|                         
|Retail Branches           |  | 11,073                                 |  | 11,421 |  | 12,890
|Corporate-Site Branches   |  | 1,009                                  |  | 1,116  |  | 1,125 
|Unicard                   |  | 223                                    |  | 240    |  | 375   
|Hipercard                 |  | 57                                     |  | 67     |  | 93    
|Wholesale                 |  | 366                                    |  | 429    |  | 421   
|Insurance                 |  | 1,301                                  |  | 1,330  |  | 1,519 
|Unibanco Asset Management |  | 89                                     |  | 84     |  | 105   
|Banco Dibens              |  | -                                      |  | -      |  | -     
|Fininvest (1)             |  | 3,755                                  |  | 4,928  |  | 4,463 
|Others                    |  | 11,631                                 |  | 13,341 |  | 13,224
|                          |  |                                        |  |        |  |       
|Total                     |  | 29,504                                 |  | 32,956 |  | 34,215

___________________
(1) Includes the Hipercards sales force in 2005, 2006 and 2007.

The following tables set forth the number of Unibanco employees grouped by title and region:

|               |  |                                       |  |        |  |       
|-------------- |  | ------------------------------------- |  | ------ |  | ------
|               |  | Number of Employees as of December 31
|               |  |                                      
|Title          |  | 2005                                  |  | 2006   |  | 2007  
|               |  |                                       |  |        |  |       
|              
|Officer        |  | 115                                   |  | 109    |  | 128   
|Superintendent |  | 316                                   |  | 302    |  | 309   
|Manager        |  | 2,300                                 |  | 2,521  |  | 2,369 
|Others (1)     |  | 26,773                                |  | 30,024 |  | 31,409
|               |  |                                       |  |        |  |       
|Total          |  | 29,504                                |  | 32,956 |  | 34,215

___________________
(1) Includes employees in foreign offices.

|                |  |                                        |  |        |  |       
|--------------- |  | -------------------------------------- |  | ------ |  | ------
|                |  | Number of Employees As of December 31,
|                |  |                                       
|Region          |  | 2005                                   |  | 2006   |  | 2007  
|                |  |                                        |  |        |  |       
|               
|Southeast       |  | 23,235                                 |  | 25,889 |  | 26,850
|South           |  | 2,358                                  |  | 2,872  |  | 3,110 
|Northeast       |  | 2,513                                  |  | 2,755  |  | 2,708 
|Center-East     |  | 892                                    |  | 885    |  | 887   
|Foreign Offices |  | 343                                    |  | 387    |  | 350   
|North           |  | 163                                    |  | 168    |  | 310   
|                |  |                                        |  |        |  |       
|Total           |  | 29,504                                 |  | 32,956 |  | 34,215

We believe that we maintain a positive relationship with our employees and their unions. Approximately 37% of our Commercial Bank employees are members of a union. Collective bargaining agreements with the bank
employees unions typically have 12-month terms and are subject to renewal in September of each year.

In 2007, we distributed R$560 million to our employees under our profit sharing program. This program embodies the goals of our corporate culture.

Also, we offer our Executives the opportunity to become shareholders through our Executives Stock Option Plan that awards exceptional professional performance.  As of December 31, 2007, we had granted 26,899,862 stock
options (excluding any cancelled stock options), of which 13,419,962 stock options remain outstanding and 13,479,900 stock
options have been exercised. Options may be exercised for Units at an average price of R$8.11 per option, which includes the adjustment for the share bonus that took place in July 2006. The exercise period for these options began on January
21, 2005 and will end on March 21, 2013. During 2007, our Executives exercised 5,721,728 options.

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At the Extraordinary Shareholders Meeting, held on March 21, 2007, an amendment  in the Stock Option Plan was approved to establish a partnership program, under which certain Executives are chosen to be Partners of
Unibanco. This Partnership program aims to align executives commitment with long-term results and reward exceptional performance. It is also an instrument to attract, retain and motivate talented people. These select Executives are able to
invest a percentage of their respective bonuses in Unibanco and Unibanco Holdings and obtain in return a certain amount of bonus Units, which are options for Acquired Shares or Units, subject to defined vesting conditions. As of December 31, 2007,
there were 53 partners, and 51 of those partners have acquired 947,851 Acquired Shares or Units and had received 1,226,808 Bonus Options. The only condition to exercising the Bonus Options is meeting the obligation to maintain the ownership of the Acquired
Shares or Units for a period of 3 to 5 years. The exercise period for these options will begin on September 3, 2010 and will remain in effect until September 3, 2012. For further information, see Item 6.B. Compensation  Unibanco 
Executives Stock Option Plan.

In 2007, we invested more than R$52 million in training and development activities for our employees, including MBA programs in Brazil and abroad. In 2007, we offered the following new in-house courses to our
employees: Melhoria Contínua da Qualidade (Continuous Improvement of Quality), Programa Formação em Derivativos (Derivatives Training Program) and Programa Formação Gerente de
Atendimento (Attendance Manager Training Program).

Our personal support program Fique Ok (Be OK) is available to all of our employees and their families. This program assists employees facing adverse situations arising from their personal and professional
life, by providing assistance through qualified professionals, available 24 hours a day, seven days a week. A full range of psychological, social, legal and nutritional support is made available under this program. In 2007 more than 32,000 services
were offered by Fique OK.

We have been undertaking employee satisfaction surveys since 1997. These surveys are conducted by external consultants and they are an important factor in our ability to assess our organizational climate, identify areas
in need of improvement and take required actions to provide employees with concrete solutions to foster a healthy working environment that supports personal development. In 2007, the general satisfaction of our employees was 75, as measured on a
scale from 0 to 100 and their motivation index reached 77% according to the same study. Unibanco was recognized as one of the Best Companies to Work For by Você S.A. and Exame magazines in partnership with FIA  Fundação
Instituto de Administração(Administration Institute Foundation).

In 2006, we created and distributed information to all of our employees about our internal culture, called Jeito Unibanco (the Unibanco Way). Jeito Unibanco is comprised of ten principles that we expect each
of our employees to embody. Approximately 8,500 of our employees from different areas, positions and regions throughout Brazil took part in qualitative and quantitative surveys designed to define the Unibanco Way. The Unibanco Way has been widely
disseminated through internal communication channels, training sessions and recruiting and selection procedures. All of our employees are required to sign a manual that outlines the terms of this commitment.  The Unibanco Way is an integral part of
our corporate culture.

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Unibanco Holdings

Unibanco Holdings, a corporation organized under the laws of Brazil, controls us through its ownership of our shares.  Unibanco Holdings assets consist exclusively of its participation in our capital. The entirety
of Unibanco Holdings equity is invested in Unibanco  União de Bancos Brasileiros S.A., and therefore in 2007, all of its employees were registered in Unibanco  União de Bancos Brasileiros.

As of May 31, 2008, Unibanco Holdings held 97.1% of our outstanding common shares and 12.1% of our outstanding preferred shares.  Unibanco Holdings engages in no activities other than holding our shares.

6.E Share Ownership

Equity Ownership of Directors and Officers

As of May 31, 2008, the members of our Board of Directors and Executive Officers, as a group, own 0,456% of our shares. For more information, see Item 7.A Major Shareholders and Related Party Transaction 
Major Shareholders for a description of the stock ownership of our Executives.

E. Johnston Stock Purchase Plan

In September 1988, we established a stock purchase plan pursuant to which our officers and directors, and those of our subsidiaries, could purchase, in installments, preferred shares issued by Dirbanco
Administração e Participações S.A. (Dirbanco). Dirbanco was a company controlled by the Moreira Salles family.  In January 29, 2001 Dirbanco was merged into E. Johnston. Thus, our directors and officers had
their Dirbanco ́s shares replaced by E. Johnston ́s preferred shares. On April 15, 2004, E. Johnstons shareholders approved a reduction of capital pursuant to which shareholders who had preferred shares received Units held by E.
Johnston in exchange for their preferred shares.

Units held under such stock purchase plan are eligible for repurchase by E. Johnston or may be traded directly in the stock market, upon the retirement, death or permanent incapacity of the participants in our stock
purchase plan, upon completion of the terms and conditions established in such plan or upon the participants leaving Unibanco.

Since the implementation of our new Executives stock purchase plan in 2001, we no longer sell shares under the E. Johnston stock purchase plan.

As of May 31, 2008, apart from their direct ownership of our capital stock, our directors, officers and members of our management held Units under the E. Johnston stock purchase plan representing approximately 0.0411%
of our capital and 0.0702% of Unibanco Holdings capital.

Current Stock Option Plan

See Item 6.B Compensation  Unibanco  Executives Stock Option Plan for a description of our current stock option plan for selected members of management.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A Major Shareholders

Unibanco

Unibanco Holdings controls us through its ownership of common shares representing 97.080% of our voting interest, as of May 31, 2008. Each of our common shares entitles its
holder to one vote at any shareholders meeting. Our preferred shares carry no voting rights. See also Item 10.B. Memorandum and Articles of Association  Voting Rights.

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The following table shows the beneficial ownership of our outstanding common and preferred shares as of May 31, 2008.

|                                    |  |                        |  |                           |  |               |  |        
|----------------------------------- |  | ---------------------- |  | ------------------------- |  | ------------- |  | -------
|                                    |  | Unibanco Common Shares |  | Unibanco Preferred Shares
|                                    |  |                        |  |                           |  |              
|Shareholder                         |  |                        |  | % of                      |  |               |  | % of   
|                                    |  | Number                 |  | Total                     |  | Number        |  | Total  
|                                    |  |                        |  |                           |  |               |  |        
|                                   
|Unibanco Holdings                   |  | 1,467,184,984          |  | 97.080                    |  | 156,845,066   |  | 12.098 
|                                   
|Float (1)                           |  | 44,130,738             |  | 2.920                     |  | 1,111,877,734 |  | 85.764 
|Directors and Executive Officers(2) |  |                        |  |                           |  |               |  |        
|                                    |  | 614                    |  | 0.000                     |  | 12,800,742    |  | 0.987  
|Treasury                            |  | 0                      |  | 0.000                     |  | 14,915,930    |  | 1.151  
|                                    |  |                        |  |                           |  |               |  |        
|Total                               |  | 1,511,316,336          |  | 100.000                   |  | 1,296,439,472 |  | 100.000
|                                    |  |                        |  |                           |  |               |  |        

|(1) | Consisting of our floating shares in the market (Units  preferred shares), in Brazil and U.S.
|--- | ----------------------------------------------------------------------------------------------
|   
|(2) | Comprises all of our Directors and Executive Officers.                                        

Unibanco Holdings

E. Johnston controls Unibanco Holdings through its ownership of common shares representing 94.882% of Unibanco Holdings voting interest on May 31, 2008.  Each of Unibanco Holdings common shares entitles its
holder to one vote at any shareholders meeting. The preferred shares of Unibanco Holdings grant no voting right.

The following table shows the beneficial ownership of the outstanding common and preferred shares of Unibanco Holdings as of May 31, 2008.

|                                 |  |                   |  |                   |  |               |  |           
|-------------------------------- |  | ----------------- |  | ----------------- |  | ------------- |  | ----------
|                                 |  | Unibanco Holdings |  | Unibanco Holdings
|                                 |  | Common Shares     |  | Preferred Shares 
|                                 |  |                   |  |                  
|Shareholder                      |  | Number            |  | % of Total        |  | Number        |  | % of Total
|                                 |  |                   |  |                   |  |               |  |           
|Moreira Salles Group, through E. |  |                   |  |                   |  |               |  |           
|Johnston Representação e         |  |                   |  |                   |  |               |  |           
|Participações, S.A.              |  | 525,398,072       |  | 94.882            |  | 385,284       |  | 0.035     
|                                
|Bahema Group                     |  | 28,337,826        |  | 5.118             |  | 0             |  | 0.000     
|Float (1)                        |  | 6                 |  | 0.000             |  | 1,064,044,824 |  | 97.632    
|Directors and Officers(2)        |  | 0                 |  | 0.000             |  | 5,864,081     |  | 0.538     
|Treasury                         |  | 0                 |  | 0.000             |  | 19,557,594    |  | 1.795     
|                                 |  |                   |  |                   |  |               |  |           
|Total                            |  | 553,735,904       |  | 100.000           |  | 1,089,851,783 |  | 100.000   
|                                 |  |                   |  |                   |  |               |  |           

|(1) | Consisting of Unibanco Holdings floating shares in the market (Units  preferred shares), in Brazil and U.S.
|--- | ------------------------------------------------------------------------------------------------------------
|   
|(2) | Comprises all of the Directors and Executive Officers of Unibanco Holdings.                                 

At the Extraordinary Shareholders Meeting, held by us and by Unibanco Holdings on June 29, 2006, we approved a change of the ratio of the GDSs to Units to one GDS per ten Units. Further, on May 29, 2008, our Board
of Directors proposed an increase of our capital stock through a paid-in-kind dividend (each holder received one Unit for each 10 Units held), and to change the ratio of the GDSs to Units to one GDS per two Units. However, the capital increase is
pending Shareholder and Central Bank approval. The ratio ́s change is pending CVM approval. For further information, see 10.B Memorandum and Articles of Association Description of Capital Stock.

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On May 31, 2008, we had 73,808,759 outstanding GDS, held by approximately 18 record (registered) holders, which represent 67.7% of our total preferred shares and 56.9% of Unibanco Holdings total preferred shares.

Significant Changes in Ownership

On February 4, 2005, Commerzbank and BNL sold an aggregate of approximately 46 million of our Units in a global secondary offering to (i) the public in Brazil, (ii) certain qualified institutional buyers in the United
States, and (iii) institutional investors and other investors elsewhere outside Brazil and the United States. As a result of this offering, Commerzbank and BNL have liquidated their entire direct and indirect equity interests in us, which prior to
the offering represented 5.2% and 1.6% of our outstanding preferred shares, respectively. However, we maintain our current commercial relationships with Commerzbank and BNL.

On September 13, 2005, Caixa Brasil, SGPS, S.A. sold an aggregate of approximately 86 million of our Units in a global secondary offering to (i) the public in Brazil, (ii) certain qualified institutional buyers in the
United States, and (iii) institutional investors and other investors elsewhere outside Brazil and the United States. As a result of this offering, Caixa Brasil, SGPS, S.A. has liquidated its entire direct and indirect equity interest in us and
Unibanco Holdings, which prior to the offering represented 13.19% of Unibanco and 15.57% of Unibanco Holdings preferred shares. However, we maintain our current commercial relationships with Caixa Brasil, SGPS, S.A.

On June 15, 2007 and on July 25, 2007, Sul America Group sold an aggregate of approximately 12 million common shares of Unibanco Holdings to E. Johnston in a private transaction. As a result, Sul America Group has
liquidated its entire equity interest in Unibanco Holdings, which prior to the sale represented 0.75% of Unibanco Holdings shares. However, we maintain our current commercial relationships with Sul America Group.

7.B Related Party Transactions

Summarized below are all of the material transactions known to us between ourselves, Unibanco Holdings or any of our subsidiaries and any of our directors, statutory officers or shareholders which hold more than 5% of
any of our or Unibanco Holdings classes of shares, or the family members of such directors, officers and shareholders, as well as any enterprises in which such parties own a substantial interest or over which they can exercise significant
influence.

Under Brazilian law, financial institutions may not grant loans or advances to affiliates, statutory officers, directors or their family members, nor to any enterprises in which such parties, with few exceptions, own
more than 10%. For the purposes of this law, affiliates include companies in which a financial institution holds 10% or more of the capital stock or which hold 10% or more of a financial institutions capital stock. Therefore, we have not made
any loans or advances to the abovementioned persons, which include, among others, Unibanco Holdings and our non-financial subsidiaries. Without prejudice to the foregoing, this prohibition does not prevent Unibanco Holdings or any of our
non-financial subsidiaries from lending resources to the aforementioned persons, and it does not limit our ability to enter into transactions in the interbank market with related parties that are financial institutions. For further information about
related party transactions, see Note 4 of our consolidated financial statements.

Distribution of Financial Products

Certain of our subsidiaries, such as Unibanco AIG Seguros, Unibanco AIG Previdência S.A., Unibanco Companhia de Capitalização S.A., Unicard, Unibanco-Rodobens Administradora de Consórcios
S.A., Cia. Hipotecária Unibanco-Rodobens and Dibens Leasing
S.A. Arrendamento Mercantil, have entered into distribution agreements with us. These agreements govern the use of our branch network as a distribution channel for insurance products, pension plans, consortium quotas, credit cards, individual
financing related to real estate, leasing and other products.

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Costs and Expenses Sharing Agreements

In addition, the following subsidiaries have entered into costs and expenses sharing agreements with us: Unibanco Companhia de Capitalização, Unibanco AIG Seguros, Unicard, AIG Brasil Companhia de Seguros,
Banco Dibens S.A., Dibens Leasing S.A. Arrendamento Mercantil, Microinvest S.A. Sociedade de Crédito a Microempreendedor, Fininvest, Hipercard, Banco Único S.A., Unibanco AIG Vida e Previdência S.A., Unibanco AIG Saúde
Seguradora S.A. and LuizaCred. The purpose of such agreements is to establish the criteria under which (a) our and our subsidiaries administrative and operational structures may be shared in order to achieve greater competitive results, assets
and business, and/or (b) the proceedings relating to certain financial activities may be performed by our subsidiaries and us.

7.C Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A Consolidated Statements and Other Financial Information

See Item 18. Financial Statements, which contains our audited consolidated financial statements prepared in accordance with U.S. GAAP.

Legal Proceedings

Overview

We are a party to numerous lawsuits and administrative proceedings that have arisen during the normal course of our business. Our financial statements only include reserves for probable and reasonably estimable losses
and expenses that we may incur in connection with pending litigation or administrative proceedings, or as otherwise required by Brazilian law. At December 31, 2007, our provisions for such contingencies were R$4,099 million, of which R$2,778
million are related to tax-related contingencies, R$751 million are related to labor contingencies and R$570 million are related to civil contingencies. For additional information, see Note 29 to our financial statements. We believe that
these provisions would be sufficient to meet probable and reasonably estimated losses in the event we receive an unfavorable ruling in any of the legal proceedings to which we are a party. However, we cannot provide any assurance that these
provisions will be sufficient to meet our potential losses. We believe that any potential liabilities related to these lawsuits and administrative proceedings will not have a material adverse effect on our financial condition or results.

Civil Litigation- General Information

We are involved in numerous civil lawsuits that have arisen during the normal course of our business. We are not able to currently predict the total amounts involved with these claims, due to the nature of the matters
involved. However, we believe that any potential liabilities related to these lawsuits will not have a material adverse effect on our financial condition or results. We are a party to (a) certain lawsuits filed by individual minority shareholders
related to equity losses arising from corporate reorganizations associated with our acquisition of certain Brazilian financial institutions, (b) several class action suits that are primarily related to our banking activities and Brazilian government
economic policies (we are a defendant in these lawsuits with certain other Brazilian financial institutions) and (c)
various other lawsuits. We have detailed below the most significant civil lawsuits that we are currently involved in:

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Banco Nacional Citizens Action

On November 18, 1995, the Central Bank authorized us to acquire certain assets and liabilities of Banco Nacional S.A. (Banco Nacional). Due to this acquisition, we are a party to a lawsuit initiated as a
citizens action (ação popular) against Banco Nacional, the Central Bank and us. This lawsuit claims that the Central Bank fraudulently granted Banco Nacional certain loans in an aggregate original amount of
approximately R$2 billion. We are involved in this lawsuit because the plaintiffs allege that Banco Nacional transferred a portion of the proceedings from such loans to us during our acquisition of certain Banco Nacional assets and liabilities.
The citizens action seeks a judgment declaring all such loans to be null and void and demands the repayment of the amounts disbursed by the Central Bank. In June 1997, a lower District Court of Appeals removed us from the claim. The plaintiffs
appealed this decision and both the Superior Court of Justice and the Federal Supreme Court rejected the appeals. In October 2005, the Federal Supreme Court sent the appeal to a lower Federal court of competent jurisdiction, which will hear the
opinion testimony of experts. We have not set aside any amounts in connection with this lawsuit because we anticipate that the lower court will reject the plaintiffs appeal and will affirm our removal from this lawsuit.

Banco Nacional Controlling Shareholders Action

In connection with our acquisition of certain Banco Nacional assets, the former controlling shareholders of Banco Nacional, the Magalhães Pinto family, also filed lawsuits against the Central Bank,
Unibanco Holdings and us, alleging damages caused by this acquisition and demanding compensation in the total amount of R$1.5 billion (the Magalhães Pinto Lawsuits). In July 2006, however, we reached an agreement with the
Magalhães Pinto family pursuant to which they agreed to terminate the Magalhães Pinto Lawsuits and to waive all claims set forth in them. As one of the creditors of the Banco Nacional liquidating assets, we believe that such agreement
indicates progress towards the conclusion of the Banco Nacional liquidation to the satisfaction of the creditors and minority shareholders. The Magalhães Pinto Lawsuits settlement agreement is under final analysis by the Brazilian courts and
the proposal regarding the liquidations conclusion must also be submitted for Central Bank approval.

Litigation Arising from Government Economic Stabilization Plans

Between 1986 and 1994, several Government economic stabilization plans caused intense litigation against banks, including us. In addition to lawsuits brought by individual investors, we are a party to 72 lawsuits
brought by consumer protection associations or public attorneys. In all such lawsuits, plaintiffs have argued that the laws which established official inflation and/or deflation indices were unconstitutional and because such indices did not reflect
true inflation, the banks have to pay to the investors the amounts corresponding to the difference between the indices applied and the indices that were in force before the enactment of each plan. The banks have argued that the laws were
constitutional and that the banking industry was acting in compliance with federal laws and regulations. The Superior Justice Courts have been deciding the claims against the banks, but the Federal Supreme Court has yet to take a clear position on
them. Recently, the Brazilian banks have experienced an increase in the number of lawsuits brought by investors and consumer protection associations. This rise in litigation is due to the expiration of a 20-year statute of limitation applicable to
lawsuits related to the first economic plan  the Bresser Plan in June 2007. We have recorded provisions for such claims based on the number of lawsuits brought by individual investors. We believe that, since the indices applied by
the banks were determined by federal laws and regulations, in the event the Supreme Court decides the issue against the banks, we will have the right to pursue indemnification from the government.

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Tax Litigation

We are involved in several tax disputes, including judicial lawsuits and administrative proceedings, mainly relating to the constitutionality and legality of certain taxes imposed on us by the Brazilian government,
among which the most relevant are claims in connection with: (i) the expansion of the calculation basis of PIS and COFINS set forth by Law 9.718, (ii) the imposition of different rates of CSLL to the Financial System and its imposition on companies
with no employees, and (iii) the imposition of CPMF on leasing companies.

Certain of our subsidiaries are involved in lawsuits regarding the expansion of the calculation basis of PIS and COFINS taxes. On November 9, 2005, the Federal Supreme Court ruled that this expansion was
unconstitutional. Although we were not a party to the dispute in question, this ruling indicates that we may be successful in our claims related to this issue.  In addition, Unibanco Holdings obtained a definitive favorable decision on a lawsuit
relating to this matter in 2007.

Also, Unibanco Holdings was involved in a tax dispute relating to the assessment of PIS and COFINS on earnings from Interest on Capital Stock (“juros sobre capital próprio”) and has already received a
favorable decision on this matter from the lower courts. This decision remains subject to appeal by the government and to further analyses by a superior court. We have recorded a provision of R$1,566 million in connection with this dispute.

We are also a party to several judicial disputes discussing the rate of CSLL for companies without employees. As of December 31, 2007, the corresponding provision related to these disputes was approximately R$140
million.

On February 11, 2008, the Superior Court of Justice ruled that leasing companies shall be considered financial institutions and therefore shall benefit from CPMF exemption on financial transfers related to any funding
or investments made in the course of the financial business. Although we were not a party to this particular dispute, this ruling indicates that we will succeed in our claims related to this issue. As of December 31, 2007, we have set aside
provisions of approximately R$145 million in connection with these disputes.

Labor Litigation

Labor unions and former employees have filed several lawsuits against us seeking compensation for alleged violations of their labor rights. There are currently approximately 13.000 labor claims filed against us. Our
individual labor lawsuits primarily relate to overtime pay and salary parity. Our collective labor lawsuits primarily relate to strikes and salary differences resulting from economic plans established by the Brazilian government. For the fiscal year
ended December 31, 2007, we paid approximately R$299 million in settlements with former employees and judgments imposed by the labor courts.

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Dividend Distributions

Brazilian law requires corporations to pay their shareholders a dividend distribution of at least 25% of net income. Our bylaws, however, require a distribution of at least 35% of our adjusted net income as of the end
of each fiscal year. Notwithstanding the foregoing, our bylaws prohibit any distributions until we have allocated 5% of the net profit for the legal reserve, which shall not exceed 20% of our capital, and have established any reserves for
contingencies deemed necessary. Our preferred shares are entitled to a distribution of at least an additional 10% over the dividend assigned to each common share.

As for Unibanco Holdings, its bylaws set forth that the holders of common shares and preferred shares shall receive dividends equivalent to 100% of Unibanco Holdings net profit. In addition, preferred shareholders have,
among other rights, (i) priority in the distribution of the semi-annual minimum dividend of R$0.15 for each lot of 20 shares; or (ii) semi-annual priority dividends of 1.5% of the net equity for each share, resulting in an annual priority
dividend of 3% of the equity.

Notwithstanding the foregoing, according to Brazilian law, a company shall not be compelled to pay the mandatory dividend as long as the officers and Board of Directors consider the distribution incompatible with the
financial situation of the company and the shareholders ratify this decision at the shareholders meeting. In such case, a justification of the companys decision must be forward to the CVM within five days of the shareholders
meeting. The profits that were not distributed are to be recorded as a special reserve and, if not absorbed by losses in subsequent fiscal years, should be paid as dividends as soon as the companys financial situation permits.

For more information on our and Unibanco Holdings dividend distribution policies, see Item 10.B Additional Information  Memorandum and Articles of Association  Dividends Policy.

8.B Significant Changes

Since December 31, 2007, neither we nor Unibanco Holdings have experienced any significant changes that would have a material impact on our Company or results of operations.

ITEM 9. THE OFFER AND LISTING

9.A Offer and Listing Details

Our Units are listed and traded on the BOVESPA under the symbol UBBR11 and are also listed and traded on the NYSE, in the form of GDSs, under the symbol UBB. Each GDS is equivalent to ten Units.
For more information on this subject, see Item 10.B. Memorandum and Articles of Association. Our common shares and preferred shares and the preferred shares of Unibanco Holdings are also listed and traded on the BOVESPA. Our common
shares are listed under the symbol UBBR3, our preferred shares are listed under the symbol UBBR4. Unibanco Holdings' common shares are listed under the symbol UBHD3 and its preferred shares are listed under
the symbol UBHD6.

The table below sets forth, for the indicated period, the high and low market prices of the GDSs on the NYSE, in U.S. dollars, and the Units on the BOVESPA, in reais, as adjusted
to reflect the reverse stock split and the share bonus, as well as the payment of dividends or interest on own capital in subsequent periods:

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|                    |  |             |  |                |  |       |  |      
|------------------- |  | ----------- |  | -------------- |  | ----- |  | -----
|                    |  | NYSE        |  | BOVESPA       
|                    |  |             |  |               
|                    |  | US$ per GDS |  | R$ per Unit(1)
|                    |  |             |  |               
|                    |  | High        |  | Low            |  | High  |  | Low  
|                    |  |             |  |                |  |       |  |      
|2003                |  | 22.31       |  | 8.82           |  | 5.98  |  | 2.93 
|                   
|2004                |  | 30.32       |  | 15.51          |  | 7.65  |  | 4.46 
|                   
|2005                |  | 63.90       |  | 27.13          |  | 13.99 |  | 6.80 
|First quarter       |  | 37.27       |  | 27.13          |  | 9.16  |  | 6.80 
|Second quarter      |  | 37.14       |  | 31.39          |  | 8.19  |  | 7.30 
|Third quarter       |  | 50.58       |  | 33.72          |  | 10.74 |  | 7.51 
|Fourth quarter      |  | 63.90       |  | 46.39          |  | 13.99 |  | 9.85 
|                   
|2006                |  | 92.18       |  | 57.27          |  | 19.36 |  | 12.06
|First quarter       |  | 87.01       |  | 65.90          |  | 17.43 |  | 13.78
|Second quarter      |  | 84.14       |  | 57.27          |  | 16.43 |  | 12.29
|Third quarter       |  | 73.91       |  | 58.49          |  | 15.35 |  | 12.06
|Fourth quarter      |  | 92.18       |  | 72.18          |  | 19.36 |  | 15.16
|                   
|2007                |  | 154.51      |  | 78.64          |  | 27.27 |  | 16.44
|First quarter       |  | 96.03       |  | 78.64          |  | 19.89 |  | 16.44
|Second quarter      |  | 114.18      |  | 85.04          |  | 21.52 |  | 17.12
|Third quarter       |  | 130.19      |  | 95.36          |  | 24.01 |  | 19.84
|Fourth quarter      |  | 154.51      |  | 124.59         |  | 27.27 |  | 23.17
|                   
|2008                |  | 156.87      |  | 116.25         |  | 25.60 |  | 20.18
|First quarter       |  | 143.15      |  | 116.25         |  | 24.53 |  | 20.18
|                   
|Previous Six Months |  |             |  |                |  |       |  |      
|December 2007       |  | 153.36      |  | 130.95         |  | 27.27 |  | 23.84
|January 2008        |  | 141.57      |  | 121.58         |  | 24.53 |  | 21.21
|February 2008       |  | 143.15      |  | 116.76         |  | 23.85 |  | 20.27
|March 2008          |  | 139.49      |  | 116.25         |  | 23.36 |  | 20.18
|April 2008          |  | 145.41      |  | 122.14         |  | 24.77 |  | 20.56
|May 2008            |  | 156.87      |  | 140.80         |  | 25.60 |  | 23.25

|(1) | The Unit prices have been adjusted to reflect the reverse stock split of August 30, 2004 and the Share bonus, approved on June 29, 2006.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

In July 2006, we increased our capital stock through a paid-in-kind dividend (holders received one Unit for each Unit held). This share bonus was approved by our Extraordinary Shareholders Meeting on June 29,
2006 and was accompanied by a change in the Unit to GDS ratio of Unibanco and Unibanco Holdings from five (5) Units per GDS to ten (10) Units per GDS.

Further, on May 29, 2008, our Board of Directors decided to propose an increase of our capital stock through a paid-in-kind dividend (holders received one Unit for each 10 Units held) and to change the ratio of the GDSs
to Units to one GDS per every two Units. However, the capital increase is pending Shareholder and Central Bank approvals. The ratio ́s change is pending CVM approval. For further information, see 10.B Memorandum and Articles of
Association  Description of Capital Stock.

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9.B Plan of Distribution

Not applicable.

9.C Markets

In Brazil, securities are traded only on the BOVESPA which is a publicly traded corporation controlled by Bovespa Holding. At December 31, 2007, the aggregate market capitalization of the 404 companies listed on the
São Paulo Stock Exchange was approximately US$14 trillion and the ten largest companies represented approximately 54.7% of the total market capitalization of all listed companies. In 2007, the average daily trading volume of our
GDSs reached R$283.1 million on the NYSE. On the BOVESPA, the average daily trading volume of our Units was R$85.1 million

As of May 2, 2005, our Unit has been included in the Ibovespa Index (Índice BOVESPA) of the BOVESPA. The Ibovespa Index is currently composed of 66 stocks. In order to be included in this index, a stock must (i) be
included in a group of stocks in which the sum of the Negotiability Indices represents 80% of the accumulated value of the Negotiability Indices of all individual stocks; (ii) have a participation above 0.1% of the BOVESPAs total volume in the
last 12 months; and (iii) trade in at least 80% of the sessions in the last 12 months. The inclusion in the Ibovespa Index was a step towards increasing the liquidity of our Units in the Brazilian market. From May, 2008 to August, 2008, the weight
of our Units in the theoretical portfolio of the Ibovespa Index is 2.782% . Since its inclusion in the Ibovespa, its weighting has increased more than 180%.

As of September 1, 2004, our Unit has also been included in the Brazil Index-50 (Índice Brasil-50), or IBrX-50 Index, of the BOVESPA. The IBrX-50 Index is composed of the 50 stocks with the highest trade index on
the BOVESPA and that were traded in at least 80% of the sessions in the last twelve months. From May, 2008 to August, 2008, the weight of our Units in the theoretical portfolio of the IBrX-50 Index is 3.067% .

9.D Selling Shareholders

Not applicable.

9.E Dilution

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A Share capital

Not applicable.

10.B Memorandum and Articles of Association

Summary of the Bylaws of UnibancoUnião de Bancos Brasileiros S.A. and of Unibanco Holdings S.A.

We are a financial institution incorporated under the laws of the Federative Republic of Brazil, duly authorized to conduct business by the Central Bank. Our Corporate Taxpayers Enrollment Number (CNPJ) is
33.700.394/0001 -40 and our Board of Trade of the State of São Paulo Enrollment Number (NIRE) is 35.300.102.771.

Unibanco Holdings is incorporated under the laws of the Federative Republic of Brazil. Its Corporate Taxpayers Enrollment Number (CNPJ) is 00.022.034/0001 -87 and its Board of Trade of the State of São Paulo
Enrollment Number (NIRE) is 35.300.140.443.

The information below refers to our and Unibanco Holdings most recent bylaws, which include, as the case may be, the amendments approved by the shareholders of Unibanco Holdings on March 21, 2007 and those that
were approved by our shareholders on March 27, 2008. Our March 27, 2008 Shareholders Meeting is currently subject to the Central Banks approval.

The disclosure of the significant ways our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards is posted in our website and can be accessed through the following
  address: http://www.ri.unibanco.com.br/ing/gov/sox/exc/index.asp.

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Objectives and Purposes

Unibanco

Our corporate objective and purpose, as described in article 2 of our bylaws, is to perform those operations and services that may be performed by financial institutions according to Brazilian Law. This includes
conducting foreign exchange activities and participating in the share capital of other companies, pursuant to applicable legal and statutory provisions. However, we may not (i) acquire real estate not intended for our own use, with the exception of
certain cases permitted by law or (ii) issue debentures or founder shares (partes beneficiárias).

UnibancoHoldings

Unibanco Holdings objective and purpose, as described in article 2 of its bylaws, is to participate in the share capital of other companies. Unibanco Holdings exclusively holds the equity interest in Unibanco. It
does not currently intend to conduct any activity other than holding Unibancos common shares and preferred shares, on a permanent basis.

Directors and Officers

Unibanco

We are managed by a Board of Directors and a Board of Officers.

Board of Directors

Our Board of Directors may consist of between four and nine directors at any given time, including one Chairman and one Vice Chairman. Directors are elected to a one-year term by our shareholders at the annual
shareholders meeting and the Chairman and Vice Chairman are chosen by the Board of Directors. Pursuant to the Brazilian Corporate Law and our bylaws, only shareholders of a company are entitled to serve as directors of the company. Neither the
Brazilian Corporate Law nor our bylaws specify a minimum number or class of shares that a director must own.

Our Board of Directors ordinarily meets once each quarter in additional to any time that corporate interests so require. The decisions of our Board of Directors are taken by a majority of votes with the attendance of at
least half of our directors. In the event of a tie, the Chairman (or the Vice Chairman if the Chairman is not present at the relevant meeting), in addition to his own vote, is entitled to cast the tie-breaking vote. Article 15 of our bylaws
specifies that the age limit for serving on our Board of Directors is 65 years old. This limit may be extended at the Board of Directors discretion.

At our last Shareholders Meeting, held on March 27, 2008, the shareholders approved the removal of §3 of Article 18 of our bylaws, which addressed the possibility of our directors participating in Board of
Directors meetings through tele or video conference or any other similar vehicle. Such modification was undertaken to comply with a Central Bank
recommendation applicable to Brazilian financial institutions and to eliminate from our bylaws internal and operational procedures that are not utilized by our administrative bodies.

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In 2007, there were 20 Board of Directors meetings, with the attendance of the followings numbers of directors: (i) in 85% of the meetings there were at least 6 directors, (ii) in 50% of the meetings there were at least
7 directors, (iii) in 35% of the meetings there were at least 8 directors and (iv) in 15% of the meetings there were the totality of the directors.

Article 16 of our bylaws lists the exclusive powers of our Board of Directors. Pursuant to this provision, the Board has the power, among other things, to:

- elect and remove our officers;
- determine the remuneration of each member of our Board of Directors, our Audit Committee and our Board of Officers, subject to the aggregate maximum amount approved for each such corporate body, by shareholders at the annual shareholders
meeting;
- appoint and remove the independent auditors, taking into consideration the recommendation of the Audit Committee;
- elect and remove our Ombudsman and appoint an Officer responsible for our Ombudsmans Office;
- determine the performance bonus of each member of our Board of Directors and our Board of Officers;
- establish general guidance regarding the conduct of our business and our policies;
- decide on acquisitions, divestitures, increases and decreases of our equity investments in our subsidiaries, affiliates and partnerships;
- decide on joint ventures involving Unibanco and takeover bids performed by Unibanco for other companies; and
- create committees to deal with specific matters within the authority of our Board of Directors and/or our Board of Officers.

Board of Officers

Our Board of Officers may be composed of up to 150 members, including:

- one Chief Executive Officer;
- up to 10 Vice-Presidents; and
- up to 139 Executive Officers, Officers and Deputy Officers.

All members of the Board of Officers are elected to a one-year term of office by our Directors at the Board of Directors meeting. Article 20 of our bylaws specifies that the age limit for holding a position on our Board
of Officers is 60 years old. However, the 60 year age limit may be waived at the Board of Directors discretion. In addition, as approved at the Board of Directors Meeting on April 30, 2004, the Chief Executive Officer may determine whether
officers who are older than 58 years old may stand for re-election. Furthermore,
pursuant to the Brazilian Corporate Law and our bylaws, all of our officers must reside in Brazil.

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The Board of Officers has the power to act on our behalf in accordance with our bylaws and is responsible for the management and supervision of our corporate activities.

At the Shareholders Meeting, held on March 27, 2008, the shareholders approved an amendment to Article 16 of our bylaws, in order to allow the Board of Directors to delegate to the Board of Officers the authority to
decide on: (a) acquisitions, divestitures, increases or reductions of our equity investments in our subsidiaries, affiliates and partnerships, (b) the duties and responsibilities of the officers, and (c) the creation of committees to deal with
specific matters of the Board of Officers. Such delegations are permitted, according to the Board of Director criteria, given that the decisions to be taken are operational matters, strictly related to the activities of other bodies, committees or
Board of Officers or not strategical decisions for Unibanco.

Our Board of Officers meets at any time that corporate interests so require. The decisions of our Board of Officers are taken by a majority vote with the attendance of at least half of our officers, with the exception
of those related to the opening, relocation or closing of branches or facilities, which may be decided upon with the presence of at least three officers. In the event of a tie, the chairman of the meeting is entitled to cast an additional vote.

Unibanco Holdings

Unibanco Holdings is also managed by a Board of Directors and a Board of Officers.

Board of Directors

The Board of Directors may be made up of between three and eleven directors. Directors are elected to a one-year term by the shareholders at the annual shareholders meeting, including one Chairman and one Vice Chairman.
Pursuant to the Brazilian Corporate Law and the bylaws of Unibanco Holdings, only shareholders of a company are entitled to serve as a director of the company. Neither the Brazilian Corporate Law nor Unibanco Holdings bylaws specify a minimum
number or class of shares that a director must own.

Unibanco Holdings bylaws do not specify an age limit for serving on the Board of Directors.

Article 16 of Unibanco Holdings bylaws lists the exclusive powers of its Board of Directors. Pursuant to this provision, the Board has the power, among other things, to:

- elect and remove the officers of the company;
- determine the remuneration of each member of the Board of Directors and the Board of Officers, subject to the maximum aggregate amount approved for each such corporate body, by shareholders at the annual shareholders meeting;
- appoint and remove the independent auditors;
- establish general guidance regarding the conduct of Unibanco Holdings business and policies;
- decide on acquisitions, divestitures, increases and decreases of equity investments in our subsidiaries, affiliates and partnerships of Unibanco Holdings;
- decide on joint ventures involving Unibanco Holdings and takeover bids performed by Unibanco Holdings for other companies; and

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- create committees to deal with specific matters within the authority of its Board of Directors and/or its Board of Officers.

The Board of Directors ordinarily meets twice a year and also meets whenever corporate interests so require. The decisions of the Board of Directors are taken by a majority vote with the attendance of at least half of
the directors. Given that Unibanco Holdings is not a financial institution under the purview of the Central Bank, the directors of Unibanco Holdings are permitted to participate in the Board of Directors meetings through video conference or any
other similar manner. It is also possible for the directors to participate by sending their written vote prior to the meeting. In the event of a tie, the Chairman (or the Vice Chairman if the Chairman is not present at the relevant meeting), in
addition to his own vote, is entitled to cast the tie-breaking vote.

Board of Officers

The Board of Officers is made up of between three and five officers, including one Chief Executive Officer and between two to four officers. All members are elected by the Board of Directors to a one-year term. Unibanco
Holdings bylaws do not specify an age limit for membership on the Board of Officers. Pursuant to the Brazilian Corporate Law and Unibanco Holdings bylaws, all officers must reside in Brazil.

The Board of Officers is responsible for the management and supervision of Unibanco Holdings corporate activities and has the power to act on behalf of Unibanco Holdings in accordance with its bylaws.

Certain Provisions of Brazilian Law

Under Brazilian law, the controlling shareholders, directors, officers and the members of the audit committee are not allowed to take or receive loans, pledges or advances from financial institutions in which they are
shareholders, directors, officers and/or members of the audit committee. In addition, financial institutions are not allowed to grant loans or advances to their affiliates, controlling shareholders, officers, directors and their respective relatives
nor to companies in which these persons hold more than 10% of the share capital or hold a managing position.

Directors and officers are not allowed to take part in any corporate transaction or deliberate with respect to any corporate transaction in which they have a conflict of interest with the company of which they are a
director or officer. Any director or officer who believes he may have a conflict must inform the companys other officers and/or directors, as the case may be, of the nature and extent of his interest in the transaction.

Audit Committee

See Item 6.C Board Practices for information regarding our and Unibanco Holdings Audit Committee.

Description of Capital Stock

General

Unibanco

At our June 29, 2006 Extraordinary Shareholders Meeting, our shareholders approved an increase of R$3,000,000 thousand to our corporate capital, thereby increasing our overall corporate capital from
R$5,000,000 thousand to R$8,000,000 thousand, through the capitalization of (i) all of the funds previously allocated to one of our statutory reserves account and (ii) R$2,885,732 thousand, which was previously allocated in a reserve
designed to ensure that we maintain adequate operating margins. This increase in our corporate
capital led to the issuance of 1,398,897,476 new shares, entitling each of our shareholders to receive, in the form of a share bonus, one new share of the same type for every share held as of the record date (Bonificação de
Ações). This Bonificação de Ações was implemented on July 17, 2006.

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At our June 29, 2006 Extraordinary Shareholders Meeting, our shareholders also approved an increase in the cap of our authorized capital. The new limit on the amount of shares that we may issue is 2,350,852,743
shares, whether common or preferred. As of April 30, 2008, our fully subscribed and paid in capital stock was equal to R$8,000,000 thousand, represented by 2,807,755,808 registered shares with no par value. Of these:

- 1,511,316,336 were common shares, and
- 1,296,439,472 were preferred shares.

Further, on  May 29, 2008, our Board of Directors proposed an increase of R$ 3,000,000  thousand to our capital stock, thereby increasing our overall capital stock  from R$8,000,000 thousand to R$11,000,000 thousand through the capitalization  of funds currently in the reserve designed to ensure that Unibanco has adequate  operating margins. This decision, however, is pending Shareholder and Central  Bank approval.

We currently have a statutory reserve to ensure that we maintain adequate operating margins. Our statutory reserve is included in our financial statements and is prepared in accordance with Accounting Practices Adopted
in Brazil. For more information, see Note 19 of our financial statements.

Unibanco Holdings

Unibanco Holdings capital stock was altered during the second quarter of 2005, as a result of (i) the cancellation of treasury shares, approved by the Extraordinary Shareholders Meeting, held on July 19,
2005, and (ii) the conversion of common shares into preferred shares that occurred between July 19, 2005 and August 18, 2005, as approved by the shareholders meeting held on July 19, 2005. The April 12, 2006 Extraordinary Shareholders Meeting
amended the bylaws of Unibanco Holdings, in order to reflect the number of common and preferred shares that represented Unibanco Holdings capital stock as of that date.

On June 29, 2006, Unibanco Holdings shareholders approved an increase of R$2,691,925 thousand to Unibanco Holdings corporate capital, thereby increasing its overall corporate capital from R$1,863,449
thousand to R$4,555,375 thousand through the capitalization of the same amount that had previously been accounted for in retained earnings account. This increase led to the issuance of 813,253,815 new shares, entitling each shareholder of
Unibanco Holdings to receive Bonificação de Ações.

As a result of this Bonificação de Ações, both our shareholders and those of Unibanco Holdings decided that shareholders who held Units on June 29, 2006 should be entitled to receive for each
Unit held, one additional Unit as a share bonus. Another consequence of this Bonificação de Ações was that our ratio of Units to GDS was modified such that each GDS, which formerly represented five Units, currently
represents ten Units.

Additionally, Unibanco Holdings Extraordinary Shareholders meeting of June 29, 2006 also approved an increase to the limit of its authorized capital, up to 2,613,253,815 shares, up to a maximum authorized amount
of 876,867,952 common shares and 1,736,385,863 preferred shares, in addition to the total number of shares existing after the approval of the Bonificação de Ações. This Bonificação de Ações was
implemented on July 17, 2006. As of April 30, 2008, Unibanco Holdings fully subscribed and paid in capital stock was equal to
approximately R$ 4,555,375 thousand represented by 1,643,587,687 registered shares with no par value, of which:

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- 553,735,904 were common shares; and
- 1,089,851,783 were preferred shares.

Further, on May 29, 2008, Unibanco  Holdings’ Board of Directors proposed an increase of R$ 1,744,510 thousand to the capital stock, thereby increasing our overall capital stock from R$4,555,375  thousand to R$6,299,886 thousand through the capitalization of R$1,467,786  thousand of the funds currently in the equalization of equity reserve and R$276,724  thousand of the funds currently in the reserve for unrealized profits. This  decision, however, is pending Shareholder and Central Bank approval.

In the event both our shareholders and those of Unibanco Holdings approve the proposal, the shareholders who hold Units shall receive, on a determined record date to be determined after the Central Bank approval, for
each ten Units held, one additional Unit and the shareholders who hold GDS, shall receive, for each ten GDSs held, one additional GDS.

Payment for subscribed shares

Pursuant to the Brazilian corporate law, the liability of the shareholders of corporations (sociedades anônimas) is limited to the price paid for the subscribed shares. The law states further that each shareholder
must pay for its shares in accordance with the terms and conditions of the respective companys bylaws or the subscription bulletin, as the case may be. If the bylaws or the subscription bulletin do not state the amounts and terms of payment,
the management bodies must inform the shareholders of their duty to make the appropriate payments in the manner set forth in the law.

If a shareholder does not make the appropriate payments for the subscribed shares, the company may, at its discretion, seek payment through court proceedings or by selling the shareholders shares on the stock
exchange.

Unibanco common shares

Each common share entitles the holder to one vote at shareholders meetings and to receive the mandatory dividend, as provided by article 202 of Brazilian corporate law. In addition, common shareholders are entitled to
participate, on the same basis as our preferred shareholders, in capital increases resulting from reserves and profits.

Unibanco preferred shares

Our preferred shares are not convertible into common shares and, except in certain circumstances, do not entitle the holder to voting rights. Nonetheless, our preferred shares entitle the holder to the following rights:

- participation in the net profits of each fiscal year, in an amount at least 10% higher than the dividend assigned to each common share;
- priority in the return of capital, without a premium, in case of our liquidation, based on the portion of the capital stock represented by these shares; and
- participation, on an equal basis with holders of our common shares, in capital increases resulting from the capitalization of reserves, profits and monetary adjustment.

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Unibanco Holdings common shares

Each common share of Unibanco Holdings entitles the holder to one vote at shareholders meetings and to receive, together with the holders of Unibanco Holdings preferred shares, dividends equivalent to 100% of
Unibanco Holdings net profit. In addition, common shareholders are entitled to participate, on the same basis as the holders of preferred shares, in capital increases resulting from the capitalization of reserves and profits.

Unibanco Holdings preferred shares

The preferred shares of Unibanco Holdings do not entitle the holders to voting rights, except in certain circumstances. Unibanco Holdings preferred shares entitle the holder to the following additional rights:

- priority in the distribution of a minimum semi-annual dividend equal to the greater of (i) R$0.15 per twenty shares (adjusted for any applicable stock split or reverse stock split); or (ii) 1.5% of the net equity per share, resulting in a
priority annual dividend of 3% of each shares net equity;
- participation on the same basis as the common shares in the distribution of dividends, after the common shares rights to receive the dividend described above;
- priority in the return of capital, in the case of liquidation of Unibanco Holdings, based on the portion of the capital stock represented by this class of shares; and
- participation, on the same basis as the common shares in capital increases resulting from the capitalization of reserves and profits.

Units

Pursuant to Article 43 of the Brazilian corporate law, Units are defined as share deposit certificates. Each certificate, or Unit, represents one of our preferred shares and one preferred share of Unibanco Holdings.

We provide each holder of Units with a statement related to his interest position on the following basis: (i) as requested, (ii) at the end of each month in which a transaction has taken place and (iii) once a year if
no transactions have occurred.

Rights of Unit Holders

Our bylaws and Unibanco Holdings bylaws each provide, among other things, that a holder of a Unit entitled to all the rights inherent in such shares.

The following procedures are related to the exercise of the rights conferred by the shares underlying the Units:

- the dividends and the amount of the redemption or amortization of the deposited shares shall be paid by us to the holders of the Units;
- a holder of Units is entitled to participate at our and Unibanco Holdings shareholders meetings, and to exercise all rights conferred to the relevant shareholders with respect to the underlying shares; and
- if preemptive rights relating to the underlying shares of one or both companies are granted to shareholders, a holder of Units is entitled to subscribe for shares of one or both companies as applicable, and the shares may be issued to such holder separately or, if preemptive rights are granted and exercised with respect to both companies, as additional Units.

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Special Provisions Relating to the Form and Transfer of Shares and Units

Our shares, the shares of Unibanco Holdings and the Units are registered in book-entry form and we act as registrar for these securities.

Any transfer of ownership of our shares, the shares of Unibanco Holdings, the shares deposited with us for the issuance of Units and the Units themselves can only be effected through book entries upon the presentment of
a written order of the legitimate holder of the relevant securities or the presentment of a court order or authorization, which shall be kept in our files. Such entries attribute to the transferee the shares or Units acquired and withdraw from the
transferor the shares or Units sold.

The Units underlying shares and the relevant dividends and redemption or amortization amounts may not be pledged, hypothecated or otherwise subject to any liens or other encumbrances, which may jeopardize the
delivery of dividends and redemption or amortization amounts to the holders of the Units.

Pledges or other liens to which Units are subject are recorded in the Units book-entry system and included in the relevant account statement.

If holders of Units wish to trade their Units on any Brazilian Stock Exchange, such holders and their broker agent must sign an Order of Transference of Shares Kept in Book Entry Form (Ordem de Transferência de
Ações Escriturais) After receiving the order, the broker agent must deposit the Units under the custody of the Brazilian Stock Exchange, which sends a Request of Transference of Shares kept in Book Entry Form (Pedido de
Transferência de Ações Escriturais), to us after the negotiations. When such request is received, the Units are transferred to our custody and registered in the name of their new holder.

Limitations on Foreign Investors Rights to Own Securities

Foreign investors seeking to invest in Brazilian securities are required to comply with various rules and regulations, which include rules requiring the registration of investors and their investments with the Central
Bank, the Brazilian Securities Commission, and the Brazilian Registry of Legal Entities. In addition, foreign investors who wish to invest in the voting shares of Brazilian financial institutions are required to obtain the prior authorization of the
Brazilian government. For a more detailed discussion on these limitations on foreign investors rights to own securities, see Item 10.D. Additional InformationExchange ControlsRestrictions on Foreign Investments and Overseas
Remittances and Item 4.B Business OverviewRegulation and Supervision Restrictions and Limitations  Restrictions on Funding Mechanisms.

Cancellation of Units

In accordance with our bylaws and Unibanco Holdings bylaws, a holder of a Unit may, at any time, cancel its Unit and become a direct holder of the underlying shares. These shares are fully transferable.

However, the Units cannot be cancelled if (i) they are subject to pledges, encumbrances or any other liens, or (ii) our and Unibanco Holdings Board of Directors temporarily suspend the ability to cancel Units
under the limited circumstances indicated in the bylaws.

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Shareholders Meetings

Pursuant to our bylaws and Unibanco Holdings bylaws, annual shareholders meetings are held within four months from the end of each fiscal year. At the annual meeting, shareholders, among other things:

- analyze, discuss and approve our financial statements;
- deliberate on the use of our net profits accrued during the previous fiscal year, as well as the distribution of dividends; and
- elect the members of the Board of Directors and, as the case may be, the members of the Audit Committee and Fiscal Council.

Pursuant to our bylaws and Unibanco Holdings bylaws, Extraordinary Shareholder Meetings may be held whenever the corporate interests so require.

According to the Brazilian corporate law, the general shareholders meetings may be called by the Board of Directors. In addition, general shareholders meetings may also be called by:

- the Fiscal Council, when established, in circumstances specified by law;
- any shareholder, in the event officers do not call the meeting within 60 (sixty) days of the required date;
- shareholders who represent at least 5% of the capital stock, if directors fail to call a meeting within 8 days of a convocation request; or
- shareholders who represent at least 5% of the voting capital stock or 5% of the shareholders with no right to vote, if Directors fail to call a meeting within eight days of the request to install the Fiscal Committee.

Our shareholders meetings, as well as those of Unibanco Holdings, are called by publishing, not less than fifteen calendar days prior to the scheduled meeting date, and not less than three times, by a notice in
the Official Gazette (Diário Oficial do Estado de São Paulo) and in the Valor Econômico, both newspapers with wide circulation in the State of São Paulo. A notice is also filed with the CVM, BOVESPA and the SEC. This
notice must contain the agenda for the meeting and, in case of an amendment to the bylaws, an indication of the subject matter.

The meetings generally take place at our and Unibanco Holdings principal office, as the case may be. According to the Brazilian corporate law, a shareholders meeting in which all the shareholders participate
will be considered valid, even if the call for the shareholders meeting fails to meet the legal requirements.

According to our and Unibanco Holdings bylaws, shareholders meetings shall be held and presided over by the Chairman of the Board of Directors. In his absence, the Chairman may appoint any member of the Board of
Directors or of the Board of Officers to preside in his stead. The Chairman shall choose among the shareholders present one or more shareholders to serve as secretaries of the meeting.

Shareholders may be represented at shareholders meetings by a proxy that meets the conditions imposed by law. The identity of a shareholder shall be proved, if so required, by the presentation of a document evidencing
his identity.

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Voting Rights

Each of our common shares and the common shares of Unibanco Holdings entitles the holder to one vote at each respective shareholders meetings. Except as otherwise provided by law, resolutions of a general
shareholders meeting are passed by a majority vote.

Under Brazilian corporate law, non-voting preferred shares acquire voting rights when a company fails to pay their fixed or minimum dividends for three consecutive fiscal years. In this event, the voting right of the
preferred shares remains effective until the cumulative dividends are paid in full. According to our bylaws, holders of our preferred shares are not entitled to rights in this manner, given that they do not have fixed or minimum dividends
rights.

The majority of holders of our preferred shares and the preferred shares of Unibanco Holdings, voting separately as a class, in a special meeting, have the right to approve proposals of the majority of the voting
shareholders that would:

- change the rights and privileges of the preferred shares; and
- create a new class of preferred shares with superior rights.

Under Brazilian corporate law, non-controlling holders of our preferred shares and the preferred shares of Unibanco Holdings, in each case representing at least 10% of the capital stock, have the right to elect or
dismiss one member of the Board of Directors, at a separate meeting, in which the controlling shareholder cannot participate and vote; provided that those shareholders hold at least 10% of the capital stock for at least three months immediately
before the relevant shareholders meeting. Similarly, non-controlling holders of our common stock and the common stock of Unibanco Holdings which represent at least 15% of the respective voting capital stock have the right to elect or dismiss
one member of the respective Board of Directors, subject to the same terms and restrictions applied to the non-controlling holders of our and Unibanco Holdings preferred shares.

Preemptive Rights

Each of our and Unibanco Holdings shareholders has a general preemptive right to subscribe for shares in the event of any capital increase in the proportion to his shareholding. A minimum period of 30 days
following the publication of the capital increase notice must be allowed for the exercise of the right, which is transferable, either for consideration or not, during this period.

Brazilian corporate law allows the Board of Directors of publicly-held companies with authorized capital to exclude or shorten the preemptive right 30-day period in the following cases:

- offerings of shares through the stock exchanges or through public offerings; or
- exchange offers in takeover bids.

Limitation of ownership

The Brazilian Federal Constitution provides that a special law shall regulate the participation of foreign investors in the capital of financial institutions in Brazil. According to the Central Banks regulation,
until the above mentioned special law is passed, the increase of the participation of foreign investors in the voting capital of financial institutions is subject to prior authorization by the Brazilian Government.

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Notwithstanding the above, the Brazilian government had already stated that foreign investments in financial institutions are in the governments interest, as long as the foreign company or individual does not have
any voting rights. Therefore, authorization from the Brazilian government is not required for companies or individuals to acquire publicly traded non-voting shares of Brazilian financial institutions or depositary receipts offered abroad
representing such non-voting shares. See Item 4.B  Regulation and Supervision  Constitutional Restrictions on Financial Institutions for further information.

However, in the event that voting shares are being offered, our foreign shareholders and the foreign shareholders of Unibanco Holdings who hold an indirect participation in our capital stock may be prevented from
exercising their preemptive rights. The performance of such rights may be subject to prior authorization by the Brazilian government, as mentioned above.

Change of Control

Under Brazilian corporate law, the sale of control of a publicly-held company can only be effected if the purchaser makes a public offer to purchase the voting shares of the remaining shareholders at a price equal to at
least 80% of the price paid for the controlling block of shares.

Right of Withdrawal and Redemption

The Brazilian corporate law provides that, under certain circumstances, a shareholder has the right to withdraw his or her equity interest from a company and to receive payment for the portion of shareholders
equity attributable to his or her equity interest.

Our bylaws and the bylaws of Unibanco Holdings do not set forth any redemption provision; however, unless the bylaws state otherwise, the redemption of shares may only be effected if, in a shareholders meeting called
specifically to deliberate upon such matter, the redemption is approved by shareholders representing at least half of the relevant shares.

Capital Increases

Pursuant to the resolutions of our June 29, 2006 Extraordinary Shareholders Meeting, our Board of Directors may increase our corporate capital by an additional 2,350,852,743 of common or preferred shares. This capital
increase may be affected without amending our bylaws or obtaining shareholder approval, subject to the applicable limitations under Brazilian corporate law. As a financial institution, the number of our non-voting shares may not be higher than 50%
of the total shares representing our capital stock. The authorized capital stock may only be changed by our shareholders at a shareholders meeting, through an amendment to our bylaws.

Pursuant to the resolutions of the June 29, 2006 Extraordinary Shareholders Meeting of Unibanco Holdings, the Board of Directors of Unibanco Holdings may increase its corporate capital by an additional 2,613,253,815
shares, up to a maximum authorized number of 876,867,952 common shares and 1,736,385,863 preferred shares. This capital increase may be affected without amending Unibanco Holdings bylaws or obtaining shareholder approval, and without
maintaining the existing proportion among the classes of shares, subject to applicable limitations under Brazilian corporate law. No more than two-thirds of the capital stock may be represented by non-voting shares.

Since the aforementioned resolutions, no capital increase has taken place.

Acquisition of our own Shares

We and Unibanco Holdings may acquire our own shares in order to cancel them or to keep them in our treasury, subject to authorization by our Board of Directors and certain
limitations and conditions established by the CVM and by the Brazilian corporate law. Among other limitations, we may only repurchase shares with available profits and reserves as reflected in our most recent balance sheet and we may only hold 10%
of each class of outstanding shares in treasury. See Item “16.E — Purchases of Equity Securities by the  Issuer and Affiliated Purchasers” for further information.”

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Approval by the Central Bank

The Central Bank must approve certain amendments to our bylaws, including those related to changes on our corporate purposes and capital increases.

Stock options to Officers and Employees

Within the limits of our authorized capital stock, and in accordance with a plan approved at a shareholders meeting, we and Unibanco Holdings may grant options to purchase our shares to our Executives. See Item
6.B CompensationUnibancoExecutive Stock Option Plan for a more detailed description of our stock option plan.

Dividend Policy

Our bylaws contain the following provisions with respect to dividends for each fiscal year:

- the distributable amount for each fiscal year is equal to our net profit less the legal, contingency,  statutory and  unrealized income reserves, calculated according to Brazilian GAAP;
- our mandatory dividend is equal to 35% of the distributable amount, to the extent profits are available for distribution;
- for each preferred share we must pay 110% of the dividend paid with respect to each common share;
- before the annual shareholders meeting, our Board of Directors may determine the payment of interim dividends out of earnings based on (i) semiannual balance sheets or earning reserves; or (ii) balance sheets issued on shorter periods, in which case
the distribution of dividends shall not exceed the amount of capital reserves. These interim payments may be offset against the annual mandatory dividend.

The Extraordinary Shareholders Meeting of Unibanco Holdings held on June 29, 2006, amended the bylaws of Unibanco Holdings in order to clarify its policies with respect to the use of profits accrued at the end of each
fiscal year, including the payment of dividends for each fiscal year. As of June 29, 2006, Unibanco Holdings bylaws set forth the following relevant provisions:

- Unibanco Holdings shall distribute as dividends the net profits accrued in the previous fiscal year, which remain after the deduction of the legal reserve and of the contingency reserve. The net profits that will be distributed to Unibanco
Holdings shareholders as dividends are derived from the dividend payments that Unibanco Holdings receives from us in available funds.
- After the distribution of the mandatory dividends, Unibanco Holdings may distribute additional dividends with funds from the Equalization of Equity Reserve (Reserva de Equalização de Participações), created by the
Extraordinary Shareholders Meeting of Unibanco Holdings on June 29, 2006, in order to assure that Unibanco Holdings profits are equal to the income that it receives from its shares in us.

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- preferred shares receive a semiannual minimum dividend equal to the greater of (i) R$0.15 per twenty shares or (ii) 1.5% of the net equity of each share resulting in a priority annual dividend of 3% of each shares net equity;
- before the annual shareholders meeting, the Board of Directors may determine the payment of interim dividends out of earnings based on (i) semiannual balance sheets or earning reserves; or (ii) balance sheets issued on shorter periods, in which case
the distribution of dividends shall not exceed the amount of capital reserves. These interim payments may be offset against the annual mandatory dividend.

In addition to the regular Board of Directors meetings held by Unibanco and Unibanco Holdings, it has determined that each board will hold meetings on, at least, a quarterly basis during 2008 to address the payment and
method of payment of dividends to our shareholders. All payments of dividends to our shareholders shall occur within 60 days from the date of their approval at the relevant Board of Directors meeting. However, such 60 days term may be extended by
the General Shareholders Meeting and, in such case, payment must occur within the same fiscal year of such meeting. The value of the payments is considered as part of mandatory dividends corresponding to the relevant fiscal year. However, our
and Unibanco Holdings Board of Directors may, at their sole discretion, based on reasonable cause (i) modify the conditions precedent to the payment of the dividends to our shareholders, such as, but not limited to, value, form and dates of
payment, or (ii) determine not to make such payments in certain quarters.

Our and Unibanco Holdings Board of Directors may decide to pay Interest on Capital Stock to the shareholders in addition to the quarterly payments. The conditions to such additional payments shall be established
at the time of the board decision.

The legal right of action to claim dividends terminates within three years from the date the dividends were offered to the shareholder, after which we and Unibanco Holdings will be entitled to retain the unclaimed
dividend.

Pursuant to Brazilian corporate law, we and Unibanco Holdings may suspend the mandatory distribution of dividends in the event the Board of Directors determines that dividend payments would be inadvisable in view of our
financial condition. The shareholders must ratify such determination at the annual shareholders meeting and the determination must be reported to the CVM within five days as of the relevant shareholders meeting. A mandatory distribution
that is suspended and not offset against losses in future years must be paid as soon as financial condition so permits.

We and Unibanco Holdings intend to continue to distribute dividends equal to the mandatory dividend annually.

Interest on Capital Stock

Since January 1, 1996, Brazilian companies have been authorized to pay Interest on Capital Stock (“Interest on Capital Stock” or “juros sobre capital próprio”) to shareholders based on the application of the long-term interest rate (Taxa de Juros de Longo Prazo or
TJLP) on net equity accounts (excluding certain equity accounts), and to treat those payments as a deductible expense for purposes of calculating corporate income tax and, since 1997, the social contribution on net income. The amount of
the tax deduction in each year is limited to the greater of (i) 50.0% of our net income (after the deduction of social contribution on net income but before considering the mentioned distribution and any deduction of income tax) for the period in
respect of which the payment is made; or (ii) 50.0% of our accumulated profits and profit reserves at the beginning of the relevant period. Payments of Interest on Capital Stock, net of withholding income tax, may be considered as part of the
mandatory dividend distribution. Under applicable law, we are required to pay to our shareholders an amount sufficient to ensure that the net amount they
receive in respect of Interest on Capital Stock, after payment of any applicable withholding tax, plus the amount of distributed dividends, is at least equivalent to the minimum mandatory dividend amount.

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Payments of Interest on Capital Stock to our shareholders, whether or not residing in Brazil, are generally subject to Brazilian withholding tax at the rate of 15%. A tax rate of 25% applies if the shareholder receiving
such Interest on Capital Stock is a resident of a tax haven jurisdiction. See Item 10.E Taxation  Taxation of Distributions of Interest Distribution on Capital Stock for further information.

Disclosure of Ownership Interest

Acquisition by the controlling shareholder

According to CVM regulations, in the event that (i) a controlling shareholder, (ii) a shareholder that is entitled to elect members of the board of directors or of the fiscal committee or (iii) an individual, or a group
of individuals, acting together or representing only one interest, achieve a direct or indirect participation of 5% or more of a series or class of shares of a companys capital stock, the shareholder must give notice to the market of such
increase in ownership.

The companys officer responsible for the Investor Relations Department is responsible for the transmission of such notice to the CVM, the Stock Exchanges and to the over-the-counter market in which the company has
its securities negotiated. Such notice must contain the following information:

- name and qualification of the acquirer;
- objectives of the acquirer;
- quantity of stock option and subscription rights, by type and/or class of shares, already held directly or indirectly by the acquirer or by any person related to him;
- quantity of convertible debentures already held, directly or indirectly, by the acquirer or by any person related to him, establishing the quantity of shares subject to such possible conversion, by class and type; and
- existence of any agreement, which regulates voting rights or the sale and purchase of securities issued by the company.

Such obligation also applies when any individual mentioned above increases or decreases their participation by 5% or more of a type or class of shares of the companys capital stock.

For the purpose of these regulations, the potential increase of the controlling shareholders equity participation (through option, convertible debenture, etc.) must be taken into account.

10.C Material Contracts

For information concerning our contracts, please see, Item 4. Information on the Company and Item 5. Operating and Financial Review and Prospects.

10.D Exchange Controls

Only institutions authorized by the Central Bank to operate in the foreign exchange markets may purchase or sell foreign currency in Brazil.

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Restrictions on Foreign Investments and Overseas Remittances

The Central Bank may impose temporary restrictions on remittances of foreign capital abroad whenever there exists, or the Central Bank foresees, a significant imbalance in Brazils balance of payments. There are
currently no restrictions on the remittance of foreign capital abroad. Furthermore, the Brazilian government has not prevented the remittance of proceeds to foreign investors since 1990 and has never done so in respect of securities obligations.

Currently, the Brazilian government does not restrict the ability of Brazilian or foreign individuals or entities to convert Brazilian currency into foreign currency provided that the transactions are (i) legal, (ii)
based on the economic factors and responsibilities of each of the parties as set forth in the underlying document for each transaction and (iii) in compliance with all regulatory requirements such as prior registration with the Central Bank (when
applicable).

Any individual, corporation or partnership resident or domiciled abroad may register with the CVM and the Central Bank as a foreign investor, under Law No. 4,131, dated September 3, 1962, or under CMN Resolution No.
2,689, dated January 6th, 2000. According to Resolution No. 2,689, a foreign investor must:

- Appoint one or more representatives with power to take actions in relation to its investment;
- Register as a foreign investor with the CVM; and
- Register its foreign investment with the Central Bank.

Such foreign investor is then allowed to invest in any type of investment available to Brazilian citizens in the financial and securities markets, provided that securities trading is restricted to transactions
carried out in the stock exchanges or through organized over-the-counter markets.

Resolution No. 2,689 also establishes that securities and any other financial assets held by foreign investors must be registered with, maintained under custody of or in deposit accounts with an entity licensed by the
CVM and the Central Bank.

In general, when non-Brazilians receive any distribution on their investments, they can only remit outside Brazil the amounts received if their investments are registered with the Central Bank. The Depositarys
interest in the Units is registered as a foreign investment with the Central Bank. With this registration, the Custodian is able (if foreign exchange is available) to convert Brazilian currency-denominated distributions into U.S. dollars and remit
them abroad to the Depositary for distribution to holders of GDSs.

GDS holders may cancel their GDSs and exchange them for Units. When holders of GDSs exchange GDSs for the underlying Units, they are entitled to:

- sell the Units on the BOVESPA and remit the proceeds abroad within five business days;
- freely convert the investment in the Units to foreign direct investment in Brazil provided that the investor registers with the CVM and the Central Bank.
Registration with the Central Bank must be done within 30 days from the date they withdraw the Units from the Depositary Receipt program, establishing a representative of its investments in Brazil.

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Holders who do not comply with the registration rules described above may still register their investment, but the registration process will be subject to detailed procedures established by the Central Bank and may take
longer than five business days. Holders who do not comply with these rules may also be subject to certain monetary penalties.

In addition, a foreign entity, corporation or partnership which invests in the Brazilian financial and securities markets (except for investments in depositary certificates issued abroad, such as the GDS) must apply
with the CVM for registration with the Brazilian Registry of Legal Entities, or CNPJ. The CNPJ registration is maintained by the Brazilian federal tax authorities and a tax number is granted in connection therewith. In such particular cases, the
right to (i) convert into foreign currency the payment of dividends and earnings resulting from the sale of shares and securities, and (ii) remit such amounts from Brazil, is subject to registrations both with the Central Bank and the CNPJ. If the
investor is a natural person, he or she will also have to apply with the CVM to obtain a register before the Ministry of Finance (CPF). The CPF is the equivalent of the CNPJ for natural persons and it also allows the investors to (i) convert into
foreign currency the payment of dividends and earnings resulting from the sale of shares and securities, and (ii) remit such amounts from Brazil, as it is duly registered before the Central Bank.

Investments registered with the Central Bank may still be affected by changes in Brazilian law or regulations and additional restrictions imposed in the future. These restrictions could apply to holders of GDSs in the
following cases:

- the disposition of underlying Units or underlying shares;
- the repatriation of the proceeds from any such disposition;
- the remittance abroad of distributions made by us or Unibanco Holdings.

We do not know whether any restrictions are likely to be imposed and, if imposed, we cannot predict the duration or impact of the restrictions.

Exchange Rates

The Central Bank allows the real/U.S. dollar exchange rate to float freely, and it has intervened occasionally to control unstable movements in foreign exchange rates.  We cannot predict whether the Central Bank
or the Brazilian government will continue to let the realfloat freely or will intervene in the exchange rate market through a currency band system or otherwise.  The realmay depreciate or appreciate against the U.S. dollar
substantially in the future. For more information on these risks, see Item 3.D Risk Factors  Risks Relating to Brazil.

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The following table provides information on the selling exchange rate, expressed in reaisper U.S. dollar (R$/US$), for the periods indicated.  Prior to March 14, 2005, under Brazilian regulations,
foreign exchange transactions were carried out on either the commercial rate exchange market or the floating rate exchange market. Rates in the two markets were generally the same.  The table uses the commercial selling rate for periods prior to
March 14, 2005.

|                  |  |                        |  |             |  |       |  |      
|----------------- |  | ---------------------- |  | ----------- |  | ----- |  | -----
|                  |  |                        |  | Average for |  |       |  |      
|                  |  | Period-end             |  | Period(1)   |  | Low   |  | High 
|                  |  |                        |  |             |  |       |  |      
|                  |  | (reaisper U.S. Dollar)
|Year ended:       |  |                        |  |             |  |       |  |      
|December 31, 2003 |  | 2.889                  |  | 3.060       |  | 2.822 |  | 3.662
|December 31, 2004 |  | 2.654                  |  | 2.917       |  | 2.654 |  | 3.205
|December 31, 2005 |  | 2.341                  |  | 2.412       |  | 2.163 |  | 2.762
|December 31, 2006 |  | 2.138                  |  | 2.168       |  | 2.059 |  | 2.371
|December 31, 2007 |  | 1.771                  |  | 1.930       |  | 1.733 |  | 2.156
|Month:            |  |                        |  |             |  |       |  |      
|October 2007      |  | 1.744                  |  | 1.801       |  | 1.744 |  | 1.828
|November 2007     |  | 1.784                  |  | 1.770       |  | 1.733 |  | 1.850
|December 2007     |  | 1.771                  |  | 1.786       |  | 1.762 |  | 1.823
|January 2008      |  | 1.760                  |  | 1.774       |  | 1.741 |  | 1.830
|February 2008     |  | 1.683                  |  | 1.728       |  | 1.672 |  | 1.768
|March 2008        |  | 1.749                  |  | 1.707       |  | 1.670 |  | 1.749
|April 2008        |  | 1.687                  |  | 1.689       |  | 1.658 |  | 1.753
|May 2008          |  | 1.629                  |  | 1.661       |  | 1.628 |  | 1.695

10.E Taxation

We describe below the main Brazilian tax consequences relating to the acquisition, ownership and disposition of GDSs or Units by a holder that is not a resident of Brazil for purposes of Brazilian taxation, or
Non-Brazilian Holder, and whose investment in GDSs was made under our Depositary Receipt program and consequently is registered with the Central Bank.

We have considered the tax laws and regulations in effect in Brazil on the date of this annual report, which are subject to change. We have also considered that there is no income tax treaty between Brazil and the
United States.

This description does not contain all tax considerations that may be relevant to a decision to acquire Units or GDSs. You should consult your own tax advisors as to the tax consequences relating to the acquisition,
ownership and disposition of GDSs or Units that may apply to you, including the effect of any U.S. state or local or foreign tax laws.

With respect to the GDSs, we have also based this description on representations of the Depositary of our GDS program maintained in the United States and on the assumption that each obligation in the Deposit Agreement
and any related documents will be performed in accordance with its terms.

Taxation of Stock and Non-share bonus

If we or Unibanco Holdings pay dividends and/or share bonus with respect to profits accrued before December 31, 1995, such payment will be subject to withholding income tax.

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The payment of dividends or share bonus in favor of Non-Brazilian Holders of our (or Unibanco Holdings ́) GDS or Units with respect to profits accruing after December 31, 1995 is not subject to income tax

Taxation of Distributions of Interest on Capital Stock

When we or Unibanco Holdings pay Interest on Capital Stock, holders of GDSs or Units will be subject to withholding income tax, according to Brazilian law, at the rate of 15% on such payment, or 25% in case such holder
is a resident of a tax haven jurisdiction, as defined below. For a detailed description, see Item 10.B Additional InformationMemorandum and Articles of AssociationDividend Policy andInterest on Capital Stock.

Taxation of GDSs

According to Law 10,833-03, the disposition of assets located in Brazil by a Non-Brazilian Holder, whether to other Non-Brazilian Holders or Brazilian Holders, may be subject to taxation in Brazil.

We believe that the GDSs do not fall within the definition of assets located in Brazil for this purpose.

We also believe that one may challenge the Brazilian jurisdiction to impose a tax on transactions contracted between a non-Brazilian resident holder of GDS and a non-Brazilian holder purchasing such GDS.

Nevertheless, considering the general and unclear scope of such provisions, and the lack of administrative and judicial court rulings in respect thereto, we are unable to assure that such understanding will ultimately
prevail in Brazilian courts. As a result, gains on a disposition of GDSs by a Non-Brazilian Holder to a Brazilian Holder, or even to Non-Brazilian Holders, may be subject to income tax in Brazil according to the rules applicable to a disposition of
our Units. Under Brazilian law, the taxation of income derived from the disposition of our Units can vary, depending on the country of residence of the Non-Brazilian Holder, the type of registration of the investment by the Non-Brazilian Holder with
the Central Bank and how the disposition is carried out, as described below.

Conversion of GDS into Units

As a Non-Brazilian Holder of GDSs, you may cancel your GDSs and exchange them for Units, choosing registration in the form of Resolution 2,689-00 (RDE-Portfolio) or Law 4,131-62 (RDE-IED). The conversion of GDS into
Units will not be subject to Brazilian income tax. The tax treatment thereinafter will depend on the registration choice, as described below.

Conversion of Units into GDSs

Except for Non-Brazilian Holders with a portfolio investment duly registered with the Brazilian Authorities in the form of Resolution 2,689-00 (RDE-Portfolio) the deposit of Units by a Non-Brazilian Holder in exchange
for GDSs may be subject to Brazilian income tax if the acquisition cost of the Units is lower than (a) the average price per Unit on a Brazilian stock exchange on which the greatest number of such Units were sold on the day of deposit; or (b) if no
Units were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of Units were sold in the 15 trading sessions immediately preceding such deposit. In such case, the positive difference between the
acquisition cost and the average price of the Units calculated as above will be considered to be a capital gain subject to income tax at a rate of 15%. A 25% tax rate may apply to residents in tax havens.

Foreign Investment in Portfolio under Resolution 2,689-00

To register a portfolio investment:

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- you should register your investment in Brazil with the Central Bank within a specified time, in which case the foreign currency amount of your investment registered with the Central Bank will be determined based on the market value of the Units on
the date you withdraw them from the program; and
- you should register your investment in Brazil with the CVM.

In this case, the capital gain arising from the sale of Units within the Brazilian stock exchange and organized over-the-counter markets are tax-exempt, except for investors resident in tax havens. See Foreign
Direct Investment under Law 4,131-62 below for a description of the tax treatment of sales Units not carried out through the Brazilian stock exchange and organized over-the-counter markets.

If you are an investor resident in a tax haven, the sale of Units will be exempt from tax if the total sale price of the Units on the respective month is equal to or lower than R$ 20,000. Otherwise, you should be
taxed at a 15% rate on the difference between the sale price and the average acquisition cost of the Units sold, computed within the variable income tax basket, which is defined as the total amount of gains and losses in variable income
investments, which include options, futures, forwards, shares, and gold (when held as a financial asset).

Withholding tax will be charged at a 0.005% rate, which may be offset with the 15% variable income tax.

Foreign Direct Investment under Law 4,131-62

Under this proceeding, there is no need to register the direct foreign investment with the CVM, but you should register your investment with the Central Bank (RDE-IED).

The capital gain arising from the sale of direct foreign investment (Law 4.131 -62) shall be taxed according to general rules applicable to Brazilian residents (Law 9.249 -95, article 18).

Therefore, the positive difference in between the sale price and the average acquisition cost in reaiswill be taxed at a 15% capital gain tax rate.

Residents in tax havens have the rate increased to 25%.

If the sale is carried out within Brazilian stock exchange or organized over-the-counter markets, the capital gain will be subject to 0.005% withholding tax, which may be credited against the eventual income tax due on
the capital gain.

Notwithstanding this general rule, the full foreign currency amount subject to registration shall not be taxed when realized and repatriated.

Non-registered foreign investments in Units

If you fail to register your investments as set forth in Brazilian regulations and you sell your Units within the Brazilian stock exchange and organized over-the-counter markets (see Item 10.D Additional
Information  Exchange Rates and Exchange Control), you shall be tax exempt on the sale Units if the total sale price on the respective month is equal to or lower than R$ 20,000.00. Otherwise, you should be taxed at a 15% rate on the
difference between the sale price and the average acquisition cost of the Units sold, computed within the variable income tax basket, together with other gains and losses in the sale of shares, options, futures and forward contracts.

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If you make a private sale of shares or Units, you shall be taxed on the positive difference in between the sale price and the average acquisition cost in reais at a 15% capital gain tax rate.

Taxation of Tax Haven Residents

In accordance with Brazilian law, a tax haven is defined as a country or location that does not impose income tax or where the maximum income tax rate is lower than 20% or where the laws of that country or location
impose restrictions on the disclosure of shareholding composition or the ownership of the investment, or the identity of tax haven residents. Brazilian domestic tax provisions provide for a list of the jurisdictions deemed to be tax havens.

Preemptive Rights

Any exercise of preemptive rights relating to the shares underlying the Units or GDSs will not be subject to Brazilian taxation. Any gain on the sale or assignment of preemptive rights relating to the shares underlying
the Units or the GDSs will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposition of Units.

Expiration of CPMF and new rate of IOF/ Exchange Tax

Until December 31, 2007, any transaction carried out in Brazil that resulted in the transfer of funds from a Brazilian bank account was subject to CPMF at a rate of 0.38% . As of January 1st, 2008, the CPMF
Tax is no longer in force, and should not be levied on any transfer of funds carried out after that.

However, on January 3, 2008 the Brazilian government increased the IOF/ Exchange Tax  (described below) from 0% to 0.38%, which means the payment of dividends and Interest on Capital Stock to Non-Brazilian holders will
continue to be subject to tax at a 0.38% rate.

Other Brazilian Taxes

There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of Units or GDSs by a Non-Brazilian Holder except for gift and inheritance taxes which are levied by some
states of Brazil on gifts made or inheritances bestowed by individuals or entities not resident or domiciled in Brazil or domiciled within the state to individuals or entities resident or domiciled within such state in Brazil. There are no Brazilian
stamp, issue, registration or similar taxes or duties payable by holders of Units or GDSs.

A tax on foreign exchange transactions, or IOF/Exchange Tax, may be imposed on any conversion of Brazilian currency into foreign currency or vice versa. The rate of the IOF/Exchange Tax applicable is currently 0.38%
with some specific exceptions, but the Minister of Finance has the legal power to increase the rate at any time to a maximum of 25%, but only with respect to future transactions.

A bonds and securities transactions tax, or IOF/Bonds Tax, may be imposed on several types of financial transactions, including those carried out on Brazilian stock, futures or commodities exchanges. The rate of this
tax is currently zero for transactions involving Units and GDSs but the Minister of Finance has the legal authority to increase the rate at any time to a maximum rate of 1.5% per day, but only with respect to future transactions.

Material United States Federal Income Tax Consequences

The following summary describes certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of GDSs and the Units as of the
date hereof. Except where noted, this discussion deals only with U.S. Holders. As used herein, a U.S. Holder means a beneficial owner of GDSs or Unitsthat is for U.S. federal income tax purposes:

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- an individual who is a citizen or resident of the United States;
- a corporation (or other entity classified as a corporation) created or organized under the laws of the United States or any state thereof or the District of Columbia; or
- otherwise subject to U.S. federal income taxation on a net basis with respect to the Units or the GDSs.

This summary applies only to holders who will hold GDSs and the Units as capital assets (i.e., generally, as investment property). This summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the Code) and Treasury Regulations, rulings and judicial decisions, all as in effect on the date hereof. Those authorities are subject to different interpretations and may be changed, perhaps retroactively, so as to result in
U.S. federal income tax consequences different from those discussed below. There can be no assurance that the Internal Revenue Service (the IRS) will not challenge one or more of the tax consequences discussed herein or that a court will
not sustain a challenge by the IRS in the event of litigation.

This summary is of a general nature and does not address all of the U.S. federal income or other tax consequences that may be relevant to you in light of your particular situation. For example, this summary does not
apply to U.S. expatriates, insurance companies, regulated investment companies, tax-exempt organizations, financial institutions, holders subject to the alternative minimum tax, securities broker-dealers, holders that use a mark-to-market accounting
method, holders who hold GDSs or the Units as part of hedging, straddle, or conversion transactions, holders who own directly, indirectly or by attribution 10% or more of the voting power of our issued share capital, or holders whose functional
currency for U.S. federal income tax purposes is not the U.S. dollar. Further, this summary does not address any aspect of state, local or non-U.S. tax law.

The U.S. federal income tax treatment of a partner in a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) that holds GDSs or Units generally will depend on such
partners particular circumstances and on the activities of the partnership. Partners in such partnerships should consult their own tax advisors.

You should consult your own tax advisors as to the particular tax consequences to you under U.S. federal, state, local and non-U.S. laws of the acquisition, ownership and disposition of GDSs or the Units, and the
effects of possible changes in such laws.

General

For U.S. federal income tax purposes, holders of GDSs will be treated as owners of the underlying Units attributable thereto. Accordingly, deposits or withdrawals of Units for GDSs will not be subject to U.S. federal
income tax.

The United States Treasury department has expressed concern that depositaries for Global Depositary receipts, or other intermediaries between holders of shares of an issuer and the issuer, may be taking actions that are
inconsistent with the claiming of United States foreign tax credits by U.S. Holders of such receipts or shares. Accordingly, the analysis regarding the availability of a United States foreign tax credit for Brazilian taxes and the sourcing rules
described below could be affected by future actions that may be taken by the United States Treasury Department.

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Distributions

Subject to the discussion below under Passive Foreign Investment Company Considerations, the gross amount of a distribution paid on a GDS or a Unit (including distributions, if any, of Interest on Capital
Stock) generally will be a dividend for U.S. federal income tax purposes, and will be includible in your gross income as ordinary dividend income in the taxable year of receipt (which generally will be the taxable year in which such dividend is
received by you, in the case of the Units, or by The Bank of New York, as depositary, in the case of GDSs). The amount of any distribution will include the amount of Brazilian withholding taxes, if any, withheld on the amount distributed. Dividends
paid with respect to the GDSs or Units generally will be treated as foreign-source income and will not be eligible for the dividends-received deduction allowed to corporate shareholders under U.S. federal income tax law.

Such dividends generally will constitute passive category income for U.S. foreign tax credit purposes. If any Brazilian income taxes are withheld from such dividends, you may be entitled to claim a foreign
tax credit for the amount of such Brazilian income taxes against your U.S. federal income tax liability, subject to certain limitations and restrictions that may vary depending upon your circumstances. Instead of claiming the foreign tax credit, you
may, at your election, deduct the U.S. dollar value of such Brazilian income taxes in computing your U.S. taxable income (such an election would apply to all foreign income taxes during the taxable year). The rules relating to foreign tax credits
are complex, and the availability of a foreign tax credit would depend on various factors. You are urged to consult your own tax advisors regarding the availability of foreign tax credits in light of your particular circumstances.

The maximum U.S. federal income tax rate for certain dividends (qualified dividends) received by certain noncorporate taxpayers, including individuals, through taxable years beginning on or before December
31, 2010 is 15%, so long as certain holding period and other requirements are met by the holder. Dividends paid on the GDSs will be treated as qualified dividends if (i) the GDSs are readily tradable on an established securities market in the United
States or (ii) the payor of the dividends is eligible for the benefits of an income tax treaty with the United States that provides for the exchange of information and (iii) neither we nor Unibanco Holdings are classified as a passive foreign
investment company (a PFIC) (see below). The GDSs are listed on the New York Stock Exchange and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. We believe that we
and Unibanco Holdings were not treated as PFICs for our immediately preceding year and will not be so treated for our current or future years, as explained below.

It is unclear whether dividends paid to direct holders of our Units will be treated as qualified dividends (and therefore qualify for the 15% maximum rate), because such Units are not themselves listed on a United
States exchange and there is no income tax treaty between Brazil and the United States. In addition, the U.S. Treasury has announced its intention to promulgate rules pursuant to which holders of GDSs and intermediaries through which such securities
are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because such procedures have not yet been issued, it is not clear whether we will be able to comply with the
procedures. We urge you to consult your own tax advisor regarding the availability of the reduced dividend tax rate in light of the considerations discussed above and your own particular circumstances.

The amount of any distribution will be measured by the fair market value in U.S. dollars of the reaisor other property on the date received by you in the case of the Units, or by The Bank of New York, as
depositary, in the case of GDSs, based on the spot exchange rate on such date. If such reais are not converted into U.S. dollars on the date of receipt, it is
possible that you will recognize foreign currency loss or gain, which would be ordinary loss or gain, when the reaissubsequently are converted into U.S. dollars.

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A holder of GDSs that is a foreign corporation or a nonresident alien individual (a non-U.S. holder) generally will not be subject to U.S. federal income tax or withholding tax on distributions with respect
to Units or GDSs that are treated as dividend income for U.S. federal income tax purposes, unless such dividends are effectively connected with the conduct by such holder of a trade or business in the United States.

Sale, Exchange or Other Disposition of Units or GDSs

Upon the sale, exchange or other taxable disposition of a Unit or GDS, you will generally recognize a gain or a loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount
realized (including the gross amount of the proceeds before the deduction of any Brazilian tax) and your adjusted tax basis in the Unit or GDS. Your adjusted tax basis in Units or GDSs will generally equal the amounts paid therefor. Subject to the
discussion below under Passive Foreign Investment Company Considerations, such gain or loss will be a capital gain or loss and will generally be treated as U.S.-source gain or loss. If you are an individual taxpayer, any such capital
gain will generally be subject to U.S. federal income tax at a maximum rate of 15% for taxable years beginning on or before December 31, 2010 if you have held the Unit or GDS for more than one year. We do not believe that separate gain or loss
computations must be made with respect to each component of a Unit (unless they are separated), but no assurance can be given that the IRS will not challenge this position. Capital losses may be deducted from taxable income, subject to certain
limitations.

If you are a U.S. holder, gain or loss that you realize on the sale or disposition of Units or GDSs generally will be treated as U.S.-source gain or loss. As a result, if Brazilian income tax is imposed on the gain from
such sale or disposition, you may not be able to benefit from the corresponding foreign tax credit, unless you can apply the credit against U.S. federal income tax payable on other income from foreign sources. Alternatively, such Brazilian tax may
be taken as a deduction against taxable income if you do not take a credit for any foreign income tax during the taxable year.

The surrender of GDSs in exchange for the Units and the surrender of the Units in exchange for GDSs will not be a taxable event for U.S. federal income tax purposes. Accordingly, you will not recognize any gain or loss
upon such surrender.

A non-U.S. holder will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale or other disposition of a Unit or GDS, unless:

- such gain is effectively connected with the conduct by the holder of a trade or business in the United States; or
- such holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met.

Passive Foreign Investment Company Considerations

We believe that we and Unibanco Holdings were not treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our immediately preceding year and will not be so treated for our
current taxable year, or for future taxable years. However, an actual determination of PFIC status is factual in nature and generally cannot be made until the close of the applicable taxable year. A corporation will be a PFIC if either:

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- 75% or more of its gross income in a taxable year is passive income, which includes dividends, interest, royalties, rents, annuities, and some types of gains; or
- the average percentage of the value of its assets that produce or are held for the production of passive income is at least 50%.

Our belief that we and Unibanco Holdings are not, and will not in the future be, a PFIC is based on certain Proposed Treasury Regulations dealing with non-U.S. banks. Such regulations are not final and are subject to
modification, in which case our determination regarding PFIC status may be different.

If we or Unibanco Holdings were classified as a PFIC, you would be subject to certain adverse U.S. tax consequences, including the possible characterization of gain with respect to the Units or GDSs as ordinary income,
the possible imposition of an interest charge on taxes you would be deemed to have deferred and the unavailability of the reduced 15% tax rate on dividends.

You are urged to consult your own tax advisor concerning the potential application of the PFIC rules to your acquisition, ownership and disposition of the Units or GDSs.

United States Information Reporting and Backup Withholding

Certain payments, including dividends, with respect to the Units or GDSs and proceeds from the sale, exchange or redemption of the Units or GDSs may be subject to U.S. backup withholding tax (currently at a rate of
28%), unless (i) you furnish a correct taxpayer identification number, make any other required certification and otherwise comply with applicable requirements of backup withholding rules, or (ii) you are a corporation or otherwise exempt from backup
withholding and appropriately establish that exemption. If you are required to establish your exempt status you generally must provide such certification on IRS Form W-9. Amounts withheld as backup withholding may be credited against your U.S.
federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules, by filing the appropriate claim for refund with the IRS and furnishing any required information on a timely basis.

You will also be subject to information reporting with respect to certain payments on the Units or GDSs and proceeds from the sale, exchange or redemption of the Units or GDSs unless you are a corporation or other
exempt recipient and appropriately establish that exemption.

A non-U.S. holder generally will be exempt from these information reporting requirements and backup withholding taxes, but may be required to comply with certain certification and identification procedures in order to
establish its eligibility for such exemption.

10.F Dividends and Paying Agents

Not applicable.

10.G Statement by Experts

Not applicable.

10.H Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934 applicable to foreign private issuers, as amended, and to the Brazilian rules and regulations applicable to Brazilian public
companies and, in accordance with these
requirements, we file reports and other information with the SEC and with the CVM. These materials, including this annual report and the exhibits hereto, may be read or copied at the SECs public reference room at 100 F Street, N.E.,
Washington, D.C. 20549, and at the CVM at Rua 7 de Setembro, 111, Rio de Janeiro, RJ 20050-901. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room or the CVM at 55-21-3233-8686. The SEC and the CVM also
maintain web sites at http://www.sec.gov or http://www.cvm.gov.br that provide online access to reports, proxy statements and other information regarding registrants that file electronically with the SEC and with the CVM, respectively.

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10.I Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

Risk management is an independent unit responsible for identifying, measuring and managing market, credit and operational risk on an institution-wide basis.  Through the development and use of tools based on the best
practices adopted in the market, we seek to optimize our risk-return relation, as well as to assure the continuous improvement of risk management at all organizational levels.  Risk Management at Unibanco is based on tools and parameters associated
with risk/return optimization, taking into account, among others, risk diversification and maximum exposure limits.

Market Risk

Market risk measures the potential losses derived from adverse changes in interest rate yield curves, foreign exchange rates, equity and commodity prices and other risk factors, such as volatilities and sovereign
risk.

These different sources of market risk represent a macro picture of risk and require a more detailed breakdown of specific market risk factors. For example, the BRL Interest Rate Yield Curve is the main source of
interest rate risk but a more in-depth analysis will require a segmentation of the yield curve in vertices, measured in business days until maturity. This approach creates a clear distinction between interest rate risk related to short-term
positions and long-term positions.

Our securities portfolio consists mainly of Brazilian government bonds and notes, both onshore and offshore, which are very liquid assets. We did not hold a position in state or municipal bonds during 2007. We also have
an Eurobond portfolio of low risk Brazilian issuers.

The duration of fixed income instruments traded in Brazil is still short when compared to international standards. Therefore, the interest rate risk of our domestic portfolio tends to be lower than our international
bond portfolio. Gradually, the Central Bank is lengthening maturities of government liabilities.

We use derivatives as the main market instrument for our trading activities. By trading derivatives, we are able to achieve lower credit risk exposure than would be achieved with a position in the corresponding cash
instruments. Another important role for derivatives is in managing asset and liability mismatches and for hedging purposes, when it is not intended to run a specific risk or situation. The most common derivatives traded are interest rate and foreign
exchange futures, options, forwards and swaps.

A large portion of our swap portfolio has financial institutions as counterparts. Most of this portfolio is guaranteed by the Bolsa de Mercadorias & Futuros,theBrazilian
Commodities & Future Exchange (BM&F). We also trade with non-bank counterparties, most of who are customers of our commercial banking operations. Generally, these swaps have a time deposit as collateral.

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Market Risk Management Process

We believe we have a conservative policy regarding market risk exposures. All financial and main non-financial subsidiaries, such as our credit cards, capitalization, private pension funds and insurance business are
evaluated on a daily basis.

Our market risk management group has an independent line of communication with senior management as the division is headed by a member of the Executive Committee, who reports directly to our CEO. As a result, the market
risk exposure of our portfolio is independently supervised and controlled by our senior management.

Our market risk management group is heavily involved in the process of approving new products. For each product launched by our business segments, our market risk group provides a formal statement in respect of the
product, approving conditions and suggesting improvements in controls.

Market risk management is based on limits established by the financial, risk and cash committees.

We limit our market risk exposure by managing our currencies, maturities, and interest rates mismatches. Securities, derivatives, loans and funding are analyzed on both a detailed and consolidated basis. Exposure limits
for our treasury unit are established considering market volatilities, scenario forecasts, opportunities for profit and the funding needs of the Commercial Bank. Trading and positioning activities are conducted within clear limits suggested by the
risk team and ratified by the financial committee. These limits and policies are reviewed monthly or when a new risk or opportunity arises.

Our financial committee, which consists of representatives from senior management, meets every 45 days. This committee establishes the position limits for our treasury unit, taking into account market volatilities,
liquidity, institutional needs, and potential risks. Extraordinary meetings of the financial committee are held if unexpected changes in the macroeconomic environment arise that generate opportunities and/or risks.

Our risk committee, which consists of representatives of the board, business officers and risk management professionals, meets every 45 days. The committees main objective is to review policies related to
treasury, brokerage, products and custody, among other things. Limit policies are also defined in this committee, including those for the trading desk. The risk and financial committees consult one another on proposals and agree on them.

Our Treasury units cash committee meets daily. The cash committee discusses:

- macroeconomic environment;
- outstanding positioning and the main potential risks; and
- decides on positions and exposures in accordance with policy limits.

All arbitrage decisions are made by our Treasury at our headquarters in São Paulo. This segregation of duties helps to ensure the accuracy of the information about our positions, and the centralization of
arbitrage decisions allows us to better appreciate and evaluate risks inherent in arbitrage transactions.

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Market Risk Models

We have adopted several different sets of tools and methodologies in order to manage our market risks.

Stress testing

Stress tests are also part of our risk policy. Scenarios for enhanced, deteriorating and worst-case market conditions are created and frequently updated. In addition, whenever political or economic events that may
affect the financial market are foreseen, new scenarios are generated and positions reevaluated in order to understand their potential impact on our operations and financial condition. These analyses are conducted on a daily basis and are provided
to our senior management for their review. Daily market risk reports provide information about potential financial impacts, in the event of each of the stress scenarios.

Sensitivity Analysis

Interest rate related instruments may be affected by many different yield curves such as fixed, floating and inflation linked yield curves. For each one of the yield curves that we are exposed to, we calculate the price
value of one basis-point. We apply a shock of one basis-point to the interest rate portfolios and evaluate the change in the value of these portfolios, resulting of this one basis-point change.

For our options portfolios, a sensitivity matrix is performed and portfolio value is recalculated, given many different simultaneous combinations of spot and implied volatility change. This kind of scenario
analysis is very useful to capture the nonlinearities implicit in an options book.

Value at Risk (VaR)

We employ the VaR methodology for evaluating our risks. VaR is defined as the potential loss in portfolio value, from regular adverse market movements, and is based on probability analysis. We consider a 99% confidence
level (2.33 standard deviation) and a one-day holding period to calculate VaR on a daily basis.

VaR is calculated for the overall bank position and for all subportfolios such as Trading and Banking books, each one of the options book and for each risk factor separately (BRL Interest Rates, FX, Equities and
Offshore Bonds) in the Trading and Banking books.

Historical data for financial market rates and prices are used in the statistical modeling to update our risk management database for returns, volatilities and correlations of the risk factors on a daily basis.
Volatilities and correlations are obtained through the well-known exponential weighted moving average (EWMA) model. The main advantage of this model is to put more weight in the more recent data and here we use 0.95 as the decay factor.

When dealing with portfolios containing only linear instruments, a parametric VaR model is the chosen methodology and gives a quick calculation for value at risk. Parametric VaR assumes a probability distribution that
is completely described by its parameters, which is the case of the normal distribution used in this calculation.

VaR estimates for portfolios with nonlinear instruments, such as options, are calculated by Monte Carlo method, with 5,000 simulations and 99% confidence level. For some specific products, such as credit derivative swaps, we
employ historical simulations under the same confidence level.

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The following table sets forth the VaR calculated on our overall risk portfolio for each of our fiscal years ended December 31, 2007, December 29, 2006 and December 31, 2005.

|                                       |  |         |  |         |  |         |  |         
|-------------------------------------- |  | ------- |  | ------- |  | ------- |  | --------
|                                       |  |         |  |         |  |         |  | As of   
|2007                                   |  |         |  |         |  |         |  | December
|(in millions of R$)                    |  | Average |  | Minimum |  | Maximum |  | 31,     
|                                       |  |         |  |         |  |         |  |         
|Interest rate risk on domestic         |  |         |  |         |  |         |  |         
|position:                              |  |         |  |         |  |         |  |         
|Reais                                  |  | 23.73   |  | 4.66    |  | 67.81   |  | 19.53   
|FX and Cross Border                    |  | 10.41   |  | 0.94    |  | 25.77   |  | 11.35   
|Stock Market                           |  | 1.94    |  | 0.11    |  | 7.53    |  | 6.58    
|Options                                |  | 3.87    |  | 0.75    |  | 14.36   |  | 5.34    
|                                      
|                                      
|Interest rate risk on foreign position |  | 8.60    |  | 0.00    |  | 22.70   |  | 5.65    
|                                      
|Equity of foreign branches             |  | 12.59   |  | 0.00    |  | 23.59   |  | 18.97   
|Consolidated risk                      |  | 58.51   |  | 25.86   |  | 140.81  |  | 47.46   

|                                       |  |         |  |         |  |         |  |         
|-------------------------------------- |  | ------- |  | ------- |  | ------- |  | --------
|                                       |  |         |  |         |  |         |  | As of   
|2006                                   |  |         |  |         |  |         |  | December
|(in millions of R$)                    |  | Average |  | Minimum |  | Maximum |  | 29,     
|                                       |  |         |  |         |  |         |  |         
|Interest rate risk on domestic         |  |         |  |         |  |         |  |         
|position:                              |  |         |  |         |  |         |  |         
|Fixed                                  |  | 8.8     |  | 2.3     |  | 24.8    |  | 6.2     
|FloatingIGPM indexed                  |  | 1.6     |  | 0.7     |  | 5.3     |  | 0.8     
|FloatingTR indexed                    |  | 6.3     |  | 0.5     |  | 44.7    |  | 2.1     
|FloatingUS$ indexed                   |  | 0.6     |  | 0.1     |  | 3.5     |  | 0.7     
|Foreign exchange riskUS$              |  | 2.8     |  | 0.0     |  | 11.2    |  | 0.1     
|Stock market                           |  | 0.2     |  | 0.0     |  | 1.2     |  | 1.1     
|Derivatives                            |  | 5.4     |  | 0.8     |  | 11.9    |  | 1.3     
|Interest rate risk on foreign position |  | 4.7     |  | 2.1     |  | 13.8    |  | 5.4     
|Structured position:                   |  |         |  |         |  |         |  |         
|Equity of foreign branches             |  | 26.4    |  | 6.0     |  | 98.7    |  | 9.7     
|Consolidated risk                      |  | 47.3    |  | 22.7    |  | 144.9   |  | 23.1    

|                                       |  |         |  |         |  |         |  |         
|-------------------------------------- |  | ------- |  | ------- |  | ------- |  | --------
|                                       |  |         |  |         |  |         |  | As of   
|2005                                   |  |         |  |         |  |         |  | December
|(in millions of R$)                    |  | Average |  | Minimum |  | Maximum |  | 31,     
|                                       |  |         |  |         |  |         |  |         
|Interest rate risk on domestic         |  |         |  |         |  |         |  |         
|position:                              |  |         |  |         |  |         |  |         
|Fixed                                  |  | 5.94    |  | 2.99    |  | 9.54    |  | 5.52    
|FloatingIGPM indexed                  |  | 1.55    |  | 0.58    |  | 6.40    |  | 0.99    
|FloatingTR indexed                    |  | 4.27    |  | 2.23    |  | 7.66    |  | 7.66    
|FloatingUS$ indexed                   |  | 1.01    |  | 0.41    |  | 1.85    |  | 0.43    
|Foreign exchange riskUS$              |  | 2.27    |  | 0.00    |  | 9.47    |  | 2.11    
|Stock market                           |  | 0.01    |  | 0.00    |  | 0.32    |  | 0.00    
|Options                                |  | 3.72    |  | 0.28    |  | 10.32   |  | 5.81    
|Interest rate risk on foreign position |  | 9.51    |  | 2.99    |  | 23.81   |  | 4.62    
|Structured position:                   |  |         |  |         |  |         |  |         
|Equity of foreign branches             |  | 15.85   |  | 6.32    |  | 27.85   |  | 13.76   
|Consolidated risk                      |  | 34.64   |  | 17.02   |  | 50.78   |  | 27.93   

We calculate VaR on each business day. The following table shows our VaR during 2007, 2006 and 2005, as measured by the percentage of business days during the year on which VaR fell within the specified real
levels.

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|                    |  |                   
|------------------- |  | ------------------
|                    |  | % of business days
|                    |  | on which VAR fell 
|                    |  | within specified  
|                    |  | levels            
|                    |  |                   
|(in millions of R$) |  | 2007              
|                    |  |                   
|up to R$20          |  | 0.00%             
|over R$20 to R$40   |  | 25.71             
|over R$40 to R$60   |  | 37.55             
|over R$60 to R$80   |  | 17.96             
|over R$80 to R$100  |  | 6.53              
|over R$100 to R$120 |  | 8.57              
|over R$120 to R$140 |  | 3.27              
|over R$140 to R$160 |  | 0.41              
|over R$160 to R$180 |  | 0.00              
|over R$180 to R$200 |  | 0.00              
|over R$200          |  | 0.00              
|                    |  | 100.00%           
|                   
|                   
|                    |  | % of business days
|                    |  | on which VAR fell 
|                    |  | within specified  
|                    |  | levels            
|                    |  |                   
|(in millions of R$) |  | 2006              
|                    |  |                   
|up to R$10          |  | 0.0%              
|over R$10 to R$20   |  | 0.0               
|over R$20 to R$30   |  | 5.6               
|over R$30 to R$40   |  | 36.1              
|over R$40 to R$50   |  | 39.8              
|over R$50 to R$60   |  | 6.8               
|over R$60 to R$70   |  | 2.0               
|over R$70 to R$80   |  | 1.2               
|over R$80 to R$90   |  | 1.2               
|over R$90 to R$100  |  | 1.6               
|Over R$100          |  | 5.6               
|                    |  | 100.0%            
|                   
|                   
|                    |  | % of business days
|                    |  | on which VAR fell 
|                    |  | within specified  
|                    |  | levels            
|                    |  |                   
|(in millions of R$) |  | 2005              
|                    |  |                   
|up to R$5           |  | 0.00%             
|over R$5 to R$10    |  | 0.00              
|over R$10 to R$15   |  | 0.00              
|over R$15 to R$20   |  | 2.79              
|over R$20 to R$25   |  | 5.98              
|over R$25 to R$30   |  | 19.12             
|over R$30 to R$35   |  | 25.10             
|over R$35 to R$40   |  | 20.72             
|over R$40 to R$45   |  | 17.53             
|over R$45 to R$50   |  | 8.37              
|over R$50 to R$55   |  | 0.40              
|Over R$55           |  | 0.00              
|                    |  | 100.00%           

Backtesting

We use backtesting analysis to monitor the accuracy of our VaR models. Backtesting compares daily profit and loss with the VaR and verifies if the risk model predicts correctly the number of times VaR is exceeded by
daily profit and loss. It is expected that the
backtesting results will show a number of exceptions in line with the confidence level of the risk model (for instance, if we calculate VaR with a 99% confidence level, for every hundred days, we would expect one day of loss higher than the
predicted VaR value). It is important to note that profit and loss results are theoretically calculated as intraday positions and earned fees are not considered in the daily profit and loss used in backtesting.

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Double tail measurements of VaR against profit and losses are conducted on a regular basis and function as an effective tool under normal conditions. Irregular market movements, however, such as those experienced in
August 2007 as a result of the U.S. subprime mortgage crisis, may affect the precision of our VaR processes, therefore potential irregular market movements are incorporated into our testing scenarios.

Non-trading activities

Both trading and non-trading activities are measured and controlled by the same tools and methodologies. Positions closed by us with clients and hedged in the market are evaluated by VaR and stress tools using the same
data, the same projections and kept under rigorous monitoring.

We recognize, however, the distinctive nature of the banking book with respect to its accrual instruments and have developed an approach to evaluate the potential impact of yield curve movements in the net interest
revenues of the banking book and, consequently, the potential impact in its earnings.

Currently, the earnings risk model processes market risk factors in which we have greater potential for revenue, such as, the Fixed Interest Rate and the Floating TR Indexed Rate. This model aims to continually
incorporate and target additional risk factors.

Economic Capital

To ensure optimal capital allocation, we apply an internally developed methodology for economic capital that is based on the RAROC (Risk Adjusted Return on Capital) and EVA (Economic Value Added) models.  We believe
that the use of economic capital is a performance tool that helps investments decisions, optimizing the return on capital.

We have undertaken several initiatives to introduce more advanced techniques consistent with risk management best practices. We also monitor regulatory and economic capital methodology developments through participation
in industry working groups (Febraban), risk management conferences and research.

Additional Risks

Credit Risks

Credit risk is related to the ability of a borrower to meet its financial obligations and is associated with exposures that are more likely to be held to maturity, such as corporate and retail loans.  Our credit policy
is designed to manage risk while maintaining the flexibility required by market conditions and customer needs.  We limit our credit risk exposure by avoiding concentration on single clients or particular sectors. Our credit policy establishes
various approval levels for both retail and wholesale customers. Depending on the size and type of exposure and the customers prior credit history, approval levels range from the branch general manager or account manager to the Retail or
Wholesale credit committees, which are composed of members of senior management.  Our centralized credit decision making process is based on strict credit limits, set by the Wholesale and Retail committees. We pre-approve credit limits to our
customers based on their creditworthiness and size. We believe these limits and pre-approved credit lines, as well as a rigid hierarchical approval structure and committees, assure a robust credit risk management process.

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Wholesale Risks

Our Wholesale segment encompasses economic groups with annual sales in excess of R$150 million. The risk evaluations are carried out on an individual and periodic basis, by means of a proprietary risk rating system
with 14 levels of risk (from AA to H). The system comprises quantitative and qualitative elements, such as the companys economic and financial status, management capacity, financial background, relationship with us and the conditions of the
market in which it operates, among others.  Credit lines for corporate customers are reviewed every 60 to 360 days, depending on the borrowers rating and the economic environment. The rating system is structured as follows:

- AA and A are very stable with minimal credit risk and considered to be financially very sound;
- B and C are less stable and require close monitoring (loans to companies ranked B and C are usually short-term, require significant security and other credit support);
- D, E, F and G are higher risks or have potential problems; and
- H are poor credit risks (defaults) and fully provisioned against.

For companies ranked B and C-, we generally conduct a credit review every 180 days. With companies ranked A- to AA1, we generally conduct a credit review every 360 days. As of December 31, 2007, approximately 99% of our
wholesale loan portfolio ranked between AA and C.

Retail Risks

Credit management in our Retail banking business is characterized by the processing of a large volume of credit requests, which requires specialized systems and processes. Our Retail segment includes individuals, as
well as firms with annual sales of up to R$150 million. Exposures to individuals and companies with sales of up to R$10 million are managed through proprietary statistical credit scoring and behavior scoring tools, in line with the
portfolios high volume of customers. Companies with annual sales in excess of R$10 million, in turn, are evaluated through a risk rating system, similar to the one used in the Wholesale business.

Operational Risks

Operational risks are related to an institutions losses due to inadequate or failed internal processes, human and systems behavior or from external events. We maintain an Operational Risk Area that manages
operational risks and undertakes several initiatives to ensure compliance with the requirements of Basel II and the regulatory criteria of the Central Bank.

Unibancos Operational Risk Area has established a set of tools and procedures to manage and control operational risks, which include:

Risk and Control Assessment  structured approach that enables mapping, evaluating and reviewing objectives, activities and workflows of a given unit. With this tool, operational risk can be clearly identified and
efficiency controls can be effectively measured. Roughly 100% of our relevant processes are reviewed monthly by specific managers that evaluate and report indicators and attention points to be monitored by Internal Control Committees.

New Products and Services Approval Process  ensures that prior to the launch of a new Unibanco product or service all relevant business areas have formal knowledge and
understanding, upon issuing their respective approvals. This procedure ensures that any new product, project or process complies with our policies and business strategy, following a well planned workflow and broad and rigorous evaluation criteria
that covers all involved areas.

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Loss Database  an important internal database used to store all loss events arising from our operations due to operational risk. This data is carefully classified in order to enable tracking, measuring, monitoring
and reporting loss occurrences. Our Loss Database was created in 2006, and is continuously improved and updated with new and relevant loss events. Besides its utility with respect to operational risk management and the mitigation process, this
database built will enable us over time to establish quantitative modeling and to calculate capital allocation. According to Basel II, the establishment of an internal loss database is one of the qualifying criteria for AMA (Advanced Measurement
Approaches).

Key Risk Indicators  provide indication and warnings of risk concerns, based upon predetermined risk levels. With Key Risk Indicators, changes in the operational risk profile and potential future loss exposures
can be assessed and anticipated, helping us to control, adapt and mitigate risks.

Business Continuity Plan (BCP)  a set of measures and procedures aimed to limit losses and recover business operation in the event of a crisis or a disaster with severe business disruption. Crisis administration,
operation continuity and business recovery are addressed by the BCP. Through BCP implementation, we seek to manage and mitigate the effects of disasters that can adversely affect our business and customer loyalty and confidence.

These tools promote the integration among our managers and establish an internal culture dedicated to identifying and analyzing operational risks. In addition, it provides senior management with the tools to assess
operational risks and supply a basis for economic and regulatory capital allocation under Basel II. By stimulating and maintaining an internal culture focused on efficient and integrated risk management, we aim to reduce costs and operational losses
and explore business opportunities, maximizing return to our shareholders.

Systems Risk

As banking operations diversify and the volume of transactions involving computers and telecommunication networks increases, the importance of information technology and the potential impact of system failures or
electronic security breaches have grown. Accordingly, we have devoted substantial resources to ensure the reliability, stability and security of our computer and related systems. Our main computer facility is located in São Paulo, where we
maintain a backup system to provide automatic coverage in the case of system failures.  We also store backup files recording all banking operations and conduct periodic testing to check all the procedures and identify points of attention.

Liquidity Risk

Liquidity Risk Management involves using best practices to avoid a cash shortfall and an inability to meet payments when due. Our liquidity management includes:

- Monitoring of short-term cash flow (90 days) for Onshore and Offshore Treasury on a consolidated basis;
- Monitoring of long term liquidity gaps;
- Monitoring of medium and long term cash flows vis a vis budgeted portfolios, as it requires coordination between treasury and business units throughout the bank to
provide enough funding to support business growth and, at the same time, to avoid cash mismatches;

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- Evaluation of the cost of funding and alternative funding sources;
- Funding diversification through an ongoing control of sources of funding considering investor type, maturities and other factors; and
- Periodic revaluation of liquidity policies as per current market conditions.
 The following committees are responsible for the management of our liquidity risk:
- Treasury Cash Committee
Frequency: Daily
Members: Traders (including people involved in Treasury Cash Management), Macroeconomic Research, and Risk Management
- Liquidity Management Committee
Frequency: Weekly
Members: Head of Banking Book and staff, Risk Management and Controlling
- Assets and Liabilities Committee (ALCO)  a senior level committee that plays the primary role in setting guidelines, following and monitoring liquidity across the bank in accordance with approved liquidity policies
Frequency: Monthly
Members:
Executive Committee
Risk Management Officer
Planning and Controlling Officer
Risk Management senior staff
Treasury senior staff
Planning and Controlling

A contingency plan establishes all the procedures and sources of cash to be used in case of deterioration in liquidity market condition.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

Financial Responsibility, Disclosure Controls and Procedures, and Report on Internal Control Over Financial Reporting

(a) Disclosure Controls and Procedures

During the fiscal year ended December 31, 2007, evaluations of the effectiveness of our and Unibanco Holdings disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) were carried out under the supervision of our respective management, including our Chief Executive Officer and Chief Financial Officer. There are inherent limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their
control objectives.

Based upon the evaluation referred to above, our and Unibanco Holdings Chief Executive Officer and Chief Financial Officer concluded, subject to the limitations noted above, that for the period covered by this
annual report, our and Unibanco Holdings disclosure controls and procedures were adequate and effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Managements Annual Report on Internal Control over Financial Reporting

Our and Unibanco Holdings managements are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and
Exchange Act of 1934. Our internal control was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may decline.

Our and Unibanco Holdings managements assessed the effectiveness of our internal controls over financial reporting as of December 31, 2007. In making this assessment, it used the criteria established in
Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation and those criteria, our and Unibanco Holdings managements have concluded
that our internal control over financial reporting was effective as of December 31, 2007.

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(c) Attestation Reports of the Registered Public   Accounting Firm

PricewaterhouseCoopers Auditores Independentes, the   independent registered public accounting firm that has audited Unibanco   Holdings and our financial statements, has issued attestation reports   on Unibanco Holdings and our internal controls over financial reporting as of   December 31, 2007.  These attestation reports appear on pages F-1 and   F-3.

(d) Changes in Internal Control over Financial Reporting

There have been no changes in our and Unibanco Holdings internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal
year ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our or Unibanco Holdings internal control over financial reporting. At this time, given our and Unibanco Holdings management
s conclusion that our internal controls over financial reporting were effective as of December 31, 2007, we and Unibanco Holdings are not planning to institute any significant changes to our internal controls over financial reporting in
2008.

16.A Audit Committee Financial Expert

Our Board of Directors has determined that one of the members of our Audit Committee, Guy Almeida Andrade is an audit committee financial expert and meets the requirements set forth by the SEC and the NYSE. He, along
with the other members of our Audit Committee, is independent. Mr. Andrade is an expert in U.S. GAAP, which is the GAAP used by us in our primary financial statements filed with the SEC. Other members of our Audit Committee are experts in accounting
practices adopted in Brazil and we believe the skills, experience and education of our Audit Committee members qualifies them to carry out all of their duties as members of the Audit Committee, including overseeing the preparation of our U.S. GAAP
financial statements. In addition, our Audit Committee has the ability to retain independent accountants, financial advisors or other consultants, advisors and experts whenever it deems appropriate.

Unibanco Holdings Board of Directors has determined that it does not have an audit committee financial expert (as defined under the rules and regulations of the SEC) serving on its Audit Committee
because Mr. Israel Vainboim, the sole member of its Audit Committee, is not an expert in U.S. GAAP. Mr Vainboim is an expert in accounting practices adopted in Brazil and we believe that his skills, experience and education qualify him to carry out
all of his duties as member of the Audit Committee, including overseeing the preparation of Unibanco Holdings U.S. GAAP financial statements. In addition, Unibanco Holdings Audit Committee has the ability to retain independent
accountants, financial advisors or other consultants, advisors and experts whenever it deems appropriate.

16.B Code of Ethics

We and Unibanco Holdings have adopted a Code of Ethics that applies to all of our employees, including directors, principal executive officers, principal financial officers, principal controllers, other officers,
trainees and temporary staff. The full text of our Code of Ethics is published on our website, at the following address: http://www.ri.unibanco.com.br/ing/gov/man/eti/index.asp. Copies of our Code of Ethics are also available, without charge,
upon written request addressed to Avenida Eusébio Matoso, 89115th FloorSão Paulo, SPBrazil; 05423-901; Attn. Mr. Rogério Paulo Calderón Péres. Amendments to our Code of Ethics, if any, will be
promptly disclosed on our website.

16.C Principal Accountants Fees And Services

According to Brazilian law, financial institutions must replace their independent registered public accounting firm at least every five consecutive fiscal years and former accountants can be rehired only after three
complete fiscal years have passed since their
prior service. For further information regarding these requirements, see Item 4.B Business Overview  Independent Accountants and Audit Committee.

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In 2004, we hired PricewaterhouseCoopers  Auditores Independentes  as our and Unibanco Holdings independent registered public accounting firm and they have since been performing this function.

Before we hire PricewaterhouseCoopers  Auditores Independentes  to provide any non-audit services, our senior management considers whether those services would be inconsistent with the independence guidelines established by the SEC, the Central Bank, the CVM and
the Brazilian Federal Accounting Council.  The initial analysis of the hire request is conducted by our Internal Audit Department, following the criteria determined by our Audit Committee, which are based on the rules and regulations applicable to
us. If senior management does not identify any issues, the proposed service is submitted for Audit Committee approval. Our Audit Committees policy for approving services provided by PricewaterhouseCoopers  Auditores Independentes  is described below.

The following table presents fees for professional audit services rendered by PricewaterhouseCoopers  Auditores Independentes  for the audit of our annual financial statements for the years ended December 31, 2006 and December 31, 2007, respectively, and fees
billed for other permitted services rendered by PricewaterhouseCoopers  Auditores Independentes  during those periods:

|                       |  |                        |  |       
|---------------------- |  | ---------------------- |  | ------
|                       |  | 2006                   |  | 2007  
|                       |  |                        |  |       
|                       |  | (in thousands ofreais)
|                       |  |                       
|Audit Fees (1)         |  | 8,851                  |  | 9,378 
|Audit-Related Fees (2) |  | 1,870                  |  | 586   
|Tax Fees(3)            |  | 204                    |  | 215   
|Total                  |  | 10,925                 |  | 10,179

Audit Committees Pre-approval Policies

On April 30, 2004, we established an Audit Committee to comply with Central Bank requirements.

On December 23, 2004, our Audit Committee approved a policy with respect to the engagement of independent registered public accounting firms to provide any audit or permitted non-audit services to our subsidiaries or
us. This policy was ratified by our Board of Directors on February 1, 2005.

This policy establishes that we cannot hire an independent registered public accounting firm to provide services that involve (i) the auditing of its own work, (ii) the exercise of any management functions and (iii) the
promotion of the audited companys interests. Our Audit Committee approved a list of services that may not be provided by our independent registered public accounting firm, because they may infringe these principles, such as the assistance with
corporate reorganizations and the reevaluation of assets.

This policy also provides that under certain circumstances, management may engage the independent registered public accounting firm to provide certain pre-approved services without the Audit Committees prior
approval.

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The engagement of the independent registered public accounting firm to provide any services not outlined above must be pre-approved by our Audit Committee.

Since the establishment of our pre-approval policy, all engagements for audit-related services, tax services and other services provided by PricewaterhouseCoopers  Auditores Independentes  have been approved in compliance with such policy.

16.D Exemptions From the Listing Standards for Audit Committees

Under the listed company audit committee rules of the NYSE and the SEC, we and Unibanco Holdings must comply with Rule 10A-3 of the Securities Exchange Act (Listing Standards Relating to Audit Committees).  Rule 10A-3
requires that we and Unibanco Holdings either establish an audit committee composed of members of the board of directors that meets specified requirements, or designate and empower a board of auditors or similar body to perform the role of the audit
committee in reliance on the general exemption for audit committees of foreign private issuers set forth in Rule 10A-3(c)(3) of the Securities Exchange Act.

In accordance with Central Bank regulations, we have established a body similar to the audit committee of the board of directors of a U.S. company, which we are required to call an audit committee. For more
information, see Item 4B  Business Overview  Regulation and Supervision  Audit Committee.

Our Audit Committee, to the extent permitted under Brazilian law, performs all the functions required of an audit committee under Rule 10A-3. As required by Brazilian law, our Board of Directors and Audit Committee are
separate legal entities and only one of the four members of our Audit Committee is also a member of our Board of Directors. In addition, under Brazilian law, the function of hiring independent auditors is a power reserved exclusively for a
companys board of directors. Therefore, our Board of Directors acts as our audit committee, as permitted under Rule 10A-3(c)(3)(v) of the Securities Exchange Act for the purpose of the appointment of our independent auditors.

Except in these respects, our Audit Committee is comparable to, and performs the functions of, an audit committee of the board of directors of a U.S. company. We believe that our Audit Committee is able to act
independently in performing the responsibilities of an audit committee under the Sarbanes-Oxley Act, satisfies the other requirements of the exemption of Rule 10A-3(c) and therefore is in compliance with Rule 10A-3 of the Securities Exchange Act.

Unibanco Holdings Audit Committee does not rely on any specific exemption, as it has an audit committee that fully complies with the requirements of Rule 10A-3 of the Securities Exchange Act.

16.E Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During 2007, we repurchased Units by exercising our repurchase rights under the Executive Stock Option Plan. For more information, see Item 6.B  Compensation - Unibanco  Executives Stock Option
Plan.

In August 2007, our Board of Directors and Unibanco Holdings Board of Directors approved the share repurchase of the preferred shares of both Unibanco and Unibanco Holdings traded on the Brazilian market.
Unibanco was authorized to acquire 20,000,000 Units during the 6-month period ending February 2008, with the intent to either (i) maintain the shares in treasury, (ii) sell the shares or (iii) cancel the shares without the capital reduction of
Unibanco or Unibanco Holdings.  Pursuant to this authorization, Unibanco purchased 8,765,400 Units at an average price of R$23.22 per Unit.

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On February 13, 2008, our Board of Directors and Unibanco Holdings Board of Directors approved a new stock repurchase program for the acquisition of up to 20,000,000 Units, effective for the 12-month period
beginning February 15, 2008.

The total amounts and average prices of Units repurchased by us in 2007 are indicated in the table below:

|               |  |            |  |             |  |                     |  |                    
|-------------- |  | ---------- |  | ----------- |  | ------------------- |  | -------------------
|               |  |            |  |             |  |                     |  |                    
|               |  |            |  |             |  |                     |  | (d) Maximum        
|               |  |            |  |             |  | (c) Total Number of |  | Number (or         
|               |  |            |  |             |  | shares              |  | approximate dollar 
|               |  | (a) Total  |  |             |  | (or Units)          |  | value) of shares   
|               |  | Number     |  | (b) Average |  | purchased           |  | (or Units) that may
|               |  | of Shares  |  | Price paid  |  | as part of publicly |  | yet be purchased   
|               |  | (Or Units) |  | per Share   |  | announced plans or  |  | under the plans or 
|Period         |  | purchased: |  | (or Unit)   |  | programs(1)         |  | programs           
|               |  |            |  |             |  |                     |  |                    
|January 2007   |  | 951,406    |  | 20.27       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|February 2007  |  | 120,855    |  | 19.95       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|March 2007     |  | 66,576     |  | 17.66       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|April 2007     |  | 323,741    |  | 19.09       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|May 2007       |  | 302,437    |  | 21.50       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|June 2007      |  | 54,819     |  | 21.77       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|July 2007      |  | 92,318     |  | 23.51       |  | -                   |  | -                  
|               |  |            |  |             |  |                     |  |                    
|August 2007    |  | 2,450,618  |  | 21.37       |  | 2,283,100           |  | 20,000,000         
|               |  |            |  |             |  |                     |  |                    
|September 2007 |  | 1,422,884  |  | 21.55       |  | 1,000,000           |  | 17,716,900         
|               |  |            |  |             |  |                     |  |                    
|October 2007   |  | 1,135,654  |  | 25.38       |  | 885,000             |  | 16,716,900         
|               |  |            |  |             |  |                     |  |                    
|November 2007  |  | 1,450,323  |  | 25.19       |  | 1,300,000           |  | 15,831,900         
|               |  |            |  |             |  |                     |  |                    
|December 2007  |  | 1,289,671  |  | 25.83       |  | 1,200,000           |  | 14,531,900         
|               |  |            |  |             |  |                     |  |                    
|Total          |  | 9,661,302  |  | 22.84       |  | 6,668,100           |  | -                  
|               |  |            |  |             |  |                     |  |                    

The total amounts and averages prices of Units repurchased by us in 2008, until May 2008, are set forth in the table below:

|              |  |            |  |             |  |                     |  |                    
|------------- |  | ---------- |  | ----------- |  | ------------------- |  | -------------------
|              |  |            |  |             |  |                     |  |                    
|              |  |            |  |             |  |                     |  | (d) Maximum        
|              |  |            |  |             |  | (c) Total Number of |  | Number (or         
|              |  |            |  |             |  | shares              |  | approximate dollar 
|              |  | (a) Total  |  |             |  | (or Units)          |  | value) of shares   
|              |  | Number     |  | (b) Average |  | purchased           |  | (or Units) that may
|              |  | of Shares  |  | Price paid  |  | as part of publicly |  | yet be purchased   
|              |  | (Or Units) |  | per Share   |  | announced plans or  |  | under the plans or 
|Period        |  | purchased: |  | (or Unit)   |  | programs(1) (2)     |  | programs           
|              |  |            |  |             |  |                     |  |                    
|January 2008  |  | 2,201,590  |  | 22.72       |  | 2,097,300           |  | 13,331,900         
|              |  |            |  |             |  |                     |  |                    
|February 2008 |  | 379,536    |  | 22.61       |  | 100,000             |  | 20,000,000         
|              |  |            |  |             |  |                     |  |                    
|March 2008    |  | 612,418    |  | 22.13       |  | 400,000             |  | 19,900,000         
|              |  |            |  |             |  |                     |  |                    
|April 2008    |  | 1,708,498  |  | 21.46       |  | 1,359,700           |  | 19,500,000         
|              |  |            |  |             |  |                     |  |                    
|May 2008      |  | 73,542     |  | 24.30       |  | -                   |  | 18,140,300         
|              |  |            |  |             |  |                     |  |                    
|Total         |  | 4,975,584  |  | 22.23       |  | 3,957,000           |  | -                  
|              |  |            |  |             |  |                     |  |                    

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ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The audited consolidated financial statements of Unibanco Holdings S.A. and subsidiary, Unibanco-União de Bancos Brasileiros S.A. and subsidiaries as of December 31, 2007 and for the three years then ended together with the reports of
PricewaterhouseCoopers Auditores Independentes and the  financial statements of Redecard S.A as of December 31,2007 and for the three years then ended together with the report of KPMG Auditores Independentes for the year ended 2007, filed as part of this annual
reports are as follows:

UNIBANCO HOLDINGS AND UNIBANCO

|                                                                                                                                                                       |  |     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers Auditores Independentes for Unibanco Holdings S.A. and Subsidiary                       |  | F-1 
|                                                                                                                                                                       |  |     
|Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers Auditores Independentes for Unibanco  União de Banco Brasileiros S.A. and Subsidiaries |  | F-3 
|                                                                                                                                                                       |  |     
|Unibanco Holdings S.A. and subsidiary                                                                                                                                  |  |     
|Consolidated balance sheets as of December 31, 2006 and 2007                                                                                                           |  | F-5 
|Consolidated statement of income for the years ended December 31, 2005, 2006 and 2007                                                                                  |  | F-6 
|Consolidated statement of changes in shareholders equity for the years ended December 31, 2005, 2006 and 2007                                                         |  | F-8 
|Consolidated statement of cash flows for the years ended December 31, 2005, 2006 and 2007                                                                              |  | F-9 
|                                                                                                                                                                       |  |     
|Unibanco  União de Bancos Brasileiros S.A. and subsidiaries                                                                                                           |  |     
|Consolidated balance sheets as of December 31, 2006 and 2007                                                                                                           |  | F-10
|Consolidated statements of income for the years ended December 31, 2005, 2006 and 2007                                                                                 |  | F-11
|Consolidated statements of changes in shareholders equity for the years ended December 31, 2005, 2006 and 2007                                                        |  | F-13
|Consolidated statements of cash flows for the years ended December 31, 2005, 2006 and 2007                                                                             |  | F-14
|Notes to the consolidated financial statements                                                                                                                         |  | F-15
|                                                                                                                                                                       |  |     
|REDECARD  S.A.                                                                                                                                                        |  |     
|Report of Independent Auditors KPMG Auditores Independentes for Redecard  S.A.                                                                                        |  |     
|Balance sheets as of December 31, 2006 (unaudited) and 2007                                                                                                            |  |     
|Statements of income for the years ended December 31, 2005 (unaudited), 2006 (unaudited) and 2007                                                                      |  |     
|Statements of changes  in shareholders ́ equity for the years ended December 31, 2005 (unaudited), 2006  (unaudited) and 2007                                           |  |     
|Statements of changes  in financial position for the years ended December 31, 2005 (unaudited), 2006  (unaudited) and 2007                                             |  |     
|Statements of cash flows for the years ended December 31, 2005 (unaudited), 2006(unaudited) and 2007                                                                   |  |     
|Notes to the financial statements                                                                                                                                      |  |     

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ITEM 19. EXHIBITS

|1.1  | Articles of Association of Unibanco  União de Bancos Brasileiros S.A., as amended and consolidated on [March 21, 2007] (English-language version).            
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|1.2  | Articles of Association of Unibanco Holdings S.A., as amended and consolidated on [March 21, 2007] (English-language version).                                 
|    
|6.1  | Please refer to Note 2 (x) to our consolidated financial statements.                                                                                           
|    
|8.1  | List of our Subsidiaries.                                                                                                                                      
|    
|12.1 | Certifications of the Chief Executive Officers of Unibanco and Unibanco Holdings pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
|    
|12.2 | Certifications of the Chief Financial Officers of Unibanco and Unibanco Holdings pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
|    
|13.1 | Certifications required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                             
|    

Certain instruments with respect to our long-term debt and that of our subsidiaries have not been filed as an exhibit to this annual report on Form 20-F because the total amount of debt authorized under any such
instrument does not exceed 10% of our total assets and those of our subsidiaries on a consolidated basis. We agree to furnish a copy of each such instrument upon request of the Securities and Exchange Commission.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

|                                          |  |                                                     |  | 
|----------------------------------------- |  | --------------------------------------------------- |  | 
|UNIBANCO-UNIÃO DE BANCOS BRASILEIROS S.A. |  |                                                     |  | 
|                                          |  |                                                     |  | 
|                                         
|                                         
|By:                                       |  | /s/ Pedro Moreira Salles                           
|                                          |  |                                                    
|                                          |  | Name: Pedro Moreira Salles                         
|                                          |  | Title: Chief Executive Officer                     
|                                         
|                                         
|                                         
|                                         
|By:                                       |  | /s/ Geraldo Travaglia Filho                        
|                                          |  |                                                    
|                                          |  | Name: Geraldo Travaglia Filho                      
|                                          |  | Title: Vice-President (principal financial officer)
|                                         
|                                         
|UNIBANCO HOLDINGS S.A.                    | 
|                                         
|                                         
|By:                                       |  | /s/ Pedro Moreira Salles                           
|                                          |  |                                                    
|                                          |  | Name: Pedro Moreira Salles                         
|                                          |  | Title: Chief Executive Officer                     
|                                         
|                                         
|                                         
|                                         
|By:                                       |  | /s/ Geraldo Travaglia Filho                        
|                                          |  |                                                    
|                                          |  | Name: Geraldo Travaglia Filho                      
|                                          |  | Title: Officer (principal financial officer)       

Date: June 30, 2008

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Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Shareholders
Unibanco Holdings S.A.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statement of income, of changes in shareholders equity and of cash flows present fairly, in all material respects, the financial position of Unibanco
Holdings S.A. and its subsidiary at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the Managements Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on
these financial statements and on the Company's internal control over financial reporting based on our audits (which were integrated audits in 2007 and 2006). We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in notes 2(x) and 24 to the consolidated financial statements, on January 1, 2006 the Company changed its method of accounting for share-based compensation by adopting Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share-Based Payment.

F-1

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A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers 
Auditores Independentes

São Paulo, SP 
June 30, 2008

F-2

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Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Shareholders
Unibanco  União de Bancos Brasileiros S.A.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statement of income, of changes in shareholders equity and of cash flows present fairly, in all material respects, the financial position of Unibanco
 União de Bancos Brasileiros S.A. and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Bank's management is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Managements Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our
responsibility is to express opinions on these financial statements and on the Bank's internal control over financial reporting based on our audits (which were integrated audits in 2007 and 2006). We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in notes 2(x) and 24 to the consolidated financial statements, on January 1, 2006 the Bank changed its method of accounting for share-based compensation by adopting Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share-Based Payment.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

F-3

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Table of Contents

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers 
Auditores Independentes

São Paulo, SP 
June 30, 2008

F-4

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Unibanco Holdings S.A. and Subsidiary
 Consolidated Balance Sheets
(Expressed in millions of Brazilian reais)

|                                                                        |  |                    |  |           
|----------------------------------------------------------------------- |  | ------------------ |  | ----------
|                                                                       
|                                                                        |  | As of December 31,
|                                                                        |  | 2006               |  | 2007      
|                                                                       
|Assets                                                                  |  |                    |  |           
|Cash and due from banks                                                 |  | R$ 1,304           |  | R$ 4,444  
|Interest-bearing deposits in other banks                                |  | 2,407              |  | 3,991     
|Federal funds sold and securities purchased under resale agreements     |  | 7,928              |  | 25,253    
|                                                                        |  |                    |  |           
|Cash and cash equivalents                                               |  | 11,639             |  | 33,688    
|Interest-bearing deposits in other banks                                |  | 5,225              |  | 4,601     
|Federal funds sold and securities purchased under resale agreements     |  | 6,585              |  | 5,815     
|Central Bank compulsory deposits                                        |  | 5,177              |  | 6,683     
|Trading assets, at fair value                                           |  | 9,904              |  | 12,459    
|Securities available for sale, at fair value                            |  | 7,286              |  | 11,019    
|Securities held to maturity, at amortized cost                          |  | 1,576              |  | 1,312     
|Loans                                                                   |  | 44,654             |  | 60,348    
|Allowance for loan losses                                               |  | (2,577)            |  | (2,712)   
|                                                                        |  |                    |  |           
|Net loans                                                               |  | 42,077             |  | 57,636    
|Investments in unconsolidated companies                                 |  | 802                |  | 905       
|Premises and equipment, net                                             |  | 1,435              |  | 1,492     
|Goodwill                                                                |  | 1,471              |  | 1,469     
|Intangibles, net                                                        |  | 672                |  | 661       
|Other assets                                                            |  | 8,784              |  | 10,626    
|                                                                        |  |                    |  |           
|Total Assets                                                            |  | R$ 102,633         |  | R$ 148,366
|                                                                        |  |                    |  |           
|                                                                       
|Liabilities                                                             |  |                    |  |           
|Deposits from customers:                                                |  |                    |  |           
|Demand deposits  non interest bearing                                  |  | R$ 4,099           |  | R$ 10,290 
|Time deposits                                                           |  | 24,307             |  | 23,463    
|Savings deposits                                                        |  | 7,274              |  | 11,224    
|Deposits from banks                                                     |  | 435                |  | 1,380     
|                                                                        |  |                    |  |           
|Total deposits                                                          |  | 36,115             |  | 46,357    
|Federal funds purchased and securities sold under repurchase agreements |  | 16,939             |  | 27,134    
|Short-term borrowings                                                   |  | 3,045              |  | 7,627     
|Long-term debt                                                          |  | 14,638             |  | 21,714    
|Other liabilities                                                       |  | 20,556             |  | 29,988    
|                                                                        |  |                    |  |           
|Total Liabilities                                                       |  | 91,293             |  | 132,820   
|                                                                        |  |                    |  |           
|                                                                       
|Commitments and contingent liabilities (Note 29)                        |  | -                  |  | -         
|                                                                       
|Minority interest in consolidated subsidiaries (Note 30)                |  | 5,221              |  | 7,878     
|                                                                        |  |                    |  |           
|                                                                       
|Shareholders' Equity                                                    |  |                    |  |           
|Preferred share (Note 19)                                               |  | 3,015              |  | 3,015     
|Common share (Note 19)                                                  |  | 1,609              |  | 1,609     
|Additional paid in capital                                              |  | 10                 |  | 292       
|Treasury share, at cost                                                 |  | (102)              |  | (122)     
|Capital reserves                                                        |  | 435                |  | 435       
|Appropriated retained earnings                                          |  | 1,157              |  | 2,345     
|Accumulated other comprehensive losses                                  |  | (60)               |  | (63)      
|Unappropriated retained earning                                         |  | 55                 |  | 157       
|                                                                        |  |                    |  |           
|                                                                       
|Total Shareholders' Equity                                              |  | 6,119              |  | 7,668     
|                                                                        |  |                    |  |           
|                                                                       
|Total Liabilities and Shareholders' Equity                              |  | R$ 102,633         |  | R$ 148,366
|                                                                        |  |                    |  |           

The accompanying notes are an integral part of these consolidated financial statements

F-5

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Unibanco Holdings S.A. and Subsidiary 
Consolidated Statement of Income
(Expressed in millions of Brazilian reais)

|                                                                     |  |                                 |  |             |  |           
|-------------------------------------------------------------------- |  | ------------------------------- |  | ----------- |  | ----------
|                                                                     | 
|                                                                     |  | For the Year Ended December 31,
|                                                                     |  | 2005                            |  | 2006        |  | 2007      
|                                                                     | 
|Interest Income                                                      |  |                                 |  |             |  |           
|Interest and fees on loans                                           |  | R$   9,354                      |  | R$   10,105 |  | R$   9,765
|Interest on federal funds sold and securities purchased under        |  |                                 |  |             |  |           
|agreements to resell                                                 |  | 2,069                           |  | 1,809       |  | 2,184     
|Interest on securities:                                              |  |                                 |  |             |  |           
|Trading                                                              |  | 1,176                           |  | 2,295       |  | 983       
|Available for sale                                                   |  | 1,128                           |  | 898         |  | 1,644     
|Held to maturity                                                     |  | 386                             |  | 229         |  | 201       
|Interest on deposits in other banks                                  |  | 436                             |  | 644         |  | 1,039     
|Interest on Central Bank compulsory deposits                         |  | 569                             |  | 486         |  | 425       
|Interest on other assets                                             |  | 4                               |  | 4           |  | 3         
|                                                                     |  |                                 |  |             |  |           
|Total interest income                                                |  | 15,122                          |  | 16,470      |  | 16,244    
|                                                                     |  |                                 |  |             |  |           
|Interest Expense                                                     |  |                                 |  |             |  |           
|Interest on deposits:                                                |  |                                 |  |             |  |           
|From banks                                                           |  | 19                              |  | 41          |  | 81        
|From customers:                                                      |  |                                 |  |             |  |           
|Savings deposits                                                     |  | 416                             |  | 346         |  | 394       
|Time deposits                                                        |  | 4,208                           |  | 3,652       |  | 2,339     
|Interest on federal funds purchased and securities                   |  |                                 |  |             |  |           
|sold under agreements to repurchase                                  |  | 1,037                           |  | 1,711       |  | 2,351     
|Interest on short-term borrowings                                    |  | (116)                           |  | 9           |  | 152       
|Interest on long-term debt                                           |  | 969                             |  | 1,119       |  | 405       
|                                                                     |  |                                 |  |             |  |           
|Total interest expense                                               |  | 6,533                           |  | 6,878       |  | 5,722     
|                                                                     |  |                                 |  |             |  |           
|Net Interest Income                                                  |  | 8,589                           |  | 9,592       |  | 10,522    
|Provision for loan losses                                            |  | 1,870                           |  | 2,030       |  | 1,935     
|                                                                     |  |                                 |  |             |  |           
|Net Interest Income After Provision for Loan Losses                  |  | 6,719                           |  | 7,562       |  | 8,587     
|                                                                     |  |                                 |  |             |  |           
|Non Interest Income                                                  |  |                                 |  |             |  |           
|Fee and commission income                                            |  | 2,712                           |  | 3,008       |  | 3,084     
|Trading income, net (Note 6)                                         |  | 111                             |  | 225         |  | 475       
|Net gains on securities and non-trading derivatives                  |  | 83                              |  | 132         |  | 208       
|Net losses on foreign currency transactions                          |  | (100)                           |  | (43)        |  | (130)     
|Equity in results of unconsolidated companies                        |  | 158                             |  | 195         |  | 261       
|Insurance, private retirement plan and pension investment contracts  |  | 2,616                           |  | 3,220       |  | 4,137     
|Other non-interest income - gain on change in interest in subsidiary |  | -                               |  | -           |  | 640       
|Other non-interest income                                            |  | 1,002                           |  | 878         |  | 3,186     
|                                                                     |  |                                 |  |             |  |           
|Total non-interest income                                            |  | 6,582                           |  | 7,615       |  | 11,861    
|                                                                     |  |                                 |  |             |  |           
|Non Interest Expense                                                 |  |                                 |  |             |  |           
|Salaries and benefits                                                |  | 3,016                           |  | 3,044       |  | 3,514     
|Administrative expenses                                              |  | 2,740                           |  | 3,103       |  | 2,983     
|Amortization and impairment of intangibles                           |  | 134                             |  | 77          |  | 120       
|Insurance, private retirement plan and pension investment contracts  |  | 2,830                           |  | 3,548       |  | 4,405     
|Other non-interest expense                                           |  | 2,351                           |  | 2,780       |  | 3,850     
|                                                                     |  |                                 |  |             |  |           
|Total non-interest expense                                           |  | 11,071                          |  | 12,552      |  | 14,872    
|                                                                     |  |                                 |  |             |  |           
|Income Before Income Taxes and Minority Interest                     |  | 2,230                           |  | 2,625       |  | 5,576     
|                                                                     |  |                                 |  |             |  |           
|Income Taxes                                                         |  |                                 |  |             |  |           
|Current tax expense                                                  |  | (319)                           |  | (469)       |  | (990)     
|Deferred tax expense                                                 |  | (136)                           |  | (70)        |  | (375)     
|                                                                     |  |                                 |  |             |  |           
|Total income taxes                                                   |  | (455)                           |  | (539)       |  | (1,365)   
|                                                                     |  |                                 |  |             |  |           
|Income Before Minority Interest                                      |  | 1,775                           |  | 2,086       |  | 4,211     
|Minority Interest                                                    |  | (855)                           |  | (1,008)     |  | (2,277)   
|Change in accounting principle (note 2(x))                           |  | -                               |  | (10)        |  | -         
|                                                                     |  |                                 |  |             |  |           
|Net Income                                                           |  | R$   920                        |  | R$   1,068  |  | R$   1,934
|                                                                     |  |                                 |  |             |  |           

(continue...)

F-6

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##### 

Table of Contents

Unibanco Holdings S.A. and Subsidiary 
Consolidated Statement of Income
(Expressed in millions of Brazilian reais, except otherwise indicated)

(continuation)

|                                                             |  |                                 |  |           |  |           
|------------------------------------------------------------ |  | ------------------------------- |  | --------- |  | ----------
|                                                             | 
|                                                             |  | For the Year Ended December 31,
|                                                             |  | 2005                            |  | 2006      |  | 2007      
|                                                             | 
|Net income applicable to common shares                       |  | R$   335                        |  | R$   358  |  | R$   657  
|Net income applicable to preferred shares                    |  | R$   585                        |  | R$   710  |  | R$   1,277
|Earnings per shares  in Brazilian reais (1)                 |  |                                 |  |           |  |           
|Distributed earnings (dividends)                             |  |                                 |  |           |  |           
|. Common                                                     |  | R$   0.21                       |  | R$   0.28 |  | R$   0.40 
|. Preferred                                                  |  | 0.21                            |  | 0.28      |  | 0.40      
|Undistributed earnings                                       |  |                                 |  |           |  |           
|. Common                                                     |  | 0.35                            |  | 0.37      |  | 0.79      
|. Preferred                                                  |  | 0.35                            |  | 0.37      |  | 0.79      
|Basic and diluted earnings per share                         |  |                                 |  |           |  |           
|. Common                                                     |  | 0.56                            |  | 0.65      |  | 1.19      
|. Preferred                                                  |  | R$   0.56                       |  | R$   0.65 |  | R$   1.19 
|Weighted average shares outstanding (in thousands)  Basic   |  |                                 |  |           |  |           
|. Common                                                     |  | 600,846                         |  | 553,736   |  | 553,736   
|. Preferred                                                  |  | 1,046,090                       |  | 1,080,865 |  | 1,074,303 
|Weighted average shares outstanding (in thousands)  Diluted |  |                                 |  |           |  |           
|. Common                                                     |  | 600,846                         |  | 553,736   |  | 553,736   
|. Preferred                                                  |  | 1,048,134                       |  | 1,084,847 |  | 1,080,383 

|_______________
|---------------
|(1)            
|               

The accompanying notes are an integral part of these consolidated financial statements

F-7

---

##### 

Table of Contents

Unibanco Holdings S.A. and SubsidiaryConsolidated Statement of Changes in Shareholders Equity
(Expressed in millions of Brazilianreais, except for number of shares)

|                                                                         |  |               |  |                                 |  |            |  |           
|------------------------------------------------------------------------ |  | ------------- |  | ------------------------------- |  | ---------- |  | ----------
|                                                                         | 
|                                                                         |  | Number of     |  | For the Year Ended December 31,
|                                                                         |  | shares        |  | 2005                            |  | 2006       |  | 2007      
|                                                                         | 
|Capital                                                                  |  |               |  |                                 |  |            |  |           
|Preferred shares - balance beginning of year                             |  | 1,089,851,783 |  | R$   1,237                      |  | R$   1,237 |  | R$   3,015
|Transfer from unappropriated retained earnings                           |  | -             |  | -                               |  | 1,778      |  | -         
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  | 1,089,851,783 |  | 1,237                           |  | 3,015      |  | 3,015     
|                                                                         |  |               |  |                                 |  |            |  |           
|Common shares - balance beginning of year                                |  | 553,735,904   |  | 695                             |  | 695        |  | 1,609     
|Transfer from unappropriated retained earnings                           |  | -             |  | -                               |  | 914        |  | -         
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  | 553,735,904   |  | 695                             |  | 1,609      |  | 1,609     
|                                                                         |  |               |  |                                 |  |            |  |           
|Additional paid in capital  balance beginning of year                   |  |               |  | 18                              |  | 21         |  | 10        
|Cumulative effect of a change in accounting principle                    |  |               |  | -                               |  | (4)        |  | -         
|Difference between cash received and average cost of treasury share sold |  |               |  | -                               |  | (16)       |  | (45)      
|Share option plan                                                        |  |               |  | 3                               |  | 9          |  | 4         
|Unrealized gain on change in interest in subsidiary (Note 30)            |  |               |  | -                               |  | -          |  | 196       
|Deferred tax assets of transaction with shareholders                     |  |               |  | -                               |  | -          |  | 127       
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | 21                              |  | 10         |  | 292       
|                                                                         |  |               |  |                                 |  |            |  |           
|Treasury share, at cost - balance beginning of year                      |  | 15,882,580    |  | (69)                            |  | (114)      |  | (102)     
|Acquisition of treasury share                                            |  | -             |  | (114)                           |  | -          |  | -         
|Shares canceled                                                          |  | -             |  | 68                              |  | -          |  | -         
|Share exchange with Unibanco                                             |  | 2,991,723     |  | 1                               |  | 12         |  | (20)      
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  | 18,874,303    |  | (114)                           |  | (102)      |  | (122)     
|                                                                         |  |               |  |                                 |  |            |  |           
|Capital reserves - balance beginning of year                             |  |               |  | 503                             |  | 435        |  | 435       
|Treasury share canceled                                                  |  |               |  | (68)                            |  | -          |  | -         
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | 435                             |  | 435        |  | 435       
|                                                                         |  |               |  |                                 |  |            |  |           
|Appropriated retained earnings                                           |  |               |  |                                 |  |            |  |           
|Legal reserve  balance beginning of year                                |  |               |  | 200                             |  | 251        |  | 299       
|Transfer from unappropriated retained earnings                           |  |               |  | 51                              |  | 48         |  | 91        
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | 251                             |  | 299        |  | 390       
|                                                                         |  |               |  |                                 |  |            |  |           
|Unrealized income reserve  balance beginning of year                    |  |               |  | 2,472                           |  | 3,111      |  | 821       
|Transfer from unappropriated retained earnings                           |  |               |  | 639                             |  | (2,290)    |  | 1,097     
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | 3,111                           |  | 821        |  | 1,918     
|                                                                         |  |               |  |                                 |  |            |  |           
|Special dividends reserve  balance beginning and end of year            |  |               |  | 37                              |  | 37         |  | 37        
|                                                                         |  |               |  |                                 |  |            |  |           
|Total appropriated retained earnings                                     |  |               |  | 3,399                           |  | 1,157      |  | 2,345     
|                                                                         |  |               |  |                                 |  |            |  |           
|Accumulated other comprehensive                                          |  |               |  |                                 |  |            |  |           
|Securities available for sale  balance beginning of year                |  |               |  | 7                               |  | 38         |  | (10)      
|Securities available for sale, net of applicable taxes (1)               |  |               |  | 31                              |  | (48)       |  | (53)      
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | 38                              |  | (10)       |  | (63)      
|                                                                         |  |               |  |                                 |  |            |  |           
|Cash flow hedges  balance beginning of year                             |  |               |  | -                               |  | (13)       |  | (50)      
|Cash flow hedges, net of applicable taxes (1)                            |  |               |  | (13)                            |  | (37)       |  | 50        
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | (13)                            |  | (50)       |  | -         
|                                                                         |  |               |  |                                 |  |            |  |           
|Total accumulated other comprehensive gains (losses)                     |  |               |  | 25                              |  | (60)       |  | (63)      
|                                                                         |  |               |  |                                 |  |            |  |           
|Unappropriated retained earnings  balance beginning of year             |  |               |  | (4)                             |  | (119)      |  | 55        
|Net income for the year                                                  |  | .             |  | 920                             |  | 1,068      |  | 1,934     
|Dividends/Interest on Capital Stock - Preferred shares                   |  |               |  | (219)                           |  | (308)      |  | (218)     
|Dividends/Interest on Capital Stock - Common shares                      |  |               |  | (126)                           |  | (152)      |  | (426)     
|Transfer to reserves                                                     |  |               |  | (690)                           |  | (434)      |  | (1,188)   
|                                                                         |  |               |  |                                 |  |            |  |           
|Balance end of year                                                      |  |               |  | (119)                           |  | 55         |  | 157       
|                                                                         |  |               |  |                                 |  |            |  |           
|Total Shareholders' Equity                                               |  |               |  | R$   5,579                      |  | R$   6,119 |  | R$   7,668
|                                                                         |  |               |  |                                 |  |            |  |           
|Comprehensive income (Note 25)                                           |  |               |  |                                 |  |            |  |           
|Net income                                                               |  |               |  | R$   920                        |  | R$   1,068 |  | R$   1,934
|Other comprehensive income, net of reclassification adjustment           |  |               |  | 18                              |  | (85)       |  | (3)       
|                                                                         |  |               |  |                                 |  |            |  |           
|Comprehensive income                                                     |  |               |  | R$   938                        |  | R$   983   |  | R$   1,931
|                                                                         |  |               |  |                                 |  |            |  |           

|_______________
|---------------
|(1)            

The accompanying notes are an integral part of these consolidated financial statements

F-8

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##### 

Table of Contents

Unibanco Holdings S.A. and Subsidiary 
Consolidated Statement of Cash Flows
(Expressed in millions of Brazilian reais)

|                                                                                    |  |                                 |  |             |  |            
|----------------------------------------------------------------------------------- |  | ------------------------------- |  | ----------- |  | -----------
|                                                                                    | 
|                                                                                    |  | For the Year Ended December 31,
|                                                                                    |  | 2005                            |  | 2006        |  | 2007       
|                                                                                    | 
|Operating activities                                                                |  |                                 |  |             |  |            
|Net income                                                                          |  | R$   920                        |  | R$   1,068  |  | R$   1,934 
|Adjustment to reconcile net income to net cash provided by operating activities:    |  |                                 |  |             |  |            
|Provision for loan losses                                                           |  | 1,870                           |  | 2,030       |  | 1,935      
|Provision for insurance and private retirement plans                                |  | 864                             |  | 915         |  | 1,155      
|Depreciation                                                                        |  | 337                             |  | 316         |  | 336        
|Amortization and impairment of intangibles                                          |  | 134                             |  | 77          |  | 120        
|Gain on sale of other investments (Note 23)                                         |  | -                               |  | -           |  | (762)      
|Gain on sale of equity investees (Note 23)                                          |  | -                               |  | -           |  | (1,865)    
|Gain on change in interest in subsidiary (Note 23)                                  |  | -                               |  | -           |  | (640)      
|Loss (gain) on sale of foreclosed assets (Note 23)                                  |  | 38                              |  | 22          |  | (18)       
|Gain on securities and non-trading derivatives                                      |  | (83)                            |  | (132)       |  | (208)      
|(Gain) loss on sale of premises and equipment (Note 23)                             |  | (15)                            |  | (9)         |  | 1          
|Deferred tax expense                                                                |  | 136                             |  | 70          |  | 375        
|Equity in results of unconsolidated companies                                       |  | (158)                           |  | (195)       |  | (261)      
|Share option expenses                                                               |  | 4                               |  | 60          |  | 66         
|Minority interest of consolidated subsidiaries                                      |  | 854                             |  | 1,008       |  | 2,277      
|Dividends received from unconsolidated companies                                    |  | 106                             |  | 196         |  | 261        
|Changes in assets and liabilities                                                   |  |                                 |  |             |  |            
|Trading assets (increase) decrease                                                  |  | (3,316)                         |  | 1,150       |  | (2,017)    
|Other assets (increase) decrease                                                    |  | (1,590)                         |  | 144         |  | (5,394)    
|Other liabilities increase                                                          |  | 2,933                           |  | 4,338       |  | 7,936      
|                                                                                    |  |                                 |  |             |  |            
|Net cash provided by operating activities                                           |  | 3,034                           |  | 11,058      |  | 5,231      
|                                                                                    |  |                                 |  |             |  |            
|Investing activities                                                                |  |                                 |  |             |  |            
|Net (increase) decrease in deposits in other banks                                  |  | (2,590)                         |  | (1,636)     |  | 804        
|Net increase in Central Bank compulsory deposits                                    |  | (341)                           |  | (16)        |  | (1,489)    
|Net (increase) decrease in federal funds sold and securities purchased under resale |  |                                 |  |             |  |            
|agreements                                                                          |  | (8,695)                         |  | 1,557       |  | 802        
|Purchases of available for sale securities                                          |  | (5,669)                         |  | (15,826)    |  | (26,132)   
|Proceeds from sale of available for sale securities                                 |  | 3,244                           |  | 13,637      |  | 22,569     
|Purchases of securities held to maturity                                            |  | -                               |  | (3)         |  | -          
|Proceeds from matured and called securities held to maturity                        |  | 2,497                           |  | 831         |  | 204        
|Net increase in loans                                                               |  | (8,591)                         |  | (6,925)     |  | (15,087)   
|Net cash paid on acquisition of companies (Note 3)                                  |  | (4)                             |  | (268)       |  | -          
|Acquisition of intangible assets (Note 3)                                           |  | (147)                           |  | (331)       |  | (124)      
|Reimbursement on discharge of intangible assets                                     |  | -                               |  | -           |  | 15         
|Purchases of premises and equipment                                                 |  | (395)                           |  | (368)       |  | (445)      
|Proceeds from sale of premises and equipment                                        |  | 70                              |  | 94          |  | 129        
|Proceeds from sale of foreclosed assets                                             |  | 4                               |  | 86          |  | 136        
|Purchases of unconsolidated companies                                               |  | (69)                            |  | (216)       |  | (132)      
|Proceeds from sale of unconsolidated companies                                      |  | -                               |  | 15          |  | 2,639      
|                                                                                    |  |                                 |  |             |  |            
|Net cash used in investing activities                                               |  | (20,686)                        |  | (9,369)     |  | (16,111)   
|                                                                                    |  |                                 |  |             |  |            
|Financing activities                                                                |  |                                 |  |             |  |            
|Net increase in deposits                                                            |  | 1,538                           |  | 148         |  | 10,609     
|Net increase in federal funds purchased                                             |  |                                 |  |             |  |            
|and securities sold under repurchase agreements                                     |  | 3,846                           |  | 5,733       |  | 9,906      
|Net increase (decrease) in short-term borrowings                                    |  | 536                             |  | (147)       |  | 4,528      
|Borrowings under long-term debt arrangements                                        |  | 4,793                           |  | 4,139       |  | 11,451     
|Repayment of long-term debt                                                         |  | (3,553)                         |  | (3,441)     |  | (4,314)    
|Acquisition of own shares/Units                                                     |  | (114)                           |  | -           |  | -          
|Proceeds from exercise of share options                                             |  | 7                               |  | -           |  | -          
|Cash dividends/Interest on capital stock paid                                       |  | (336)                           |  | (407)       |  | (525)      
|Cash received from change in interest in subsidiary                                 |  | -                               |  | -           |  | 1,952      
|Minority interest of consolidated subsidiaries                                      |  | (309)                           |  | (530)       |  | (678)      
|                                                                                    |  |                                 |  |             |  |            
|Net cash provided by financing activities                                           |  | 6,408                           |  | 5,495       |  | 32,929     
|                                                                                    |  |                                 |  |             |  |            
|Net increase (decrease) in cash and cash equivalents                                |  | (11,244)                        |  | 7,184       |  | 22,049     
|Cash and cash equivalents at beginning of year                                      |  | 15,699                          |  | 4,455       |  | 11,639     
|                                                                                    |  |                                 |  |             |  |            
|Cash and cash equivalents at end of year                                            |  | R$   4,455                      |  | R$   11,639 |  | R$   33,688
|                                                                                    |  |                                 |  |             |  |            
|Supplemental:                                                                       |  |                                 |  |             |  |            
|Cash paid for interest                                                              |  | R$   5,880                      |  | R$   5,151  |  | R$   3,904 
|Cash paid for income taxes                                                          |  | 251                             |  | 322         |  | 794        
|Loans transferred to foreclosed assets                                              |  | 104                             |  | 196         |  | 131        
|Dividends/Interest on capital stock declared but not yet paid                       |  | 153                             |  | 206         |  | 325        
|Premises and equipment acquired through capital lease                               |  | R$   18                         |  | R$   46     |  | R$   79    

The accompanying notes are an integral part of these consolidated financial statements

F-9

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##### 

Table of Contents

Unibanco  União de Bancos Brasileiros S.A. and Subsidiaries Consolidated Balance Sheets
(Expressed in millions of Brazilian reais)

|                                                                        |  |                    |  |           
|----------------------------------------------------------------------- |  | ------------------ |  | ----------
|                                                                       
|                                                                        |  | As of December 31,
|                                                                        |  | 2006               |  | 2007      
|                                                                       
|Assets                                                                  |  |                    |  |           
|Cash and due from banks                                                 |  | R$ 1,304           |  | R$ 4,444  
|Interest-bearing deposits in other banks                                |  | 2,407              |  | 3,991     
|Federal funds sold and securities purchased under resale agreements     |  | 7,928              |  | 25,253    
|                                                                        |  |                    |  |           
|Cash and cash equivalents                                               |  | 11,639             |  | 33,688    
|Interest-bearing deposits in other banks                                |  | 5,225              |  | 4,601     
|Federal funds sold and securities purchased under resale agreements     |  | 6,585              |  | 5,815     
|Central Bank compulsory deposits                                        |  | 5,177              |  | 6,683     
|Trading assets, at fair value                                           |  | 9,904              |  | 12,459    
|Securities available for sale, at fair value                            |  | 7,286              |  | 11,019    
|Securities held to maturity, at amortized cost                          |  | 1,576              |  | 1,312     
|Loans                                                                   |  | 44,654             |  | 60,348    
|Allowance for loan losses                                               |  | (2,577)            |  | (2,712)   
|                                                                        |  |                    |  |           
|Net loans                                                               |  | 42,077             |  | 57,636    
|Investments in unconsolidated companies                                 |  | 802                |  | 905       
|Premises and equipment, net                                             |  | 1,435              |  | 1,492     
|Goodwill                                                                |  | 1,471              |  | 1,469     
|Intangibles, net                                                        |  | 672                |  | 661       
|Other assets                                                            |  | 8,714              |  | 10,531    
|                                                                        |  |                    |  |           
|Total Assets                                                            |  | R$ 102,563         |  | R$ 148,271
|                                                                        |  |                    |  |           
|                                                                       
|Liabilities                                                             |  |                    |  |           
|Deposits from customers:                                                |  |                    |  |           
|Demand deposits  non interest bearing                                  |  | R$ 4,099           |  | R$ 10,290 
|Time deposits                                                           |  | 24,393             |  | 23,601    
|Savings deposits                                                        |  | 7,274              |  | 11,224    
|Deposits from banks                                                     |  | 435                |  | 1,380     
|                                                                        |  |                    |  |           
|Total deposits                                                          |  | 36,201             |  | 46,495    
|Federal funds purchased and securities sold under repurchase agreements |  | 16,991             |  | 27,197    
|Short-term borrowings                                                   |  | 3,045              |  | 7,627     
|Long-term debt                                                          |  | 14,638             |  | 21,714    
|Other liabilities                                                       |  | 20,399             |  | 29,780    
|                                                                        |  |                    |  |           
|Total Liabilities                                                       |  | 91,274             |  | 132,813   
|                                                                        |  |                    |  |           
|                                                                       
|Commitments and contingent liabilities (Note 29)                        |  | -                  |  | -         
|                                                                       
|Minority interest in consolidated subsidiaries (Note 30)                |  | 850                |  | 2,421     
|                                                                        |  |                    |  |           
|                                                                       
|Shareholders' Equity                                                    |  |                    |  |           
|Preferred share (Note 19)                                               |  | 3,478              |  | 3,478     
|Common share (Note 19)                                                  |  | 4,522              |  | 4,522     
|Additional paid in capital                                              |  | 17                 |  | 502       
|Treasury share, at cost                                                 |  | (45)               |  | (139)     
|Capital reserves                                                        |  | 338                |  | 339       
|Appropriated retained earnings                                          |  | 634                |  | 807       
|Accumulated other comprehensive losses                                  |  | (104)              |  | (109)     
|Unappropriated retained earnings                                        |  | 1,599              |  | 3,637     
|                                                                        |  |                    |  |           
|                                                                       
|Total Shareholders' Equity                                              |  | 10,439             |  | 13,037    
|                                                                        |  |                    |  |           
|                                                                       
|Total Liabilities and Shareholders' Equity                              |  | R$ 102,563         |  | R$ 148,271
|                                                                        |  |                    |  |           

The accompanying notes are an integral part of these consolidated financial statements

F-10

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##### 

Table of Contents

Unibanco  União de Bancos Brasileiros S.A. and Subsidiaries 
Consolidated Statement of Income
(Expressed in millions of Brazilian reais)

|                                                                     |  |                                 |  |             |  |           
|-------------------------------------------------------------------- |  | ------------------------------- |  | ----------- |  | ----------
|                                                                     | 
|                                                                     |  | For the Year Ended December 31,
|                                                                     |  | 2005                            |  | 2006        |  | 2007      
|                                                                     | 
|Interest Income                                                      |  |                                 |  |             |  |           
|Interest and fees on loans                                           |  | R$   9,354                      |  | R$   10,105 |  | R$   9,765
|Interest on federal funds sold and securities purchased under        |  |                                 |  |             |  |           
|agreements to resell                                                 |  | 2,069                           |  | 1,809       |  | 2,184     
|Interest on securities:                                              |  |                                 |  |             |  |           
|Trading                                                              |  | 1,176                           |  | 2,295       |  | 983       
|Available for sale                                                   |  | 1,128                           |  | 898         |  | 1,644     
|Held to maturity                                                     |  | 386                             |  | 229         |  | 201       
|Interest on deposits in other banks                                  |  | 436                             |  | 644         |  | 1,039     
|Interest on Central Bank compulsory deposits                         |  | 569                             |  | 486         |  | 425       
|Interest on other assets                                             |  | 4                               |  | 4           |  | 3         
|                                                                     |  |                                 |  |             |  |           
|Total interest income                                                |  | 15,122                          |  | 16,470      |  | 16,244    
|                                                                     |  |                                 |  |             |  |           
|Interest Expense                                                     |  |                                 |  |             |  |           
|Interest on deposits:                                                |  |                                 |  |             |  |           
|From banks                                                           |  | 19                              |  | 41          |  | 81        
|From customers:                                                      |  |                                 |  |             |  |           
|Savings deposits                                                     |  | 416                             |  | 346         |  | 394       
|Time deposits                                                        |  | 4,220                           |  | 3,666       |  | 2,353     
|Interest on federal funds purchased and securities                   |  |                                 |  |             |  |           
|sold under agreements to repurchase                                  |  | 1,037                           |  | 1,714       |  | 2,358     
|Interest on short-term borrowings                                    |  | (116)                           |  | 9           |  | 152       
|Interest on long-term debt                                           |  | 969                             |  | 1,119       |  | 405       
|                                                                     |  |                                 |  |             |  |           
|Total interest expense                                               |  | 6,545                           |  | 6,895       |  | 5,743     
|                                                                     |  |                                 |  |             |  |           
|Net Interest Income                                                  |  | 8,577                           |  | 9,575       |  | 10,501    
|Provision for loan losses                                            |  | 1,870                           |  | 2,030       |  | 1,935     
|                                                                     |  |                                 |  |             |  |           
|Net Interest Income After Provision for Loan Losses                  |  | 6,707                           |  | 7,545       |  | 8,566     
|                                                                     |  |                                 |  |             |  |           
|Non Interest Income                                                  |  |                                 |  |             |  |           
|Fee and commission income                                            |  | 2,712                           |  | 3,008       |  | 3,084     
|Trading income, net (Note 6)                                         |  | 111                             |  | 225         |  | 475       
|Net gains on securities and non-trading derivatives                  |  | 83                              |  | 132         |  | 208       
|Net losses on foreign currency transactions                          |  | (100)                           |  | (43)        |  | (130)     
|Equity in results of unconsolidated companies                        |  | 158                             |  | 195         |  | 261       
|Insurance, private retirement plan and pension investment contracts  |  | 2,616                           |  | 3,220       |  | 4,137     
|Other non-interest income - gain on change in interest in subsidiary |  | -                               |  | -           |  | 640       
|Other non-interest income                                            |  | 1,002                           |  | 850         |  | 3,178     
|                                                                     |  |                                 |  |             |  |           
|Total non-interest income                                            |  | 6,582                           |  | 7,587       |  | 11,853    
|                                                                     |  |                                 |  |             |  |           
|Non Interest Expense                                                 |  |                                 |  |             |  |           
|Salaries and benefits                                                |  | 3,016                           |  | 3,044       |  | 3,514     
|Administrative expenses                                              |  | 2,740                           |  | 3,101       |  | 2,982     
|Amortization and impairment of intangibles                           |  | 134                             |  | 77          |  | 120       
|Insurance, private retirement plan and pension investment contracts  |  | 2,830                           |  | 3,548       |  | 4,405     
|Other non-interest expense                                           |  | 2,301                           |  | 2,720       |  | 3,765     
|                                                                     |  |                                 |  |             |  |           
|Total non-interest expense                                           |  | 11,021                          |  | 12,490      |  | 14,786    
|                                                                     |  |                                 |  |             |  |           
|Income Before Income Taxes and Minority Interest                     |  | 2,268                           |  | 2,642       |  | 5,633     
|                                                                     |  |                                 |  |             |  |           
|Income Taxes                                                         |  |                                 |  |             |  |           
|Current tax expense                                                  |  | (292)                           |  | (449)       |  | (942)     
|Deferred tax expense                                                 |  | (168)                           |  | (83)        |  | (404)     
|                                                                     |  |                                 |  |             |  |           
|Total income taxes                                                   |  | (460)                           |  | (532)       |  | (1,346)   
|                                                                     |  |                                 |  |             |  |           
|Income Before Minority Interest                                      |  | 1,808                           |  | 2,110       |  | 4,287     
|Minority Interest                                                    |  | (158)                           |  | (149)       |  | (727)     
|Change in accounting principle (note 2(x))                           |  | -                               |  | (10)        |  | -         
|                                                                     |  |                                 |  |             |  |           
|Net Income                                                           |  | R$   1,650                      |  | R$   1,951  |  | R$   3,560
|                                                                     |  |                                 |  |             |  |           

(continue...)

F-11

---

##### 

Table of Contents

Unibanco  União de Bancos Brasileiros S.A. and Subsidiaries 
Consolidated Statement of Income
(Expressed in millions of Brazilianreais, except otherwise indicated)

(continuation)

|                                                             |  |                                 |  |            |  |           
|------------------------------------------------------------ |  | ------------------------------- |  | ---------- |  | ----------
|                                                             | 
|                                                             |  | For the Year Ended December 31,
|                                                             |  | 2005                            |  | 2006       |  | 2007      
|                                                             | 
|Net income applicable to common shares                       |  | R$   855                        |  | R$   1,003 |  | R$   1,838
|Net income applicable to preferred shares                    |  | R$   795                        |  | 948        |  | R$   1,722
|Earnings per shares  in Brazilian reais(1)                  |  |                                 |  |            |  |           
|Distributed earnings (dividends)                             |  |                                 |  |            |  |           
|. Common                                                     |  | R$   0.25                       |  | R$   0.30  |  | R$   0.46 
|. Preferred                                                  |  | 0.27                            |  | 0.33       |  | 0.51      
|Undistributed earnings                                       |  |                                 |  |            |  |           
|. Common                                                     |  | 0.32                            |  | 0.36       |  | 0.76      
|. Preferred                                                  |  | 0.35                            |  | 0.40       |  | 0.83      
|Basic and Diluted earnings per share                         |  |                                 |  |            |  |           
|. Common                                                     |  | 0.57                            |  | 0.66       |  | 1.22      
|. Preferred                                                  |  | R$   0.62                       |  | R$   0.73  |  | R$   1.34 
|Weighted average shares outstanding (in thousands)  Basic   |  |                                 |  |            |  |           
|. Common                                                     |  | 1,511,316                       |  | 1,511,316  |  | 1,511,316 
|. Preferred                                                  |  | 1,282,354                       |  | 1,291,496  |  | 1,289,541 
|Weighted average shares outstanding (in thousands)  Diluted |  |                                 |  |            |  |           
|. Common                                                     |  | 1,511,316                       |  | 1,511,316  |  | 1,511,316 
|. Preferred                                                  |  | 1,284,400                       |  | 1,295,478  |  | 1,295,621 

|_______________
|---------------
|(1)            

Theaccompanying notes are an integral part of these consolidated financial statements

F-12

---

##### 

Table of Contents

Unibanco  União de Bancos Brasileiros S.A. and SubsidiariesConsolidated Statement of Changes in Shareholders Equity
(Expressed in millions of Brazilian reais, except for number of shares)

|                                                                         |  |               |  |                                 |  |             |  |            
|------------------------------------------------------------------------ |  | ------------- |  | ------------------------------- |  | ----------- |  | -----------
|                                                                         | 
|                                                                         |  | Number of     |  | For the Year Ended December 31,
|                                                                         |  | shares        |  | 2005                            |  | 2006        |  | 2007       
|                                                                         | 
|Capital                                                                  |  |               |  |                                 |  |             |  |            
|Preferred shares - balance beginning of year                             |  | 1,296,439,472 |  | R$   2,098                      |  | R$   2,098  |  | R$   3,478 
|Transfer from unappropriated retained earnings                           |  | -             |  | -                               |  | 1,380       |  | -          
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  | 1,296,439,472 |  | 2,098                           |  | 3,478       |  | 3,478      
|                                                                         |  |               |  |                                 |  |             |  |            
|Common shares - balance beginning of year                                |  | 1,511,316,336 |  | 2,902                           |  | 2,902       |  | 4,522      
|Transfer from unappropriated retained earnings                           |  | -             |  | -                               |  | 1,620       |  | -          
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  | 1,511,316,336 |  | 2,902                           |  | 4,522       |  | 4,522      
|                                                                         |  |               |  |                                 |  |             |  |            
|Additional paid in capital  balance beginning of year                   |  |               |  | 29                              |  | 35          |  | 17         
|Cumulative effect of a change in accounting principle                    |  |               |  | -                               |  | (7)         |  | -          
|Difference between cash received and average cost of treasury share sold |  |               |  | 1                               |  | (27)        |  | (78)       
|Share option plan                                                        |  |               |  | 4                               |  | 16          |  | 8          
|Additional share premium                                                 |  |               |  | 1                               |  | -           |  | -          
|Unrealized gain on change in interest in subsidiary (Note 30)            |  |               |  | -                               |  | -           |  | 337        
|Deferred tax assets of transaction with shareholders                     |  |               |  | -                               |  | -           |  | 218        
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 35                              |  | 17          |  | 502        
|                                                                         |  |               |  |                                 |  |             |  |            
|Treasury share, at cost                                                  |  |               |  |                                 |  |             |  |            
|Preferred shares - balance beginning of year                             |  | 7,565,902     |  | (53)                            |  | (53)        |  | (45)       
|Acquisition of treasury share                                            |  | 9,744,335     |  | (7)                             |  | (20)        |  | (111)      
|Share purchased by grantees of owner share option plan (Note 24)         |  | (5,804,761)   |  | 6                               |  | 18          |  | 42         
|Sale of own stocks                                                       |  | (947,851)     |  | -                               |  | -           |  | 8          
|Share exchange with Unibanco Holdings S.A                                |  | 2,991,723     |  | 1                               |  | 10          |  | (33)       
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  | 13,549,348    |  | (53)                            |  | (45)        |  | (139)      
|                                                                         |  |               |  |                                 |  |             |  |            
|Capital reserves                                                         |  |               |  |                                 |  |             |  |            
|Share premium  balance beginning of year                                |  |               |  | 301                             |  | 302         |  | 302        
|Additional share premium                                                 |  |               |  | 1                               |  | -           |  | -          
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 302                             |  | 302         |  | 302        
|Treasury share sold  balance beginning and end of year                  |  |               |  | 13                              |  | 13          |  | 13         
|Fiscal incentive investment reserve  balance beginning of year          |  |               |  | 22                              |  | 23          |  | 23         
|Adjustment reserve                                                       |  |               |  | 1                               |  | -           |  | 1          
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 23                              |  | 23          |  | 24         
|                                                                         |  |               |  |                                 |  |             |  |            
|Total capital reserves                                                   |  |               |  | 338                             |  | 338         |  | 339        
|                                                                         |  |               |  |                                 |  |             |  |            
|Appropriated retained earnings                                           |  |               |  |                                 |  |             |  |            
|Legal reserve - balance beginning of year                                |  |               |  | 391                             |  | 483         |  | 570        
|Transfer from unappropriated retained earnings                           |  |               |  | 92                              |  | 87          |  | 173        
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 483                             |  | 570         |  | 743        
|                                                                         |  |               |  |                                 |  |             |  |            
|Special dividends reserve  balance beginning and end of year            |  |               |  | 64                              |  | 64          |  | 64         
|                                                                         |  |               |  |                                 |  |             |  |            
|Total appropriated retained earnings                                     |  |               |  | 547                             |  | 634         |  | 807        
|                                                                         |  |               |  |                                 |  |             |  |            
|Accumulated other comprehensive                                          |  |               |  |                                 |  |             |  |            
|Securities available for sale  balance beginning of year                |  |               |  | 12                              |  | 65          |  | (19)       
|Securities available for sale, net of applicable taxes (1)               |  |               |  | 53                              |  | (84)        |  | (90)       
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 65                              |  | (19)        |  | (109)      
|                                                                         |  |               |  |                                 |  |             |  |            
|Cash flow hedges  balance beginning of year                             |  |               |  | -                               |  | (22)        |  | (85)       
|Cash flow hedges, net of applicable taxes (1)                            |  |               |  | (22)                            |  | (63)        |  | 85         
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | (22)                            |  | (85)        |  | -          
|                                                                         |  |               |  |                                 |  |             |  |            
|Total accumulated other comprehensive (losses) gains                     |  |               |  | 43                              |  | (104)       |  | (109)      
|                                                                         |  |               |  |                                 |  |             |  |            
|Unappropriated retained earnings  balance beginning of year             |  |               |  | 2,793                           |  | 3,624       |  | 1,599      
|Net income for the year                                                  |  |               |  | 1,650                           |  | 1,951       |  | 3,560      
|Dividends/Interest on Capital Stock - Preferred shares                   |  |               |  | (349)                           |  | (457)       |  | (697)      
|Dividends/Interest on Capital Stock - Common shares                      |  |               |  | (377)                           |  | (434)       |  | (652)      
|Transfer to capital                                                      |  |               |  | -                               |  | (3,000)     |  | -          
|Transfer to reserves                                                     |  |               |  | (93)                            |  | (85)        |  | (173)      
|                                                                         |  |               |  |                                 |  |             |  |            
|Balance end of year                                                      |  |               |  | 3,624                           |  | 1,599       |  | 3,637      
|                                                                         |  |               |  |                                 |  |             |  |            
|Total Shareholders' Equity                                               |  |               |  | R$   9,534                      |  | R$   10,439 |  | R$   13,037
|                                                                         |  |               |  |                                 |  |             |  |            
|Comprehensive income (Note 25)                                           |  |               |  |                                 |  |             |  |            
|Net income                                                               |  |               |  | R$   1,650                      |  | R$   1,951  |  | R$   3,560 
|Other comprehensive income, net of reclassification adjustment           |  |               |  | 31                              |  | (147)       |  | (5)        
|                                                                         |  |               |  |                                 |  |             |  |            
|Comprehensive income                                                     |  |               |  | R$   1,681                      |  | R$   1,804  |  | R$   3,555 
|                                                                         |  |               |  |                                 |  |             |  |            

|_______________
|---------------
|(1)            

The accompanying notes are an integral part of these consolidated financial statements

F-13

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##### 

Table of Contents

Unibanco  União de Bancos Brasileiros S.A. and Subsidiaries 
Consolidated Statement of Cash Flows
(Expressed in millions of Brazilian reais)

|                                                                                    |  |                                 |  |             |  |            
|----------------------------------------------------------------------------------- |  | ------------------------------- |  | ----------- |  | -----------
|                                                                                    | 
|                                                                                    |  | For the Year Ended December 31,
|                                                                                    |  | 2005                            |  | 2006        |  | 2007       
|                                                                                    | 
|Operating activities                                                                |  |                                 |  |             |  |            
|Net income                                                                          |  | R$   1,650                      |  | R$   1,951  |  | R$   3,560 
|Adjustment to reconcile net income to net cash provided by operating activities:    |  |                                 |  |             |  |            
|Provision for loan losses                                                           |  | 1,870                           |  | 2,030       |  | 1,935      
|Provision for insurance and private retirement plans                                |  | 864                             |  | 915         |  | 1,155      
|Depreciation                                                                        |  | 337                             |  | 316         |  | 336        
|Amortization and impairment of intangibles                                          |  | 134                             |  | 77          |  | 120        
|Gain on sale of other investments (Note 23)                                         |  | -                               |  | -           |  | (762)      
|Gain on sale of equity investees (Note 23)                                          |  | -                               |  | -           |  | (1,865)    
|Gain on change in interest in subsidiary (Note 23)                                  |  | -                               |  | -           |  | (640)      
|Loss (gain) on sale of foreclosed assets (Note 23)                                  |  | 38                              |  | 22          |  | (18)       
|Gain on securities and non-trading derivatives                                      |  | (83)                            |  | (132)       |  | (208)      
|(Gain) loss on sale of premises and equipment (Note 23)                             |  | (15)                            |  | (9)         |  | 1          
|Deferred tax expense                                                                |  | 168                             |  | 83          |  | 404        
|Equity in results of unconsolidated companies                                       |  | (158)                           |  | (195)       |  | (261)      
|Share-based compensation expenses                                                   |  | 4                               |  | 60          |  | 66         
|Minority interest of consolidated subsidiaries                                      |  | 158                             |  | 149         |  | 727        
|Dividends received from unconsolidated companies                                    |  | 106                             |  | 196         |  | 261        
|Changes in assets and liabilities                                                   |  |                                 |  |             |  |            
|Trading assets (increase) decrease                                                  |  | (3,316)                         |  | 1,150       |  | (2,017)    
|Other assets (increase) decrease                                                    |  | (1,577)                         |  | 135         |  | (5,184)    
|Other liabilities increase                                                          |  | 2,845                           |  | 4,331       |  | 7,680      
|                                                                                    |  |                                 |  |             |  |            
|Net cash provided by operating activities                                           |  | 3,025                           |  | 11,079      |  | 5,290      
|                                                                                    |  |                                 |  |             |  |            
|Investing activities                                                                |  |                                 |  |             |  |            
|Net (increase) decrease in deposits in other banks                                  |  | (2,590)                         |  | (1,636)     |  | 804        
|Net increase in Central Bank compulsory deposits                                    |  | (341)                           |  | (16)        |  | (1,489)    
|Net (increase) decrease in federal funds sold and securities purchased under resale |  |                                 |  |             |  |            
|agreements                                                                          |  | (8,695)                         |  | 1,557       |  | 802        
|Purchases of available for sale securities                                          |  | (5,669)                         |  | (15,826)    |  | (26,132)   
|Proceeds from sale of available for sale securities                                 |  | 3,244                           |  | 13,637      |  | 22,569     
|Purchases of securities held to maturity                                            |  | -                               |  | (3)         |  | -          
|Proceeds from matured and called securities held to maturity                        |  | 2,497                           |  | 831         |  | 204        
|Net increase in loans                                                               |  | (8,591)                         |  | (6,925)     |  | (15,087)   
|Net cash paid on acquisition of companies (Note 3)                                  |  | (4)                             |  | (268)       |  | -          
|Acquisition of intangible assets (Note 3)                                           |  | (147)                           |  | (331)       |  | (124)      
|Reimbursement on discharge of intangible assets                                     |  | -                               |  | -           |  | 15         
|Purchases of premises and equipment                                                 |  | (395)                           |  | (368)       |  | (445)      
|Proceeds from sale of premises and equipment                                        |  | 70                              |  | 94          |  | 129        
|Proceeds from sale of foreclosed assets                                             |  | 4                               |  | 86          |  | 136        
|Purchases of unconsolidated companies                                               |  | (69)                            |  | (216)       |  | (132)      
|Proceeds from sale of unconsolidated companies                                      |  | -                               |  | 15          |  | 2,639      
|                                                                                    |  |                                 |  |             |  |            
|Net cash used in investing activities                                               |  | (20,686)                        |  | (9,369)     |  | (16,111)   
|                                                                                    |  |                                 |  |             |  |            
|Financing activities                                                                |  |                                 |  |             |  |            
|Net increase in deposits                                                            |  | 1,585                           |  | 148         |  | 10,661     
|Net increase in federal funds purchased                                             |  |                                 |  |             |  |            
|and securities sold under repurchase agreements                                     |  | 3,846                           |  | 5,784       |  | 9,918      
|Net increase (decrease) in short-term borrowings                                    |  | 536                             |  | (147)       |  | 4,528      
|Borrowings under long-term debt arrangements                                        |  | 4,793                           |  | 4,139       |  | 11,451     
|Repayment of long-term debt                                                         |  | (3,553)                         |  | (3,441)     |  | (4,314)    
|Acquisition of own shares/Units                                                     |  | (7)                             |  | (42)        |  | (221)      
|Proceeds from exercise of share options                                             |  | 7                               |  | 19          |  | 28         
|Proceeds from Sale of own shares/Units                                              |  | -                               |  | -           |  | 21         
|Cash dividends/Interest on capital stock paid                                       |  | (676)                           |  | (869)       |  | (1,025)    
|Cash received from change in interest in subsidiary                                 |  | -                               |  | -           |  | 1,952      
|Minority interest of consolidated subsidiaries                                      |  | (114)                           |  | (117)       |  | (129)      
|                                                                                    |  |                                 |  |             |  |            
|Net cash provided by financing activities                                           |  | 6,417                           |  | 5,474       |  | 32,870     
|                                                                                    |  |                                 |  |             |  |            
|Net increase (decrease) in cash and cash equivalents                                |  | (11,244)                        |  | 7,184       |  | 22,049     
|Cash and cash equivalents at beginning of year                                      |  | 15,699                          |  | 4,455       |  | 11,639     
|                                                                                    |  |                                 |  |             |  |            
|Cash and cash equivalents at end of year                                            |  | R$   4,455                      |  | R$   11,639 |  | R$   33,688
|                                                                                    |  |                                 |  |             |  |            
|Supplemental:                                                                       |  |                                 |  |             |  |            
|Cash paid for interest                                                              |  | R$   5,880                      |  | R$   5,151  |  | R$   3,904 
|Cash paid for income taxes                                                          |  | 251                             |  | 322         |  | 794        
|Loans transferred to foreclosed assets                                              |  | 104                             |  | 196         |  | 131        
|Dividends/Interest on capital stock declared but not yet paid                       |  | 336                             |  | 358         |  | 682        
|Premises and equipment acquired through capital lease                               |  | R$   18                         |  | R$   46     |  | R$   79    

The accompanying notes are an integral part of these consolidated financial statements

F-14

---

##### 

Table of Contents

|                                                                      
|----------------------------------------------------------------------
|Unibanco Holdings S.A. and Subsidiary and                             
|Unibanco - União de Bancos Brasileiros S.A. and Subsidiaries          
|Notes to the Consolidated Financial Statements                        
|(Expressed in millions of Brazilian reais, unless otherwise indicated)
|                                                                      
|                                                                      

Note 1 - Basis of Presentation

Unibanco Holdings S.A. (Holdings) is a corporation formed under Federative Republic of Brazil law. Activities of Holdings are conducted exclusively through its subsidiary Unibanco - União de Bancos
Brasileiros S.A. (Unibanco or the Bank), which is a multiple service bank under Brazilian banking regulations, headquartered in São Paulo, Brazil. At December 31, 2006 and 2007, Holdings held 97.1% of Unibancos
common (voting) and 12.4% and 12.2% of Unibancos preferred (nonvoting) shares, respectively, totaling 58.1% of interest. The preferred shares of Unibanco confer dividend rights 10% greater than those of the common shares.

Unibanco is a full-service financial institution providing, directly and indirectly through its subsidiaries, a wide variety of credit and non-credit products and services to all segments of the Brazilian domestic
market and to a lesser extent to Brazilian customers for its operations outside Brazil through its offices, branches and subsidiaries in Grand Cayman (Cayman Islands); New York (USA); Asuncion (Paraguay); Luxembourg (Luxembourg); and Geneva
(Switzerland).

The notes to the consolidated financial statements cover both Unibanco and Holdings, and generally are applicable to both companies; however, when a particular Note is only applicable to Unibanco or Holdings
individually (such as note 19 which deals with shareholders equity and matters relating to the by laws) we have highlighted this fact.

Our segment financial information is based on how our operations are managed. Our senior management utilizes this segment information to assess segment performance and to allocate resources. Such information is prepared
based on management criteria defined by our executive committee and is duly reconciled with our financial statements prepared in accordance with Brazilian GAAP.

Throughout this annual report, we present financial information by operating segment, with respect to our five business segments: Retail, Wholesale, Treasury, Insurance and Pension Plan and Wealth Management; and one
non-operating Corporation segment.

The measurement methods used to segment our net income by business segment considers: (i) interest paid to the non-operating Corporation Segment on capital allocated on each business; and (ii) full cost allocation, including direct and overhead costs. In the Adjustments and Reclassifications column, we disclose the differences between the management reporting basis and the USGAAP criteria.

Beginning 2007, operational changes in the measurement methods enabled us to describe our non-operating Corporation segment, which captures (i) the interest earned on the capital allocated to the operating segments, (ii) temporary
differences between management criteria and Accounting Practices Adopted in Brazil (Brazilian GAAP); and (iii) the effects of certain corporate matters, which occur as a result of management decisions, such as the sale of an investment.
Additionally, beginning in 2007, the treasury activities currently performed by recently created Treasury segment were performed before 2007 by our Wholesale segment.

For comparison purposes, we have also presented all segment financial information for the years ended December 31, 2005 and 2006 based on the current methodology. For further information, see note 31.

The consolidated financial statements of Holdings include the accounts of Holdings and its majority-owned subsidiary, Unibanco. The consolidated financial statements of Unibanco include the accounts of Unibanco and its
majority-owned subsidiaries and entities where we have a controlling financial interest through arrangements that do not involve voting interests. These financial statements have been prepared in accordance with generally accepted accounting
principles in the United States of America (U.S. GAAP). All material intercompany accounts and transactions have been eliminated in consolidation.

In the financial statements for the years ended December 31, 2005 and 2006, we made certain reclassifications to conform to the presentation in the current year. Such reclassifications did not affect the amounts that
were previously recorded as assets, liabilities, shareholders equity and net income. The reclassifications were related to:

(i) payroll management and financial resource administration services - In the Consolidated Balance Sheets, the amount of R$120, for 2006, was reclassified from Other assets to Intangibles,
net, in the Consolidated Statement of Income, the amounts of R$4 for 2005 and R$19 for 2006 were reclassified from Administrative expenses to Amortization and impairment of intangibles, and in Consolidated Statement of Cash Flows, the amounts of R$36 for 2005 and R$108 for 2006 were reclassified from Investing Activities to
Operating Activities, both of Unibanco and Holdings.

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(ii) presentation of stock option plan  In the Consolidated Statement of Changes in Shareholders ́Equity, the amount of R$27, in 2006, was reclassified from Unappropriated retained earnings to
Additional paid in capital for Unibanco, and the amount of R$16, in 2006, was reclassified from Appropriated retained earnings to Additional paid in capital for Holdings.

(iii) Fees on loans, net of costs  In the Consolidated Statement of Income, the amounts of R$102 for 2005 and R$132 for 2006, related to fees on loans, were reclassified from Fee and commission
income to Interest and fees on loans, and the amount of R$23 and R$68 for 2005 and R$12 and R$75 for 2006, related to costs associated with fees on loans, were reclassified from Salaries and benefits and
Administrative expenses, respectively, to Interest and fees on loans, both of Unibanco and Holdings.

Prior to January 1, 2007, we applied cash flow hedge accounting to certain derivative instruments that were designated as hedging the risk of changes in cash flows attributable to variability in the Brazilian benchmark
interbank interest rate (CDI) relating to certain time deposits, loans and debentures.

We have since concluded that all of the criteria in SFAS 133 had not been met for the application of cash flow hedge accounting in our previously issued consolidated financial statements for years ended December 31,
2005 and 2006. We have concluded, based on a SAB 99 analysis, that the effect of the prior errors on reported net income of R$(22) and R$(63) for 2005 and 2006 respectively was immaterial to the consolidated financial statements for each of
those respective years. Given that management concluded such error was immaterial to our financial statements, we did not restate prior years consolidated financial statements. We have also concluded that the necessary cumulative adjustment to
correct the effects for those years is immaterial to the consolidated financial statements for the year ended December 31, 2007. Accordingly, we recorded in 2007 a cumulative adjustment of R$129 as a loss in Trading Income, net with a related
income tax effect of R$44, for Unibanco and Holdings. The cumulative impact to net income was R$85, net of taxes for Unibanco and R$50 for Holdings. The cumulative impact on Minority Interest was an expense of R$35 for
Holdings.

We have discontinued the application of hedge accounting, effective as of January 1, 2007. Since that date, we have accounted for the derivative instruments as trading transactions and, consequently, recognized changes
in the fair value of the instruments immediately in earnings for the current period (See Notes 6, 25 and 27).

The most significant subsidiaries of Unibanco as of December 31, 2007 are:

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|                                                         |  |                       |  |            |  |                    |  |         
|-------------------------------------------------------- |  | --------------------- |  | ---------- |  | ------------------ |  | --------
|                                                         |  |                       |  |            |  | Ownership interest
|                                                         |  |                       |  |            |  |                   
|Direct and indirect consolidated companies               |  | Activity              |  | Country    |  | Total              |  | Voting  
|                                                         |  |                       |  |            |  |                    |  |         
|                                                        
|Unibanco AIG Seguros S.A.                                |  | Insurance             |  | Brazil     |  | 49.902%            |  | 52.970% 
|Unibanco AIG Vida e Previdência S.A.                     |  | Pension and           |  | Brazil     |  | 49.902             |  | 52.970  
|                                                         |  | retirement plans      |  |            |  |                    |  |         
|Unibanco AIG Saúde Seguradora S.A.                       |  | Insurance             |  | Brazil     |  | 49.902             |  | 52.970  
|. Unibanco Companhia de Capitalização                    |  | Savings and annuities |  | Brazil     |  | 99.999             |  | 99.999  
|                                                         |  | products              |  |            |  |                    |  |         
|. Unicard Banco Múltiplo S.A.                            |  | Credit card           |  | Brazil     |  | 100.000            |  | 100.000 
|. Hipercard Banco Múltiplo S.A.                          |  | Credit card           |  | Brazil     |  | 100.000            |  | 100.000 
|. Banco Único S.A.                                       |  | Bank                  |  | Brazil     |  | 100.000            |  | 100.000 
|. Banco Fininvest S.A.                                   |  | Bank and credit card  |  | Brazil     |  | 100.000            |  | 100.000 
|. Banco Dibens S.A.                                      |  | Bank                  |  | Brazil     |  | 100.000            |  | 100.000 
|. Dibens Leasing S.A. - Arrendamento Mercantil           |  | Leasing               |  | Brazil     |  | 99.999             |  | 99.999  
|Unibanco Participações Societárias S.A.                  |  | Holding               |  | Brazil     |  | 51.000             |  | 90.000  
|. Unibanco Investshop Corretora de Valores Mobiliários e |  |                       |  |            |  |                    |  |         
|Câmbio S.A.                                              |  | Security broker       |  | Brazil     |  | 100.000            |  | 100.000 
|. Interbanco S.A.                                        |  | Bank                  |  | Paraguay   |  | 99.999             |  | 99.999  
|. Unipart Participações Internacionais Ltd.              |  | Holding               |  | Cayman     |  | 100.000            |  | 100.000 
|                                                         |  |                       |  | Island     |  |                    |  |         
|Unibanco - União de Bancos Brasileiros (Luxemburg) S.A.  |  | Bank                  |  | Luxembourg |  | 99.999             |  | 99.999  
|Unibanco Cayman Bank Ltd.                                |  | Bank                  |  | Cayman     |  | 100.000            |  | 100.000 
|                                                         |  |                       |  | Island     |  |                    |  |         
|Unicorp Bank & Trust Ltd.                                |  | Private bank          |  | Cayman     |  | 100.000            |  | 100.000 
|                                                         |  |                       |  | Island     |  |                    |  |         
|Unibanco Securities Inc.                                 |  | Security broker       |  | USA        |  | 100.000%           |  | 100.000%

For a description of Unibancos investments in unconsolidated companies, see Notes 2 (j) and 11.

Note 2 - Significant Accounting Policies

In preparing our consolidated financial statements, we use estimates and assumptions to account for certain assets, liabilities, revenues, expenses and other transactions in accordance with U.S. GAAP. The consolidated
financial statements contain various estimates and assumptions, including, but not limited to the adequacy of allowance for loan losses, estimates of fair value of certain financial instruments, carrying amount of goodwill, amount of valuation
allowances on deferred tax assets, amount of insurance and private retirement plan reserves, selection of useful lives of certain assets, determination of probability and estimate of contingent losses, judgments and interpretations related to the
application of tax laws and about when in the future certain items will affect taxable income and valuation of employee stock option. Actual results in future periods could differ from those estimates.

These consolidated financial statements differ from our statutory consolidated financial statements as filed with the applicable Brazilian authorities as a result of preparing these consolidated financial statements in
accordance with U.S. GAAP.

(a) Cash and cash equivalents

For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits in other banks and federal funds sold and securities purchased under resale agreements
with original maturities of three months or less at the time of purchase.

(b) Presentation of interest-bearing assets and interest-bearing liabilities

Interest-bearing assets and interest-bearing liabilities are presented in the consolidated balance sheet at the principal amount outstanding plus accrued effective interest yield and monetary correction adjustments.
Such presentation is required since accrued interest and monetary correction adjustments are added to the outstanding principal each period for substantially all of such assets and liabilities.

Such monetary correction may be related to an inflation index, changes in foreign exchange rates (usually U.S. dollar) or other floating interest rate. The interest yield and monetary correction are applied at the end of each month to the principal balance of each operation. The updated value becomes the new basis for the accrual of the next months interest and monetary correction, and so forth, until settled. As a result, it is not practical
(and it would not reflect the actual return on our investments) to segregate only the interest rate component.

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Total interest and monetary correction accrued on the outstanding principal of assets and liabilities was R$4,222 and R$4,914 at December 31, 2006 and R$7,628 and R$6,753 at December 31, 2007,
respectively.

(c) Securities purchased under resale agreements and securities sold under repurchase agreements

We enter into purchases of securities under resale agreements and sales of securities under repurchase agreements of substantially identical securities (mainly represented by government debt securities). The amounts
advanced under resale agreements and the amounts borrowed under repurchase agreements are accounted as short-term secured borrowings and are carried on the balance sheet together with accrued interest. Generally, our policy is to obtain the use or
take possession of the securities purchased under resale agreements and we do not account for the securities underlying such agreements as securities in the consolidated balance sheets because the control remains with the counterparty. On the other
hand, the securities underlying the repurchase agreements remain accounted as our securities because we retain the control of the securities. We closely monitor the market value of the underlying securities collateralizing the resale agreements in
order to limit our risk with counterparties.

(d) Trading assets

Instruments negotiated in trading activities include securities stated at fair value in accordance with Statement of Financial Accounting Standards (SFAS) 115, Accounting for Investments in Debt and
Equity Securities. Fair value is generally based on market data obtained from independent sources. For some products which prices may not be always available, the fair value has been determined from quoted prices for similar instruments in the
market or based on internal pricing models, discounted cash flows or similar techniques.

In particular, the fair value of sovereign bonds of foreign governments are quoted through prices listed on Bloomberg. When those prices are not available, the cash flows of those securities are discounted by
appropriate market rates, derived from quoted futures contracts collected from Bloomberg.

Additionally, for local instruments, the main sources for compute or acquire fair market values are Brazilian Futures and Commodities Exchange (BM&F), National Association of Financial Market Institutions (Andima),
São Paulo Stock Exchange (Bovespa) and Brazilian Central Bank. International instruments, on the other hand, have fair market values computed or acquired from Bloomberg as the main source.

Realized and unrealized gains (losses) on trading securities are recognized currently in Non-interest income  trading income.

(e) Derivative instruments and hedging activities

We use a variety of derivatives, such as forwards, futures, swaps and options, as part of our overall asset and liability risk management. As required by SFAS 133 Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS 137 Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS 133, SFAS 138 Accounting for Certain Derivative Instruments and Certain Hedging
Activities and SFAS 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities, we recognize all derivatives on the balance sheet as either assets or liabilities, at fair value, based on quoted market prices,
when available. If quoted market prices are not available, fair values are obtained using internal valuation techniques such as Black-Scholes or Monte Carlo simulation. The valuation techniques depend on the type of derivatives and the nature of the
underlying.

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Market data for acquiring fair value prices are available daily from local sources like BM&F, Andima, Bovespa and Brazilian Central Bank. Also must be mentioned that data for international assets, liabilities and
derivatives instruments are available from Bloomberg collected prices and quotes.

Financial derivatives involve, to varying degrees, interest rate, foreign exchange, market and credit risk. We manage those risks as part of our asset and liability management process and through credit policies and
procedures. We seek to minimize counterparty credit risk by entering into transactions with only a select number of high-quality institutions. A large part of our derivatives are negotiated on the BM&F. Exchange-traded instruments conform to
standard terms and are subject to policies set by the BM&F, including counterpart approval, daily margin requirements and security deposit requirements. The credit risk associated with these types of instruments is disclosed in Note 27. For swap
contracts, which are negotiated in a Clearing House for Custody and Financial Settlement of Securities or in an over-the-counter transaction, we analyze the credit risk and record provisions for probable losses, as necessary.

The accounting for changes in fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship. Derivatives not designated as hedges are recorded as trading
assets or liabilities and the gain or loss is recognized in current earnings in trading income, net in Non-interest income.

Embedded derivatives are bifurcated when all of the following criteria are met: (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the
economic characteristics and risks of the host contract, (ii) the contract that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value with changes in fair value reported in earnings as they occur and
(iii) a separate instrument with the same terms as the embedded derivative instruments would be a derivative instrument subject to the requirements of SFAS 133, as amended. These embedded derivative instruments are measured at fair value with gains
and losses recognized in income at each reporting date.

In accordance with SFAS 155 Accounting for Certain Hybrid Financial Instruments, hybrid financial instruments which contain an embedded derivative that would otherwise require bifurcation may be accounted
for at fair value, with changes in fair value recognized in consolidated statement of income. The fair value would be applied on an instrument-by-instrument basis; however the election to apply fair value accounting is irrevocable.

We have discontinued the application of hedge accounting, effective as of January 1, 2007. Since that date, we have accounted for the derivative instruments as trading transactions and, consequently, recognized changes
in the fair value of the instruments immediately in earnings for the current period (see note 1).

(f) Available for sale and held to maturity securities

We classify securities in accordance with SFAS 115. These classifications are determined based on our intent with respect to the securities on the date of purchase (trade date). Gains and losses on the sale of
securities are recognized through average cost method on the applicable trade date.

Generally, we classify debt and equity securities as available for sale based on current economic conditions, including interest rates. Securities available for sale are recorded at fair value with unrealized gains and
losses recorded as a separate component of shareholders equity, net of applicable taxes gains (losses) of R$(19) and R$(109) at December 31, 2006 and 2007, respectively, in Unibanco, and gains (losses) of R$(10) and R$(63) at
December 31, 2006 and 2007, respectively, in Holdings. Securities available for sale are used as part of our overall interest rate risk management strategy and may be sold in response to changes in interest rates, changes in prepayment risk and
other factors.

Debt securities for which we have the intent and ability to hold them to maturity are classified as held to maturity and recorded at amortized cost.

Declines in the fair value of available for sale and held to maturity securities below their cost that are deemed to be other-than-temporary are recorded in Net gains (losses) on securities and non-trading derivatives as realized losses in accordance with SFAS 115 and the application of the additional qualitative and quantitative disclosures of marketable securities and debt securities impairment established by EITF 03-01 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments, which was replaced by FASB Staff Position (FSP) 115-1 and SFAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments.

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(g) Loans

Loans are stated at principal plus accrued effective yield interest and monetary correction (as explained in Note 2 (b)). Interest income is recorded on an accrual basis using the effective yield interest method. All
loans 60 days or more past due as to principal or interest are discontinued the accrual (non-accrual) of interest income and monetary correction and are classified as nonperforming loans. Interest collections including, indexation readjustments,
received in each period on non-accrual loans are included in interest income on loans.

Credit card fee operations are deferred and recognized on a straight-line basis over the period that the fee entitles the cardholder to use the card.

Direct lease financing is carried at the aggregate of lease payments plus estimated residual value of the leased property, less unearned income. Lease financing income is recognized over the term of the lease.

(h) Allowance for loan losses

The allowance for loan losses is the amount that has been provided for probable losses inherent in the loan portfolio. The allowance is increased by provisions for loan losses and recoveries of loans previously
charged-off and reduced by charged-off loans deemed uncollectible.

Loans are charged-off against the allowance when the loan is not collected or is considered permanently impaired. Charge-off normally occurs if no payment is received within 360 days from its due date.

We assess the creditworthiness of our loan portfolio and establish allowances for probable credit losses on a regular basis. The process used to determine these reserves involves estimates and judgments. We determine an
allowance for probable losses within each clients rating considering, among other things, recent loss experience, current economic conditions, the risk characteristics of the various classifications of loans, the fair value of the underlying
collateral, the probability of default in making this evaluation, as well as the size and diversity of individual credits. Changes in these estimates and judgments have a direct impact on the allowances.

We consider all larger balance nonperforming loans (amounts higher than R$5) subject to specific review for impairment. Once a loan has been identified as impaired, we measure impairment in accordance with SFAS 114,
Accounting by Creditors for Impairment of a Loan, as amended by SFAS 118 Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures. The measurement of impairment on an impaired loan is based on (i)
the present value of the loans expected cash flows discounted at the loans original effective interest rate; or (ii) the realizable value of the underlying collateral for collateral-dependent loans. If carrying value of the impaired loan
exceeds the measure of estimated fair value, a specific allowance is established as a component of the allowance for loan losses.

Wholesale loans and small-balance homogeneous loans with similar characteristics, such as overdrafts, credit card loans, mortgage loans and consumer finance loans, are managed using specialized systems and processes. We
use a wide range of statistical tools to evaluate loans requests and clients performance, which include credit and behavior scoring models, such as Stochastic Process (Markov Chain), Back Testing using non parametrical test (Mann-Whitney) and
stress testing in Markov Chain.

Charge-off normally occurs if no payment is received within 360 days from its due date. We usually consider loans that are past due 360 days no longer collectible, given all of the our efforts to recover the payments
take place within 360 days from the date that the loans had first become past due. In our experience, if collection efforts are not successful within a 360 day period, we are unlikely to recover the amount.

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The allowance for loan losses is maintained at a level that we believe to be sufficient to absorb estimated probable credit losses inherent in the loan portfolio. The initial allowance amounts are set based on estimates
for probable losses under our portfolios as of the balance sheet date, which will impact the level of provisions required for the period. The charge-offs reflect the risk profile and behavior of the nonperforming loan portfolio constituted in the
past, usually before at least 360 days.

Also, we have followed the policies prescribed by SOP 03-3: Accounting for Certain Loans or Debt Securities Acquired in a Transfer, which provides guidance on the accounting for differences between
contractual and expected cash flows from the purchasers initial investment in loans or debt securities acquired in a transfer, if those differences are attributable, at least in part, to credit quality and other guidances.

(i) Impaired loans and nonperforming

We consider certain loans as impaired (except for smaller homogeneous loans which we evaluated under SFAS 5 Accounting for Contingencies) when in our judgment all amounts due, including accrued interest, are
no longer considered collectible, as defined in SFAS 114, and amended by SFAS 118. We consider all loans 60 days or more overdue as nonperforming and those of larger balance nature are subject to specific review for impairment (note 2 (h)). A
valuation allowance is established through the allowance for loan losses for the difference between the carrying value of the impaired loan and its value determined as described above.

(j) Investments in unconsolidated companies

Investments in unconsolidated companies, where we own between 20% and 50% of voting capital and have the ability to exercise significant influence over the operation of the investee are accounted for using the equity
method of accounting in accordance with APB 18 The Equity Method of Accounting for Investments in Common Stock. Under this method our share of results of the investee, as reported under U.S. GAAP, is recognized in the statements of
income in one amount as Equity in results of unconsolidated companies, and dividends are credited when declared to the Investments in unconsolidated companies account in the balance sheets.

Investments in companies of less than 20% of voting capital with no readily determinable market value are recorded at cost (unless we have the ability to exercise significant influence over the operations of the
investee. In this case, we use the equity method) and dividends are recognized in income when received (note 11).

(k) Premises and equipment

Premises and equipment are recorded at cost. Depreciation is computed on the straight-line method at the following annual rates: buildings - 4%, furniture and equipment - 10% and data processing equipment and vehicles -
20%. Leasehold improvements are amortized over the shorter of the useful life of the improvement or the maturity of the lease contract, generally between 5 and 10 years. Expenditures for maintenance and repairs are charged in Non-interest
expense as incurred.

Fixed assets, mainly comprising certain bank branches, which were sold and subsequently leased by us for the purposes of continuing our operations, were recorded pursuant to SFAS 13, SFAS 98, Accounting for
Leases, and SFAS 28 Accounting for Sales with Leasebacks.

For transactions classified as operating leases, relating to property sold for cash, only the portion corresponding to: (i) the positive difference between revenue determined at the time of the sale and the present
value of the future lease to be paid is recognized immediately in income for the period, whereas (ii) the remaining portion is deferred over the corresponding rental contract terms, and (iii) exclusively in cases of loss, the amounts are recognized
immediately. In cases where the sale is financed, income will be determined only as from the final maturity of the corresponding financing (note 12) and subsequently recorded in accordance with the criteria described above. Gain or loss on the cash sales not subject to lease contracts was recognized immediately in income for the year as Other non-interest income.

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(l) Costs of software developed or obtained for internal use

We adopt Statement of Position (SOP) 98-1 Accounting for the Cost of Software Developed or Obtained for Internal Use and accordingly we capitalize certain costs associated with internally
developed internal-use software. Amortization is computed on the straight-line method over no more than five years. Also, we capitalize all costs related with software developed or obtained for internal use, except the costs related with the
planning and production stage, which are expensed.

(m) Goodwill and intangibles

We recorded goodwill and intangibles in accordance with SFAS 141 Business Combinations and SFAS 142 Goodwill and Other Intangible Assets as amended by SFAS 147 Acquisitions of Certain
Financial Institutions, which includes in its scope long-term customer-relationship intangible assets of financial institutions such as depositor-and-borrower-relationship intangible assets. The net assets of companies acquired in purchase
transactions are recorded at fair value at the date of acquisition. The historical cost basis of individual assets and liabilities are adjusted to reflect their fair value. Identified intangibles are amortized on an appropriate systematic method,
over the period which the asset is expected to contribute directly or indirectly to the future cash flows. Goodwill is not amortized but is reviewed for potential impairment at least on annual basis at the reporting unit level. The impairment test
compares the fair value of the reporting unit, which is case-by-case either an operating segment or one level below, with the carrying amount of the net assets (including goodwill). If the fair value of the reporting unit exceeds the carrying amount
of the net assets (including goodwill), the goodwill is considered not impaired; however, if the carrying amount of the net assets exceeds its fair value, an additional procedure must be performed. That additional procedure compares the implied fair
value of the reporting units goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. Impairment adjustment on goodwill was not
required for December 31, 2005, 2006 and 2007.

Intangible assets are evaluated for impairment if events and circumstances indicate a possible impairment. There are no events and circumstances indicating any impairment for December 31, 2005 and 2006. At December 31,
2007, we recorded an impairment on intangible assets in the amount of R$6.

(n) Foreclosed assets, including real estate

For loan accounting purpose, we consider any balance that is 60 days or more overdue as nonperforming, and it is subject to specific review for charge off. We charge off a loan when, in our judgment, all amounts due are
no longer considered collectible in accordance with the contractual terms of the loan. Generally, this condition is reached at approximately 360 days overdue, for both wholesale and retail portfolios. The procedures set forth below are normally
followed after 180 days, overdue:

- Legal analysis of the enforceability of the respective guarantee;
- Judicial filing of the recovery claim;
- Assessment of market value of the guarantee by an expert;
- Two judicial auctions (In the first auction, the purchase price must be at least equal to the market value assessed by the expert assigned by the competent judge; in the second (and last) auction, the guarantee may be sold at any price);
- If there are third party purchasers, we receive the payment with 24 hours;
- If no third party purchasers, adjudication of the guarantee takes place;
- In case the value of the guarantee is insufficient to fully repay the loan, we continue with the judicial claim, aiming for free assets of the debtor;
- When the adjudication takes place, we record, as a foreclosed asset, the lower of fair value minus estimated costs to sell or the carrying value of the loan.

Assets received upon foreclosure of loans or in lieu of foreclosure, including real estate, are initially recorded at the lower of (a) fair value minus estimated costs to sell, or (b) the carrying value of the loan;
with initial differences recorded as a charge to the allowance for loan losses. Subsequent decreases in the fair value of the asset are recorded as a valuation allowance with a corresponding charge in Non-interest expense. Net costs of maintaining such assets are expensed as incurred. In accordance with Brazilian banking regulations, we are
required to dispose of such assets within one year of foreclosure.

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(o) Transfers of financial assets

Transfers of financial assets are accounted as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been legally isolated from us
(2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) we do not maintain effective control over the transferred assets through agreements
to repurchase or redeem them before their maturity or ability to unilaterally cause the holder to return specific assets.

(p) Perpetual bond

We classify our perpetual bond as a liability, since such financial instrument also meets the definition of a liability under FASB Concepts no. 6 "Elements of Financial Statements" and SFAS 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and Equity.

(q) Litigation

According to SFAS 5 and Interpretation No 14 (FIN14) Reasonable Estimation of the Amount of a Loss, we recognize accruals in determining loss contingencies when the conditions known before
the issuance of the financial statements show that: (i) it is probable that losses had been incurred at the date of the financial statement; and (ii) the amount of such losses can be reasonably estimated. We accrue our best estimate of probable
losses.

We constantly monitor litigation in progress to evaluate, among other things: (i) its nature and complexity; (ii) the evolution of the proceedings: (iii) the views of our legal advisors; and (iv) our experience with
similar proceedings. We also consider in determining whether a loss is probable and in estimating its amount:

a. The probability of loss from claims or events that have occurred on or before the date of the financial statement, but with come to our attention only after the date of the financial statements, but before the financial statements are issued;

b. The need to disclose claims or events occurring after the date of the financial statements but before they are issued.

(r) Consolidation of Variable Interest Entities (VIE)

According to FASB interpretation No. 46R (FIN 46R), Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51, we consolidate our existing VIEs, considering
situations where we are the primary beneficiary of the entity taking into account qualitative and quantitative analysis of VIEs.

According to FIN 46R, an enterprise with an interest in a variable interest entity shall reconsider whether it is the primary beneficiary of the entity if the entitys governing documents or contractual
arrangements are changed in a manner that reallocates between the existing primary beneficiary and other unrelated parties (a) the obligation to absorb the expected losses of the variable interest entity or (b) the right to receive the expected
residual returns of the variable interest entity. The primary beneficiary also shall reconsider its initial decision to consolidate a variable interest entity if the primary beneficiary sells or otherwise disposes of all or part of its variable
interests to unrelated parties or if the variable interest entity issues new variable interests to parties other than the primary beneficiary or the primary beneficiarys related parties.

(s) Income taxes

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We account income taxes in accordance with SFAS 109 Accounting for Income Taxes. SFAS 109 prescribes an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for
temporary differences between the amounts included in the financial statements and tax returns. In estimating future tax consequences, SFAS 109 generally considers all expected future events other than enactments of changes in the tax law or rates.
Changes in tax law and rates are reflected in the period in which they are enacted. If, after considering future tax consequences, we believe that the carrying value of any deferred tax asset is more likely than not unrealizable, then we
establish a valuation allowance equal to that amount.

We implemented FIN 48  Accounting for Uncertainty in Income Taxes, on January 1, 2007, which sets out a consistent framework to determine the appropriate level of tax reserve to maintain for uncertain
tax positions. This interpretation of FAS 109 uses a two-step approach wherein a tax benefit is recognized if a position is more-like-than-not to be sustained. The amount of the benefit is then measured to be the highest tax benefit which is greater
than 50% likely to be realized. FIN 48 also sets out disclosure requirements to enhance transparency of an entitys tax reserves. The adoption of FIN 48 did not result in any impact to our consolidated financial position as of January 1, 2007.

(t) Insurance premiums, deferred acquisition costs, reserves for insurance claims, private retirement plan benefits and pension investment contracts

Insurance Premiums  Substantially all our insurance contracts are considered short-duration insurance contracts. Premiums from short duration insurance contracts are recognized over the related contracts period in
proportion to the amount of insurance protection provided. Insurance premiums are included as Non interest income - insurance, private retirement plan and pension investment contracts.

Deferred acquisition costs - The costs that vary with and are related to the production of new insurance business are deferred to the extent that such costs are deemed recoverable from future profits. Such costs include
mainly commissions, costs of policy issuance and variable back-office expenses and are amortized over the expected life of the contracts in proportion to the premium income. Deferred acquisition costs are subject to recoverability testing at the
end of each accounting period and, if not recoverable, are fully expensed.

Insurance policy and claims reserves - Reserves for insurance claims are established when insured events occur based on the estimated ultimate cost of settling the claims using historical experience adjusted for current
trends and include claims in process of payment as well as estimated amounts of claims incurred but not yet reported. Reserves are adjusted regularly based upon experience with the effects of changes in such estimated reserves included in the
results of operations in the period in which the estimated changes occurred and are recorded in Other liabilities.

Pension investment contracts -  For certain products offered by us, such as pension investment contracts the investment risk is borne by policyholders. During the accumulation phase of the pension investment contracts
when the investment risk is born by the policyholder, the contracts are treated as an investment contract in accordance with the requirements of SFAS 97 Accounting and Reporting by Insurance Enterprises for Certain Long Duration Contracts and
for Realized Gains and Losses from the Sale of Investments. Payments received for such contracts are not reported as revenue and the balance that accrues to the benefit of the policyholder (the account value) is recorded as liability. Account values are not actuarially determined during the accumulation phase. Rather, account values are increased by the deposits received and interest credited (based on contract provisions) and are reduced by withdrawals and administrative expense charged to the policyholders. The interest accrued is included in changes in Non interest expense  Insurance, private retirement plan and pension investment contracts. The securities related to these pension investments contracts are classified as Trading assets and Securities available for sale in the Consolidated Financial Statements.

Reserves for private retirement plan benefits are established based on actuarial calculations in accordance with FAS 60.

An additional liability for investments contracts is established if the present value of expected annuitization payments at the expected annuitization date exceeds the expected account balance at the annuitization date, in accordance with SOP 03-1 Accounting and Reporting by Insurance Enterprises for Certain Non-traditional Long-Duration Contracts and for Separate Accounts.

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SOP 05-1 Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts, provides guidance on accounting for deferred acquisition
costs on internal replacements of insurance and investment contracts, such as a modification in products benefits, features, rights, or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to
a contract, or by the election of a feature or coverage within a contract. SOP 05-1 was issued in September 2005, and became effective as from January 1, 2007. We applied SOP 05-1 and we did not have significant effects on our consolidated financial
statement.

(u) Provision for guarantees

We record provision for guarantees in accordance with FASB Interpretation 45 Guarantors Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others
(FIN 45). FIN 45 expands on the accounting guidance of SFAS 5, SFAS 57 Related Party Disclosures and SFAS 107 Disclosures about Fair Value of Financial Instruments and incorporates without change the provision of SFAS 34
Capitalization of Interest Cost, which is being superseded. FIN 45 requires that a liability be recognized at the inception of certain guarantees for the fair value of the obligation, including the ongoing obligation to stand ready to
perform over the term of the guarantee (note 28).

(v) Fee income

We earn fee income from investment management, credit card, investment banking and certain commercial banking services. Such fees are typically recognized when the service is performed (investment and commercial
banking) or deferred and recognized over the life of the contract (investment management and credit card).

(w) Translation of foreign currency operations into reais

The functional currency used for foreign operations is the Brazilian reais. Assets and liabilities of foreign operations, substantially all of which are monetary in nature, are remeasured into Brazilian
reais at the respective period-end exchange rates and revenues and expenses are remeasured at a weighted average of exchange rates during the period. Transactions denominated in foreign currencies are remeasured into Brazilian reais at
the transaction date. Foreign exchange transaction gains and losses on foreign operations are recognized by net amount currently in Net gains (losses) on foreign currency transactions.

(x) Employees benefits

(i) Pension plan

Since 2004, we have a unique pension plan for all employees, with contributions from companies and employees, called Intelligent Future. The plan is managed by UBB Prev  Previdência Complementar, which is a
complementary pension closed entity.

During 2006 and 2007, contributions from sponsors for the Intelligent Future totalized R$22 and R$25, respectively.

We do not hold supplementary pension plans with defined benefit. However, according to Brazilian legislation, we make contributions as employer to Welfare and FGTS - Guarantee Fund for Length of Service. These expenses
are recorded in the result when incurred. Such contributions totalized R$473, R$480 and R$501, in 2005, 2006 and 2007, respectively.

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(ii) Stock option plan

We established a stock option plan in 2001 which is described more fully in Note 24. From 2001 to 2005, we have accounted this plan in accordance with SFAS 123 Accounting for Stock Based Compensation.

We adopted at January 1, 2006 the modified prospective method of SFAS 123 (Revised)  Share-based payment and recognized an expense of R$10 related to change in accounting principle. This statement
requires a public entity to measure the cost of employee services received in exchange of a share based on grant-date fair value of the share, and for shares classified as liabilities, the amount compensation should be remeasured subsequently at of
each reporting date through the settlement date at fair value.

Under SFAS 123R, we have to measure the fair value on the reporting date and classify as liability all share or Units indexed to the IPCA (consumer price index). All stock option granted after July 19, 2004 indexed to
the IPCA were classified as liability.

Prior to January 1, 2006, we measured the fair value of stock option plans on grant-date using the Black-Scholes option-pricing model. On January 1, 2006, we began using a binomial option-pricing model to measure the
fair value of all stock options granted after that date and for all stock options classified as liability after adoption of SFAS 123R.

That cost will be recognized over the period during which an employee is required to provide services in exchange for the shares (vesting period). The fair value of employee stock options and similar instruments is
estimated using option-pricing models adjusted to the unique characteristics of those instruments. As result of having applied the modified prospective method to account for the implementation of SFAS 123R, expenses recorded in previous years for
stock options plans have not been restated.

Under this transition method, compensation cost for stock options plans as from January 1, 2006, include the applicable amount of compensation for all equity share based instruments based on the grant date fair value in
accordance with the provisions of SFAS 123R and for all share based instruments that had been classified as equity but now is classified as a liability under SFAS 123R, a liability at its fair value was recognized for the reporting date. The fair
value of the liability was recognized (i) by reducing equity to the extent of such previously recognized cost and (ii) by recognizing the difference in the income statement as the cumulative effect of a change in accounting principle.

At the Extraordinary Shareholders Meeting, held on March 21, 2007, a change in the current stock option plan was approved. As a result of the amendments, our stock option plan allows the granting of two kinds of
stock options: the regular stock options and the bonus stock options. See Note 24 for more details.

The granted Units of Bonus stock option were classified as equity, and measured at fair value by Unit price on its grant-date.

(y) Earnings per share (EPS)

In calculating EPS, Unibanco and Holdings have adopted the two class method. This method is an earnings allocation formula that determines earnings per share for each class of common shares and preferred shares
according to dividends declared and participation rights to undistributed earnings. Under this method, net income is first reduced by the amount of dividends declared in the current period for each class of share, the remaining earnings are then
allocated to common share and preferred share to the extent each security may share in earnings. The total earnings allocated to each share (i.e. actual dividends declared and the amount allocated for the participation feature) is then divided by
the number of weighted average shares outstanding.

Diluted earnings per share is based on the same adjusted net income as in the basic EPS and the weighted  average number of shares outstanding is increased by the number of shares that would be issued assuming the exercise of stock options. In 2005, 2006 and 2007 we issued stock options and calculated the diluted earnings (see Consolidated Statement of Income).

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We have implemented the provisions of EITF 03-6 Participating Securities and the Two-Class Method under SFAS 128 Earnings per Share and concluded that no change should be required in the
calculation of EPS.

HOLDINGS

Earnings per share are presented based on the two classes of share issued by Holdings. Both classes, common and preferred, participate in dividends on substantially the same basis (note 19). Earnings per share are
computed based on the distributed (dividends) and undistributed earnings of Holdings after giving effect to the 10% preference, without regard to whether the earnings will ultimately be fully distributed. Weighted average shares are computed based
on the periods for which the shares are outstanding.

UNIBANCO

Earnings per share are presented based on the two classes of share issued by Unibanco. Both classes, common and preferred, participate in dividends on substantially the same basis, except that preferred shareholders are
entitled to dividends per share ten percent (10%) higher than common shareholders (note 19). Earnings per share are computed based on the distributed (dividends) and undistributed earnings of Unibanco after giving effect to the 10% preference,
without regard to whether the earnings will ultimately be fully distributed. Weighted average shares are computed based on the periods for which the shares are outstanding.

(z) Gains and losses on change in interest in subsidiaries

Results from issuance of shares by subsidiaries to third parties when the issue price per share differs from the carrying amount of the investment in the shares of the corresponding subsidiary are recognized in income. Gains recognition in income is limited to transaction when realization on the gain is reasonably assured.

(aa) Recently issued accounting standards

In September, 2006, FASB issued SFAS no 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, that fair value is the relevant measurement attribute. SFAS 157 becomes effective in
fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are evaluating the impact of adoption of SFAS 157. We are in process of reviewing valuation models in order to determine whether the models to estimate
fair value is consistent with provisions of SFAS 157.

In February, 2007, FASB issued SFAS no 159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure many financial instruments and certain
other items at fair value. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments. This Statement is effective as of
the beginning of an entitys first fiscal year that begins after November 15, 2007. We are evaluating the impact of adoption of SFAS 159, which depends on the nature and content of the item elected to be measured at fair value, upon initial
application in 2008.

In April 2007, the FASB issued FASB Staff Position (FSP) No. FIN 39-1 Amendment of FASB Interpretation No. 39, this FSP amends paragraph 3 of Interpretation 39 to replace the terms conditional contracts and
exchange contracts with the term derivative instruments as defined in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. It also amends paragraph 10 of Interpretation 39 to permit a reporting entity to
offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty
under the same master netting arrangement. The guidance in this FSP is effective for fiscal years beginning after November 15, 2007. We are evaluating the impact of adoption of FSP No. FIN 39-1. However, at this time we do not expect the impact of
FSP No. FIN 39-1 to have a significant effect on our consolidated financial statement.

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In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF
06-11). EITF 06-11 requires companies to recognize a realized income tax benefit associated with dividends or dividend equivalents paid on nonvested equity-classified employee share-based payment awards that are charged to retained earnings as
an increase to additional paid-in capital. EITF 06-11 is effective for us on January 1, 2008. We do not expect the adoption of EITF 06-11 to have a material impact on our Consolidated Financial Statements.

In November, 2007, the SEC issued SAB No. 109, Written Loan Commitments Recorded at Fair Value Through Earnings, to supersede SAB 105. SAB 109 expresses the current view of the staff that, consistent with the guidance
in Statements No. 156, Accounting for Servicing of Financial Assets, and No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, the expected net future cash flows related to the associated servicing of the loan should be
included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The staff expects registrants to apply the views of SAB 109 on a prospective basis to derivative loan commitments issued or modified
in fiscal quarters beginning after December 15, 2007. We are evaluating the impact of adoption of SAB 109. However, at this time we do not expect the impact of SAB 109 to have a significant effect on our consolidated financial statement.

In December 2007, the FASB issued SFAS 141R, Business Combination. This Statement replaces FASB Statement No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141
that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement defines the acquirer as the entity
that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This Statement applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are evaluating the impact of adoption of SFAS 141R. However, at this time we do not expect the impact of SFAS 141R to have a
significant effect on our consolidated financial statement.

In December 2007, the FASB issued SFAS 160 Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51. This Statement amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating the impact of adoption of SFAS 160 our
consolidated financial statement.

In February 2008, the FASB issued FASB Staff Position No FSP 140-3, Accounting for Transfers of Financial Assets and Repurchasing Transactions, (FSP 140-3). FSP 140-3 addresses accounting
for repurchase agreements related to previously transferred financial assets when the repurchase arrangement is between the same parties as the original transfer. This FSP presumes that an initial transfer of a financial asset and a repurchase
agreement are considered part of the same arrangement under SFAS No 140. However, if certain criteria are met, the initial transfer and repurchase financing shall not be evaluated as a linked transaction and instead should be evaluated
separately under SFAS 140. This FSP is effective fiscal years beginning after November 15, 2008 and shall be applied prospectively to initial transfers and repurchase financings for which the initial transfer is executed on or after the beginning of
the fiscal year this FSP is initially applied. We are currently evaluating the potential impact of the adoption of FSP 140-3.

In March 2008, the FASB issued SFAS 161 Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133. This Statement is intended to enhance the current
disclosure framework in Statement 133. The Statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms
of the risks that the entity is intending to manage. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format should provide a more complete picture of the location in an entitys financial statements
of both the derivative positions existing at period end and the effect of using derivatives during the reporting period. Disclosing information about credit-risk-related contingent features should provide information on the potential effect on an entitys liquidity from using derivatives. Finally, this Statement requires cross-referencing within the
footnotes, which should help users of financial statements locate important information about derivative instruments. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
We are currently evaluating the impact of adoption of SFAS 161. However, at this time we do not expect the impact of SFAS 161.

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In April 2008, the FASB issued FASB Staff Position FAS 142-3, Determination of Useful Life of Intangibles Assets (FSP FAS 142-3), which amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and
the period of expected cash flows used to measure the fair value of the asset under FASB Statement No 141(R), and other U.S. generally accepted accounting principles (GAAP). This FSP applies regardless of the nature of the transaction that
resulted in the recognition asset, that is whether acquired in a business combination or otherwise. In developing assumptions about renewal or extension used to determine the useful life of a recognized intangible asset, an entity shall consider its
own historical experience in renewing or extending similar arrangements. However, these assumptions should be adjusted for the entity-specific factors in paragraph 11 of Statement 142. In the absence of that experience, an entity shall consider the
assumptions that market participants would use about renewal or extension (consistent with the highest and best use of the asset by market participants), adjusted for the entity-specific factors in paragraph 11 of Statement 142. We are currently
evaluating the potential impact of the adoption of FSP FAS 142-3.

In May 2008, the FASB issued SFAS No 163, Accounting for Financial Guarantee Insurance Contracts  an interpretation of FASB Statement No 60. SFAS 163 requires that an insurance enterprise
recognized a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by
insurance enterprises. This Statement requires disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided users of financial statements.
SFAS 163 will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of the adoption of SFAS 163.

Note 3  Acquisitions, Goodwill and Intangible Assets

During 2005 and 2006 we expanded our retail (consumer business) and insurance business through the following acquisitions:

Retail

Banco Dibens

In June 3, 2005, we acquired the remaining 49% of the capital of Banco Dibens, a commercial banking operation, which focuses on the financing and leasing of automobiles and trucks, from Grupo Verdi. The new acquisition
was valued at fair value approximately R$128, including goodwill of R$5.

Hipercard Investimentos Ltda

In January 2006, we acquired from Sonae Distribuição Brasil S.A. the total capital of Modelo Investimentos Financeiros Ltda for R$202, including goodwill of R$179 at the date of the acquisition.
The acquisition was accounted following the purchase method.

Additionally, the name of this company was changed to HiperCard Investimentos Ltda.

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Insurance

Unibanco AIG Warranty (UAW)

In June 2006, we acquired from Whirlpool 30% interest of the total capital of Unibanco AIG Warranty (UAW) for R$66, including goodwill of R$65 at the date of acquisition. The acquisition was accounted following
the purchase method.

Intangible assets

During 2005, 2006 and 2007 Unibanco through its subsidiaries acquired intangible assets related to customer relationship. These transactions have been amortizing over the period in which it is expected to contribute to
the future cash flows.

In April 2005, we acquired from Banco GE Capital S.A. an identifiable intangible asset related to the existing customer portfolio of Wal-Mart cards. The purchase price was R$69 and will be amortized over 10 years.

In January, 2006, we acquired from Wal Mart an identifiable intangible asset related to the existing customer database. The purchase price of the transaction was R$66 and will be amortized over 10 years.

In April 2006, we acquired from Renasce  Rede Nacional de Shopping Centers Ltda an identifiable intangible asset related to the existing customer database. The purchase price of the transaction was R$29 and
will be amortized over 8 years.

During 2006 we acquired from Sonae Distribuição Brasil S.A. an identifiable intangible asset related to the existing customer database. The purchase price of this transactions was R$35 and will be
amortized over 15 years.

We provide payroll management and financial resource administration services, recorded as intangible asset within Customer Relationship. During 2005, 2006 and 2007, we acquired new agreements that totalized
R$33, R$108 and R$61, respectively, which is being amortized during the agreement term.

During 2005, 2006 and 2007, we acquired other non individual significant intangible assets related to customer relationship. These transactions totalized R$42, R$71 and R$63, respectively.

(iv) Goodwill and intangible assets

The following tables present our goodwill and intangibles allocated for each business segment at December 31, 2006 and 2007:

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|                                                            |  |                    |  |          
|----------------------------------------------------------- |  | ------------------ |  | ---------
|                                                            |  | As of December 31,
|                                                            |  |                    | 
|                                                            |  | 2006               |  | 2007     
|                                                            |  |                    |  |          
|Goodwill                                                    |  |                    |  |          
|Retail                                                      |  | R$  1,301          |  | R$  1,299
|Wholesale                                                   |  | 33                 |  | 33       
|Wealth management                                           |  | 45                 |  | 45       
|Insurance                                                   |  | 92                 |  | 92       
|                                                            |  |                    |  |          
|Total                                                       |  | R$  1,471          |  | R$  1,469
|                                                            |  |                    |  |          
|                                                           
|Intangible Assets (mainly, existing customer relationships) |  |                   
|Retail                                                      |  |                    |  |          
|Acquisition cost                                            |  | R$  1,270          |  | R$  1,394
|Reimbursement                                               |  | -                  |  | (15)     
|Impairment                                                  |  | -                  |  | (6)      
|Accumulated amortization                                    |  | (598)              |  | (712)    
|                                                            |  |                    |  |          
|Total                                                       |  | R$  672            |  | R$  661  
|                                                            |  |                    |  |          

In April 2007, the company Eletrodireto requested the rescission of the partnership agreement that it had with Unibanco, due to Eletrodireto inability to comply with certain contract terms, and on May 2008, Eletrodireto
declared bankruptcy. Consequently, we recognized an impairment of R$6.

The amortization of intangible assets in 2006 and in 2007 was R$77 and R$120, respectively.

During 2006 and 2007, we recognized tax benefit of R$7 and R$9, respectively, on the deductibility, for tax purpose, of goodwill.

The estimated aggregate amortization expense will be:

|                                |  |                                 
|------------------------------- |  | --------------------------------
|                                |  | Amortization expense "unaudited"
|For the year ended December 31,
|                                |  |                                 
|2008                            |  | R$ 118                          
|2009                            |  | 115                             
|2010                            |  | 107                             
|2011                            |  | 94                              
|2012                            |  | R$ 75                           

Statement of 2007 Acquisitions

During 2005, 2006 and 2007, as a result of our purchases, the net cash paid was R$151, R$599 and R$124, respectively.

Note 4 - Related Party Transactions

The Moreira Salles Group through E.Johnston Representação e Participações S.A. owned 92.66% and 94.88% of Holdings common voting share at December 31, 2006 and 2007, respectively and
therefore indirectly controlled 97.1% of the Unibancos voting share at December 31, 2006 and 2007. Transactions with companies within the Moreira Salles Group and our own affiliates are limited to banking transactions in the normal course of
business at prevailing market terms for similar transactions.

We have made certain transactions with unconsolidated related parties that we believe were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, applicable to
those prevailing at the time in the market for comparable transactions and did not involve more than the normal risk of collectibility.

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As of December 31, 2006 and 2007, we had the following transactions with these related parties:

|                                                                        |  |                    |  |           
|----------------------------------------------------------------------- |  | ------------------ |  | ----------
|                                                                        |  | As of December 31,
|                                                                        |  |                   
|Company                                                                 |  | 2006               |  | 2007      
|                                                                        |  |                    |  |           
|Assets                                                                  |  |                    |  |           
|Interest-bearing deposits in other banks                                |  |                    |  |           
|Cibrasec  Companhia Brasileira de Securitização                        |  | R$   23            |  | R$   14   
|Banco Investcred Unibanco S.A.                                          |  | 1,106              |  | 1,274     
|Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento       |  | 586                |  | 637       
|                                                                        |  |                    |  |           
|Total                                                                   |  | 1,715              |  | 1,925     
|                                                                        |  |                    |  |           
|                                                                       
|Trading assets, at fair value                                           |  |                    |  |           
|Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento       |  | 1                  |  | -         
|                                                                        |  |                    |  |           
|Total                                                                   |  | 1                  |  | -         
|                                                                        |  |                    |  |           
|                                                                       
|Other assets                                                            |  |                    |  |           
|Redecard                                                                |  | -                  |  | 229       
|Banco Investcred Unibanco S.A.                                          |  | -                  |  | 67        
|Others                                                                  |  | 126                |  | 10        
|                                                                        |  |                    |  |           
|Total                                                                   |  | 126                |  | 306       
|                                                                        |  |                    |  |           
|                                                                       
|                                                                        |  |                    |  |           
|Total assets                                                            |  | R$ 1,842           |  | R$   2,231
|                                                                        |  |                    |  |           
|                                                                       
|Liabilities                                                             |  |                    |  |           
|Deposits                                                                |  |                    |  |           
|Others                                                                  |  | R$   2             |  | R$   10   
|                                                                        |  |                    |  |           
|Total                                                                   |  | 2                  |  | 10        
|                                                                        |  |                    |  |           
|Time deposits                                                           |  |                    |  |           
|Consórcio Nacional Ford                                                 |  | 61                 |  | 69        
|Unibanco Rodobens Administradora de Consórcios Ltda                     |  | 40                 |  | 29        
|Companhia Hipotecária Unibanco Rodobens                                 |  | 42                 |  | 54        
|Banco Investcred Unibanco S.A.                                          |  | 352                |  | 462       
|Others                                                                  |  | 11                 |  | 2         
|                                                                        |  |                    |  |           
|Total                                                                   |  | 506                |  | 616       
|                                                                        |  |                    |  |           
|                                                                       
|Federal funds purchased and securities sold under repurchase agreements |  |                    |  |           
|Banco Investcred Unibanco S.A.                                          |  | 26                 |  | 13        
|Maxfácil Participações S.A.                                             |  | 170                |  | 185       
|Others                                                                  |  | 19                 |  | 44        
|                                                                        |  |                    |  |           
|Total                                                                   |  | 215                |  | 242       
|                                                                        |  |                    |  |           
|                                                                       
|Debentures                                                              |  |                    |  |           
|Others                                                                  |  | -                  |  | 3         
|                                                                        |  |                    |  |           
|Total                                                                   |  | -                  |  | 3         
|                                                                        |  |                    |  |           
|                                                                       
|Other liabilities                                                       |  |                    |  |           
|Luizacred SCFI                                                          |  | 3                  |  | 4         
|Others                                                                  |  | 1                  |  | 4         
|                                                                        |  |                    |  |           
|Total                                                                   |  | 4                  |  | 8         
|                                                                        |  |                    |  |           
|Total liabilities                                                       |  | R$   727           |  | R$   879  
|                                                                        |  |                    |  |           

F-32

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##### 

Table of Contents

|                                                                           |  |                                 |  |          |  |         
|-------------------------------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                                           |  | For the year ended December 31,
|                                                                           |  |                                
|Company                                                                    |  | 2005                            |  | 2006     |  | 2007    
|                                                                           |  |                                 |  |          |  |         
|Interest income                                                            |  |                                 |  |          |  |         
|Interest on deposits with banks                                            |  |                                 |  |          |  |         
|Banco Investcred Unibanco S.A.                                             |  | R$   112                        |  | R$   149 |  | R$   119
|Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento          |  | 77                              |  | 79       |  | 71      
|Interest income on securities                                              |  |                                 |  |          |  |         
|Trading income                                                             |  |                                 |  |          |  |         
|Others                                                                     |  | 6                               |  | 6        |  | 4       
|Fee and commission income                                                  |  |                                 |  |          |  |         
|Others                                                                     |  | 1                               |  | -        |  | 2       
|Other income                                                               |  |                                 |  |          |  |         
|Banco Investcred Unibanco S.A.                                             |  | 16                              |  | -        |  | -       
|Cibrasec Cia Brasileira de Securitização                                   |  | -                               |  | 5        |  | 4       
|Serasa                                                                     |  | -                               |  | 12       |  | 16      
|Redecard                                                                   |  | -                               |  | -        |  | 3       
|Others                                                                     |  | 7                               |  | -        |  | -       
|Interest expense                                                           |  |                                 |  |          |  |         
|Time deposits                                                              |  |                                 |  |          |  |         
|Consórcio Nacional Ford                                                    |  | 7                               |  | 8        |  | 7       
|Unibanco Rodobens Administradora de Consórcios Ltda                        |  | 5                               |  | 4        |  | 3       
|Companhia Hipotecária Unibanco Rodobens                                    |  | -                               |  | 5        |  | 5       
|Banco Investcred Unibanco S.A.                                             |  | -                               |  | 19       |  | 35      
|Others                                                                     |  | 4                               |  | 1        |  | -       
|Federal Funds purchased and Securities sold under agreements to repurchase |  |                                 |  |          |  |         
|Maxfácil Participações S.A.                                                |  | -                               |  | 8        |  | 20      
|Banco Investcred Unibanco S.A.                                             |  | -                               |  | 16       |  | 6       
|Others                                                                     |  | -                               |  | -        |  | 5       
|Derivatives                                                                |  |                                 |  |          |  |         
|Others                                                                     |  | 14                              |  | 2        |  | -       
|Non interest expense                                                       |  |                                 |  |          |  |         
|Administrative expenses                                                    |  |                                 |  |          |  |         
|Tecnologia Bancária S.A.                                                   |  | 21                              |  | 17       |  | 44      
|Interchange                                                                |  | -                               |  | 3        |  | 10      
|Serasa                                                                     |  | -                               |  | -        |  | 32      
|Others                                                                     |  | 3                               |  | -        |  | -       
|Other non-interest expenses                                                |  |                                 |  |          |  |         
|Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento          |  | -                               |  | 35       |  | 61      
|Serasa                                                                     |  | -                               |  | 20       |  | -       
|Banco Investcred Unibanco S.A.                                             |  | -                               |  | -        |  | 14      
|Interchange                                                                |  | -                               |  | -        |  | 9       
|Others                                                                     |  | R$   40                         |  | R$   -   |  | R$   -  

We contribute on a regular basis to Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto João Moreira Salles and Instituto Moreira Salles, trusts created by the Bank for the benefit of its
employees and to further our desire to contribute to cultural and civic activities. Contributions made by Unibanco to these trusts totaled R$7, R$6 and R$7 in 2005, 2006 and 2007, respectively.

Unibanco has made no loans to its or Holdings ́affiliates nor to the executive officers and directors of Holdings or Unibanco since such practice is prohibited for all Brazilian banks by the Brazilian Central
Bank.

F-33

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##### 

Table of Contents

Note 5 - Central Bank Compulsory Deposits

The Central Bank requires financial institutions, including Unibanco, to deposit certain funds with the Central Bank. The following table presents a summary of the current compulsory deposit requirements by type and the
amounts of such deposits:

|                     |  |                    |  |           
|-------------------- |  | ------------------ |  | ----------
|                     |  | As of December 31,
|                     |  |                   
|Type of deposits     |  | 2006               |  | 2007      
|                     |  |                    |  |           
|                    
|Non-interest earning |  | R$ 987             |  | R$   1,100
|Interest-earning     |  | 4,190              |  | 5,583     
|                     |  |                    |  |           
|Total                |  | R$ 5,177           |  | R$   6,683
|                     |  |                    |  |           

At December 31, 2006 and 2007 we had also R$3,161 and R$4,260 of federal government securities, linked to the Central Bank in the form of compulsory deposits, recorded as trading assets in the amount of
R$1,264 in 2007 (note 6), and securities available for sale in the amount of R$27 in 2006 and R$1,880 in 2007 (note 7), and federal funds sold and securities purchased under resale agreements in the amount of R$3,134 in 2006 and
R$1,116 in 2007.

Note 6 - Trading Assets

Trading assets, stated at fair value, are presented in the following table:

|                                  |  |                    |  |            
|--------------------------------- |  | ------------------ |  | -----------
|                                  |  | As of December 31,
|                                  |  |                   
|                                  |  | 2006               |  | 2007       
|                                  |  |                    |  |            
|                                 
|Federal government securities (a) |  | R$   6,948         |  | R$   6,331 
|Brazilian sovereign bonds         |  | 594                |  | 146        
|Securities of foreign governments |  | 389                |  | 1,758      
|Corporate debt securities (b)     |  | 363                |  | 453        
|Bank debt securities              |  | 97                 |  | 28         
|Mutual funds (c)                  |  | 514                |  | 629        
|Shares                            |  | 229                |  | 1,119      
|Derivative financial instruments: |  |                    |  |            
|Swaps                             |  | 471                |  | 724        
|Forward and future                |  | 111                |  | 474        
|Option contracts                  |  | 188                |  | 797        
|                                  |  |                    |  |            
|Total                             |  | R$   9,904         |  | R$   12,459
|                                  |  |                    |  |            

|(a) | Includes R$126 in 2006 and R$177 in 2007 pledged to margin guarantees; R$1,082 in 2007 linked to Central Bank as compulsory deposits (note 5); R$182 in 2007 linked to Central Bank as savings deposits resources (note 5) and R$850
    in 2006 and R$666 in 2007 subject to repurchase agreements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Includes R$52 in 2007 pledged to margin guarantees .                                                                                                                                                                                                                                                
|   
|(c) | The portfolios of mutual funds held by our insurance, capitalization and private retirement companies are represented mainly by federal government securities. Includes R$36 in 2006 and R$225 in 2007 pledged to margin guarantees.                                                                
|   

Net trading income in 2005, 2006 and 2007, included in non interest income was as follows:

F-34

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##### 

Table of Contents

|                                                            |  |                                 |  |          |  |         
|----------------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                            |  | For the year ended December 31,
|                                                            |  |                                
|                                                            |  | 2005                            |  | 2006     |  | 2007    
|                                                            |  |                                 |  |          |  |         
|                                                           
|Realized gains on securities                                |  | R$   100                        |  | R$   105 |  | R$   293
|Realized losses on securities                               |  | (123)                           |  | (57)     |  | (518)   
|Net realized gains on derivatives                           |  | 139                             |  | 220      |  | 247     
|Net unrealized (losses) gains on securities and derivatives |  | (5)                             |  | (43)     |  | 453     
|                                                            |  |                                 |  |          |  |         
|Net                                                         |  | R$   111                        |  | R$   225 |  | R$   475
|                                                            |  |                                 |  |          |  |         

Note 7 - Securities Available for Sale

The amortized cost and fair value of securities available for sale were as follows:

|                                  |  |            |  |            |  |            |  |           
|--------------------------------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                                  |  |            |  | Gross      |  | Gross      |  |           
|                                  |  | Amortized  |  | unrealized |  | unrealized |  | Fair      
|                                  |  | cost       |  | gains      |  | losses     |  | value     
|                                  |  |            |  |            |  |            |  |           
|December 31, 2006                 |  |            |  |            |  |            |  |           
|Federal government securities (a) |  | R$   2,696 |  | R$   33    |  | R$   13    |  | R$   2,716
|Brazilian sovereign bonds (b)     |  | 2,219      |  | 29         |  | 86         |  | 2,162     
|Corporate debt securities         |  | 1,820      |  | 66         |  | 17         |  | 1,869     
|Segurities of foreign governments |  | 271        |  | 1          |  | -          |  | 272       
|Bank debt securities              |  | 124        |  | 1          |  | 4          |  | 121       
|Shares                            |  | 173        |  | 1          |  | 34         |  | 140       
|Mutual funds                      |  | 7          |  | -          |  | 1          |  | 6         
|                                  |  |            |  |            |  |            |  |           
|Total                             |  | R$   7,310 |  | R$   131   |  | R$   155   |  | R$   7,286
|                                  |  |            |  |            |  |            |  |           

|                                  |  |             |  |            |  |            |  |            
|--------------------------------- |  | ----------- |  | ---------- |  | ---------- |  | -----------
|                                  |  |             |  | Gross      |  | Gross      |  |            
|                                  |  | Amortized   |  | unrealized |  | unrealized |  | Fair       
|                                  |  | cost        |  | gains      |  | losses     |  | value      
|                                  |  |             |  |            |  |            |  |            
|December 31, 2007                 |  |             |  |            |  |            |  |            
|Federal government securities (a) |  | R$   4,864  |  | R$   25    |  | R$   91    |  | R$   4,798 
|Brazilian sovereign bonds (b)     |  | 2,046       |  | 45         |  | 328        |  | 1,763      
|Corporate debt securities (c)     |  | 2,286       |  | 91         |  | 28         |  | 2,349      
|Securities of foreign governments |  | 1,495       |  | 1          |  | 10         |  | 1,486      
|Bank debt securities              |  | 174         |  | 1          |  | 8          |  | 167        
|Shares                            |  | 327         |  | 211        |  | 87         |  | 451        
|Mutual funds                      |  | 7           |  | -          |  | 2          |  | 5          
|                                  |  |             |  |            |  |            |  |            
|Total                             |  | R$   11,199 |  | R$   374   |  | R$   554   |  | R$   11,019
|                                  |  |             |  |            |  |            |  |            

|(a) | Includes R$359 in 2006 and R$598 in 2007 pledged to margin guarantees; R$27 in 2006 and R$1,696 in 2007 linked to Central Bank as compulsory deposits (note 5); R$184 in 2007 linked to Central Bank as savings deposits resources
    (note 5) and R$581 in 2006 and R$622 in 2007 subject to repurchase agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Includes R$1,996 in 2006 and R$1,742 in 2007 subject to repurchase agreement.                                                                                                                                                                                                                                        
|   
|(c) | Includes R$685 in 2007 pledged to margin guarantees.                                                                                                                                                                                                                                                                 

The following table represents the aging of our unrealized losses at December 31, 2006 and 2007 as follows:

F-35

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Table of Contents

|                              |  |                         |  |                     |  |          |  |            |  |            |  |           
|----------------------------- |  | ----------------------- |  | ------------------- |  | -------- |  | ---------- |  | ---------- |  | ----------
|                              |  | As of December 31, 2006
|                              |  |                         |  |                     |  |          | 
|                              |  | Less than 12 months     |  | 12 months or longer |  | Total   
|                              |  |                         |  |                     |  |          |  |            | 
|                              |  |                         |  | Gross               |  |          |  | Gross      |  |            |  | Gross     
|                              |  | Fair                    |  | unrealized          |  | Fair     |  | unrealized |  | Fair       |  | unrealized
|                              |  | value                   |  | losses              |  | value    |  | losses     |  | value      |  | losses    
|                              |  |                         |  |                     |  |          |  |            |  |            |  |           
|Federal government securities |  | R$   375                |  | R$   13             |  | R$   1   |  | R$   -     |  | R$   376   |  | R$   13   
|Brazilian sovereign bonds     |  | 1,443                   |  | 86                  |  | -        |  | -          |  | 1,443      |  | 86        
|Corporate debt securities     |  | 746                     |  | 15                  |  | 123      |  | 2          |  | 869        |  | 17        
|Bank debt securities          |  | 105                     |  | 4                   |  | -        |  | -          |  | 105        |  | 4         
|Shares                        |  | 39                      |  | 11                  |  | 24       |  | 23         |  | 63         |  | 34        
|Mutual funds                  |  | 6                       |  | 1                   |  | -        |  | -          |  | 6          |  | 1         
|                              |  |                         |  |                     |  |          |  |            |  |            |  |           
|Total                         |  | R$   2,714              |  | R$   130            |  | R$   148 |  | R$   25    |  | R$   2,862 |  | R$   155  
|                              |  |                         |  |                     |  |          |  |            |  |            |  |           

|                                  |  |                         |  |                     |  |          |  |            |  |            |  |           
|--------------------------------- |  | ----------------------- |  | ------------------- |  | -------- |  | ---------- |  | ---------- |  | ----------
|                                  |  | As of December 31, 2007
|                                  |  |                         |  |                     |  |          | 
|                                  |  | Less than 12 months     |  | 12 months or longer |  | Total   
|                                  |  |                         |  |                     |  |          |  |            | 
|                                  |  |                         |  | Gross               |  |          |  | Gross      |  |            |  | Gross     
|                                  |  | Fair                    |  | unrealized          |  | Fair     |  | unrealized |  | Fair       |  | unrealized
|                                  |  | value                   |  | losses              |  | value    |  | losses     |  | value      |  | losses    
|                                  |  |                         |  |                     |  |          |  |            |  |            |  |           
|Federal government securities     |  | R$   3,916              |  | R$   90             |  | R$   2   |  | R$   1     |  | R$   3,918 |  | R$   91   
|Brazilian sovereign bonds         |  | 32                      |  | 51                  |  | 395      |  | 277        |  | 427        |  | 328       
|Corporate debt securities         |  | 1,281                   |  | 9                   |  | 205      |  | 19         |  | 1,486      |  | 28        
|Securities of foreign governments |  | 1,024                   |  | 10                  |  | -        |  | -          |  | 1,024      |  | 10        
|Bank debt securities              |  | 113                     |  | 8                   |  | -        |  | -          |  | 113        |  | 8         
|Shares                            |  | 192                     |  | 63                  |  | 23       |  | 24         |  | 215        |  | 87        
|Mutual funds                      |  | -                       |  | -                   |  | 5        |  | 2          |  | 5          |  | 2         
|                                  |  |                         |  |                     |  |          |  |            |  |            |  |           
|Total                             |  | R$   6,558              |  | R$   231            |  | R$   630 |  | R$   323   |  | R$   7,188 |  | R$   554  
|                                  |  |                         |  |                     |  |          |  |            |  |            |  |           

We have evaluated the unrealized losses of our securities available for sale at December 31, 2006 and 2007, and we determined there were no other-than-temporary losses, except for the amount of R$110 and R$50 of
impairment written off and recorded as Non interest incomenet gains (losses) on securities and non-trading derivatives. No impairment was recognized at December 31, 2005.

We conduct a monthly review to identify and evaluate investments that have indications of possible impairment, considering the financial condition and near-term prospects of the issuer and our ability and intention to
hold the investment for a period of time sufficient to allow for any anticipated recovery.

At December 31, 2006 and 2007 we held no securities of a single issuer or related group of companies whose fair value exceeded 10% of our shareholders equity.

Proceeds from sales of investment securities available for sale were R$3,244, R$13,637 and R$22,569 in 2005, 2006 and 2007, respectively.

Gross gains and losses realized on the sale of securities available for sale were as follows:

|       |  |                                 |  |          |  |         
|------ |  | ------------------------------- |  | -------- |  | --------
|       |  | For the year ended December 31,
|       |  |                                
|       |  | 2005                            |  | 2006     |  | 2007    
|       |  |                                 |  |          |  |         
|Gains  |  | R$   84                         |  | R$   251 |  | R$   260
|Losses |  | -                               |  | 8        |  | 2       
|       |  |                                 |  |          |  |         
|Net    |  | R$   84                         |  | R$   243 |  | R$   258
|       |  |                                 |  |          |  |         

The amortized cost and fair value of available for sale securities, by contractual maturity, were as follows:

F-36

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##### 

Table of Contents

|                                       |  |                    |  |            |  |             |  |            
|-------------------------------------- |  | ------------------ |  | ---------- |  | ----------- |  | -----------
|                                       |  | As of December 31,
|                                       |  |                    |  |           
|                                       |  | 2006               |  | 2007      
|                                       |  |                    |  |            | 
|                                       |  | Amortized          |  |            |  | Amortized   |  |            
|                                       |  | cost               |  | Fair value |  | cost        |  | Fair Value 
|                                       |  |                    |  |            |  |             |  |            
|Due in one year or less                |  | R$   1,659         |  | R$   1,649 |  | R$   3,068  |  | R$   3,031 
|Due after one year through five years  |  | 2,996              |  | 3,032      |  | 4,207       |  | 4,218      
|Due after five years through ten years |  | 754                |  | 743        |  | 1,610       |  | 1,493      
|Due after ten years                    |  | 1,721              |  | 1,716      |  | 1,980       |  | 1,820      
|No stated maturity                     |  | 180                |  | 146        |  | 334         |  | 457        
|                                       |  |                    |  |            |  |             |  |            
|Total                                  |  | R$   7,310         |  | R$   7,286 |  | R$   11,199 |  | R$   11,019
|                                       |  |                    |  |            |  |             |  |            

Note 8 - Securities Held to Maturity

The amortized cost and fair value of securities held to maturity were as follows:

|                              |  |            |  |            |  |            |  |           
|----------------------------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                              |  |            |  | Gross      |  | Gross      |  |           
|                              |  | Amortized  |  | unrealized |  | unrealized |  | Fair      
|                              |  | cost       |  | gains      |  | losses     |  | value     
|                              |  |            |  |            |  |            |  |           
|December 31, 2006             |  |            |  |            |  |            |  |           
|Federal government securities |  | R$   469   |  | R$   57    |  | R$ -       |  | R$   526  
|Brazilian sovereign bonds (a) |  | 993        |  | 114        |  | -          |  | 1,107     
|Corporate debt securities     |  | 57         |  | 2          |  | -          |  | 59        
|Bank debt securities          |  | 57         |  | -          |  | -          |  | 57        
|                              |  |            |  |            |  |            |  |           
|Total                         |  | R$   1,576 |  | R$   173   |  | R$ -       |  | R$   1,749
|                              |  |            |  |            |  |            |  |           

|                              |  |            |  |            |  |            |  |           
|----------------------------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                              |  |            |  | Gross      |  | Gross      |  |           
|                              |  | Amortized  |  | unrealized |  | unrealized |  | Fair      
|                              |  | cost       |  | gains      |  | losses     |  | value     
|                              |  |            |  |            |  |            |  |           
|December 31, 2007             |  |            |  |            |  |            |  |           
|Federal government securities |  | R$   506   |  | R$   115   |  | R$ -       |  | R$   621  
|Brazilian sovereign bonds (a) |  | 783        |  | 94         |  | -          |  | 877       
|Corporate debt securities     |  | 5          |  | -          |  | -          |  | 5         
|Bank debt securities          |  | 18         |  | -          |  | -          |  | 18        
|                              |  |            |  |            |  |            |  |           
|Total                         |  | R$   1,312 |  | R$   209   |  | R$ -       |  | R$   1,521
|                              |  |            |  |            |  |            |  |           

|_______________
|---------------
|(a)            

The amortized cost and fair value of securities held to maturity, by contractual maturity, were as follows:

F-37

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##### 

Table of Contents

|                                       |  |                    |  |            |  |                |  |           
|-------------------------------------- |  | ------------------ |  | ---------- |  | -------------- |  | ----------
|                                       |  | As of December 31,
|                                       |  |                    |  |            | 
|                                       |  | 2006               |  | 2007      
|                                       |  |                    |  |            |  |               
|                                       |  | Amortized cost     |  | Fair value |  | Amortized cost |  | Fair value
|                                       |  |                    |  |            |  |                |  |           
|Due in one year or less                |  | R$   281           |  | R$   284   |  | R$   151       |  | R$   151  
|Due after one year through five years  |  | 530                |  | 589        |  | 448            |  | 499       
|Due after five years through ten years |  | 158                |  | 176        |  | 92             |  | 103       
|Due after ten years                    |  | 607                |  | 700        |  | 621            |  | 768       
|                                       |  |                    |  |            |  |                |  |           
|Total                                  |  | R$   1,576         |  | R$   1,749 |  | R$   1,312     |  | R$   1,521
|                                       |  |                    |  |            |  |                |  |           

At December 31, 2006 and 2007 we held no securities of a single issuer or related group of companies whose amortized cost or fair value exceeded 10% of our shareholders equity.

Note 9 - Loans

|                                                       |  |                    |  |            
|------------------------------------------------------ |  | ------------------ |  | -----------
|                                                       |  | As of December 31,
|                                                       |  |                   
|                                                       |  | 2006               |  | 2007       
|                                                       |  |                    |  |            
|Commercial:                                            |  |                    |  |            
|Industrial and other                                   |  | R$   22,549        |  | R$   30,169
|Import financing                                       |  | 1,503              |  | 1,461      
|Export financing                                       |  | 1,548              |  | 2,480      
|Real estate loans, primarily residential housing loans |  | 1,404              |  | 1,644      
|Direct lease financing (a)                             |  | 1,907              |  | 6,334      
|Individuals:                                           |  |                    |  |            
|Overdraft                                              |  | 660                |  | 658        
|Financing                                              |  | 5,533              |  | 5,830      
|Credit card                                            |  | 5,957              |  | 7,912      
|Agricultural                                           |  | 1,315              |  | 1,693      
|Nonperforming loans                                    |  | 2,278              |  | 2,167      
|                                                       |  |                    |  |            
|Total loans                                            |  | R$   44,654        |  | R$   60,348
|                                                       |  |                    |  |            

|_______________
|---------------
|(a)            

Most of our business activities are with customers located in Brazil. The Bank has a diversified loan portfolio with concentration no higher than 10% in any economic sector.

Net Investments in Direct Leasing Financing

The following lists the components of the net investment in direct leasing financing:

|                                                |  |                    |  |           
|----------------------------------------------- |  | ------------------ |  | ----------
|                                                |  | As of December 31,
|                                                |  |                   
|                                                |  | 2006               |  | 2007      
|                                                |  |                    |  |           
|Total minimum lease payments to be received     |  | R$   2,567         |  | R$   8,438
|Less: Unearned income                           |  | (608)              |  | (1,907)   
|                                                |  |                    |  |           
|Net investments in direct leasing financing (b) |  | R$   1,959         |  | R$   6,531
|                                                |  |                    |  |           

|_______________
|---------------
|(b)            

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The following is a schedule by years of total minimum lease payments to be received:

|                 |  |                    |  |           
|---------------- |  | ------------------ |  | ----------
|                 |  | As of December 31,
|                 |  |                   
|                 |  | 2006               |  | 2007      
|                 |  |                    |  |           
|Overdue Payments |  | R$   28            |  | R$   80   
|2007             |  | 1,167              |  | -         
|2008             |  | 748                |  | 3,268     
|2009             |  | 401                |  | 2,403     
|2010             |  | 169                |  | 1,504     
|2011             |  | 54                 |  | 815       
|2012             |  | -                  |  | 368       
|                 |  |                    |  |           
|Total            |  | R$   2,567         |  | R$   8,438
|                 |  |                    |  |           

Our nonperforming loans were classified as follows:

|                                                       |  |                    |  |               |  |               |  |              
|------------------------------------------------------ |  | ------------------ |  | ------------- |  | ------------- |  | -------------
|                                                       |  | As of December 31,
|                                                       |  |                    |  |              
|                                                       |  | 2006               |  | 2007         
|                                                       |  |                    |  |               |  |              
|                                                       |  |                    |  | Allowance for |  |               |  | Allowance for
|                                                       |  | Nonperforming      |  | nonperforming |  | Nonperforming |  | nonperforming
|                                                       |  | loans              |  | loans         |  | loans         |  | loans        
|                                                       |  |                    |  |               |  |               |  |              
|Industrial and other                                   |  | R$   665           |  | R$   445      |  | R$   469      |  | R$   329     
|Import and export financing                            |  | 8                  |  | 6             |  | 2             |  | 2            
|Real estate loans, primarily residential housing loans |  | 102                |  | 37            |  | 77            |  | 20           
|Direct lease financing                                 |  | 52                 |  | 27            |  | 197           |  | 102          
|Individuals                                            |  | 1,445              |  | 1,013         |  | 1,419         |  | 1,002        
|Agricultural                                           |  | 6                  |  | 5             |  | 3             |  | -            
|                                                       |  |                    |  |               |  |               |  |              
|Total                                                  |  | R$   2,278         |  | R$   1,533    |  | R$   2,167    |  | R$   1,455   
|                                                       |  |                    |  |               |  |               |  |              

At December 31, 2006 and 2007, nonperforming loans included R$103 and R$71, respectively, of large balance loans that were considered individually impaired in accordance with SFAS 114. The allowance for impaired
loans is R$30 and R$23 at December 31, 2006 and 2007, respectively.

The impact on interest income as a result of nonperforming loans subject to impairment was not material for any of the periods presented. We do not have any material commitments to advance additional funds to these
borrowers.

The average balances of nonperforming loans subject to impairment were as follows:

|                                                             |  |                                 |  |            |  |           
|------------------------------------------------------------ |  | ------------------------------- |  | ---------- |  | ----------
|                                                             |  | For the year ended December 31,
|                                                             |  |                                
|                                                             |  | 2005                            |  | 2006       |  | 2007      
|                                                             |  |                                 |  |            |  |           
|Average balance of nonperforming loans subject to impairment |  | R$   1,382                      |  | R$   2,012 |  | R$   2,192

We did not recognize any interest income during the period that the above loans were nonperforming and subject to impairment.

Note 10 - Allowance for Loan Losses

The following represents an analysis of changes in the allowance for loan losses:

F-39

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Table of Contents

|                           |  |                                 |  |            |  |           
|-------------------------- |  | ------------------------------- |  | ---------- |  | ----------
|                           |  | For the year ended December 31,
|                           |  |                                
|                           |  | 2005                            |  | 2006       |  | 2007      
|                           |  |                                 |  |            |  |           
|Balance, beginning of year |  | R$   1,560                      |  | R$   2,107 |  | R$   2,577
|Provision for loan losses  |  | 1,870                           |  | 2,030      |  | 1,935     
|Loan charge-offs           |  | (1,442)                         |  | (1,842)    |  | (2,016)   
|Loan recoveries            |  | 119                             |  | 282        |  | 216       
|Net charge-offs            |  | (1,323)                         |  | (1,560)    |  | (1,800)   
|                           |  |                                 |  |            |  |           
|Balance, end of year       |  | R$   2,107                      |  | R$   2,577 |  | R$   2,712
|                           |  |                                 |  |            |  |           

Note 11 - Investments in Unconsolidated Companies

|                                                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|------------------------------------------------ |  | --------------------------------------------- |  | ------------------------------- |  | --------------------- |  | ------------------ |  | ------------------------------- |  | -------- |  | -------- |  | -------- |  | --------
|                                                 |  | As of or for the year ended December 31, 2007 |  | Investment                      |  | Equity income (loss) 
|                                                 |  |                                               |  |                                 |  |                       | 
|                                                 |  | Participation (%)                             |  | Share-holders ́
          equity |  | Netincome forthe year |  | As of December 31, |  | For the year ended December 31,
|                                                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |         
|                                                 |  | Total                                         |  | Voting                          |  |                       |  | 2006(h)            |  | 2007(h)                         |  | 2005     |  | 2006     |  | 2007    
|                                                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |         
|Redecard S.A (a)                                 |  | 23.211%                                       |  | 23.211%                         |  | 490                   |  | 671                |  | R$   29                         |  | R$   114 |  | R$   60  |  | R$   103 |  | R$   173
|Serasa S.A (b)                                   |  |                                               |  |                                 |  |                       |  |                    |  | 40                              |  | -        |  | 16       |  | 20       |  | 8       
|Cibrasec  Companhia                             |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Brasileira de Securitização (c)                  |  | 9.090%                                        |  | 9.090%                          |  | 74                    |  | 8                  |  | 6                               |  | 7        |  | 1        |  | 1        |  | 1       
|Tecnologia Bancária S.A.                         |  | 20.300%                                       |  | 20.300%                         |  | 148                   |  | 6                  |  | 30                              |  | 30       |  | 3        |  | 4        |  | 1       
|Unibanco Rodobens Administradora                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|de Consórcios Ltda                               |  | 50.000%                                       |  | 50.000%                         |  | 45                    |  | 22                 |  | 26                              |  | 22       |  | 15       |  | 14       |  | 11      
|Luizacred S.A. Sociedade de Crédito              |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Financiamento e Investimento                     |  | 49.999%                                       |  | 49.998%                         |  | 108                   |  | 25                 |  | 18                              |  | 54       |  | 15       |  | 12       |  | 13      
|Banco Investcred Unibanco S.A                    |  | 49.997%                                       |  | 49.997%                         |  | 139                   |  | 65                 |  | 70                              |  | 69       |  | 32       |  | 27       |  | 33      
|Companhia Hipotecária                            |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Unibanco  Rodobens                              |  | 50.000%                                       |  | 50.000%                         |  | 22                    |  | 5                  |  | 9                               |  | 11       |  | 1        |  | 3        |  | 2       
|UniVR Sociedade de Crédito,                      |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Financiamento e Investimento (d)                 |  | 49.000%                                       |  | 49.000%                         |  | 43                    |  | 3                  |  | 20                              |  | 21       |  | -        |  | -        |  | 2       
|Maxfácil Participações S.A. (e)                  |  | 49.986%                                       |  | 49.986%                         |  | 185                   |  | 14                 |  | 87                              |  | 92       |  | -        |  | 2        |  | 7       
|BIU Participações S.A. (BIU) (b)                 |  | 24.492%                                       |  | 24.492%                         |  | 3                     |  | 12                 |  | -                               |  | 1        |  | -        |  | -        |  | 3       
|Bancred - Sociedade de Crédito                   |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Financiamento e Investimento (f)                 |  | 50.000%                                       |  | 50.000%                         |  | 8                     |  | -                  |  | -                               |  | 4        |  | -        |  | -        |  | -       
|Interchange Serviços S.A.                        |  | 25.000%                                       |  | 25.000%                         |  | 56                    |  | 8                  |  | 15                              |  | 14       |  | 2        |  | 5        |  | 2       
|AIG Brasil Companhia de                          |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|Seguros                                          |  | 49.999%                                       |  | 49.999%                         |  | 88                    |  | 15                 |  | 40                              |  | 44       |  | 11       |  | 4        |  | 7       
|Others                                           |  |                                               |  |                                 |  | 5                     |  | (3)                |  | 4                               |  | 3        |  | 2        |  | -        |  | (2)     
|Goodwill on acquisition                          |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          |  |         
|of investments                                   |  |                                               |  |                                 |  |                       |  |                    |  | 196                             |  | 197      |  | -        |  | -        |  | -       
|Total of investments in unconsolidated companies |  |                                               |  |                                 |  | 590                   |  | 683                |  | 158                             |  | 195      |  | 261     
|Non-marketable equity investments, at cost (g)   |  |                                               |  |                                 |  | 212                   |  | 222                |  | -                               |  | -        |  | -       
|                                                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          | 
|Total                                            |  |                                               |  |                                 |  |                       |  |                    |  | R$   802                        |  | R$   905 |  | R$   158 |  | R$   195 |  | R$   261
|                                                 |  |                                               |  |                                 |  |                       |  |                    |  |                                 |  |          |  |          |  |          | 

|_______________
|---------------
|(a)            
|               
|(b)            
|               
|(c)            
|               
|(d)            
|               
|(e)            
|               
|(f)            
|               
|(g)            
|               
|(h)            

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The table below presents the Consolidated Balance Sheet and Statements of Income of our unconsolidated investments, in a combined basis:

|                       |  |                    |  |           
|---------------------- |  | ------------------ |  | ----------
|                       |  | As of December 31,
|                       |  |                   
|                       |  | 2006               |  | 2007      
|                       |  |                    |  |           
|Balance Sheet          |  |                    |  |           
|Current Assets         |  | R$   7,177         |  | R$   8,568
|Noncurrent Assets      |  | 1,629              |  | 1,492     
|                       |  |                    |  |           
|Total Assets           |  | 8,806              |  | 10,060    
|                       |  |                    |  |           
|                      
|Current Liabilities    |  | 5,273              |  | 6,462     
|Noncurrent Liabilities |  | 712                |  | 725       
|                       |  |                    |  |           
|Total Liabilities      |  | 5,985              |  | 7,187     
|                       |  |                    |  |           
|                      
|Shareholders' Equity   |  | 2,821              |  | 2,873     
|                      
|Investment             |  | R$   436           |  | R$   447  

|                           |  |                                 |  |            |  |           
|-------------------------- |  | ------------------------------- |  | ---------- |  | ----------
|                           |  | For the year ended December 31,
|                           |  |                                
|                           |  | 2005                            |  | 2006       |  | 2007      
|                           |  |                                 |  |            |  |           
|Statement of operations:   |  |                                 |  |            |  |           
|Operating revenues         |  | R$   2,112                      |  | R$   2,250 |  | R$   4,000
|Operating expenses         |  | (1,730)                         |  | (1,863)    |  | (3,282)   
|                           |  |                                 |  |            |  |           
|Income before income taxes |  | 382                             |  | 387        |  | 718       
|                           |  |                                 |  |            |  |           
|Income taxes               |  | (108)                           |  | (108)      |  | (221)     
|                           |  |                                 |  |            |  |           
|Net income                 |  | 274                             |  | 278        |  | 497       
|                           |  |                                 |  |            |  |           
|Equity income              |  | R$   98                         |  | R$   92    |  | R$   88   

Note 12 - Premises and Equipment

|                                                         |  |                             |      |                    |      |           
|-------------------------------------------------------- |  | --------------------------- | ---- | ------------------ | ---- | ----------
|                                                         |  | Estimateduseful life(years) |      | As of December 31,
|                                                         |  |                             |     
|                                                         |  |                             | 2006 |                    | 2007
|                                                         |  |                             |      |                    |      |           
|Land                                                     |  | -                           |      | R$   205           |      | R$   185  
|Buildings                                                |  | 25                          |      | 492                |      | 475       
|Furniture and equipment                                  |  | 10                          |      | 484                |      | 508       
|Leasehold improvements                                   |  | 5-10                        |      | 375                |      | 375       
|Data processing equipment                                |  | 5                           |      | 873                |      | 957       
|Costs of software developed or obtained for internal use |  | 5                           |      | 639                |      | 788       
|Vehicles                                                 |  | 5                           |      | 6                  |      | 6         
|Others                                                   |  | -                           |      | 76                 |      | 45        
|                                                         |  |                             |      |                    |      |           
|Total                                                    |  |                             |      | R$   3,150         |      | R$   3,339
|Less: Accumulated depreciation                           |  |                             |      | 1,715              |      | 1,847     
|                                                         |  |                             |      |                    |      |           
|Premises and equipment, net                              |  |                             |      | R$   1,435         |      | R$   1,492
|                                                         |  |                             |      |                    |      |           

Depreciation expense was R$337, R$316 and R$336 in 2005, 2006 and 2007, respectively, including R$19, R$28 and R$57 related to depreciation expense on assets under capital leases in 2005, 2006
and 2007, respectively.

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We have entered into leasing agreements, mainly related to data processing equipment, which is accounted for as capital leases. Under this accounting method both an asset and an obligation are recorded in the financial
statements and the asset is depreciated in a manner consistent with our normal depreciation policy for owned assets.

As from 2002, we sold many properties used as branches and, subsequently, we rented them for the purpose of continuing our operations. These sales were recorded pursuant to SFAS 13 and SFAS 98, Accounting for
leases and SFAS 28 Accounting for Sales with Leasebacks. We have not sold any of our branches during 2005 and 2006. During 2007, we sold 2 properties used as our operational branches. From 2002 to 2007, we sold 187 properties used
as our operational branches.

During 2004, we sold 75 properties, which 27 properties in the amount of R$57 (at a cost of R$33) were transactions accounted for under the financing method, where we have a continuing involvement based on our
provision of recourse financing in which the only recourse is to the leased asset. At December 31, 2007 these transactions included 9 properties in the amount of R$13 (at cost of R$10), since we had the maturity of some financings. The
proceeds from sale of the branches and interest earned from the financed contracts, net of the rental paid were recorded as income in the final maturity of the corresponding financing period, and are being deferred by the remaining time of rental
contractual terms.

In addition, the fixed assets related to outstanding transactions accounted for under the financial method are still recorded in our balance sheet, and thus subject to depreciation.

Transactions accounted for as sale-leasebacks included 160 properties (110 properties in 2002, 48 properties in 2004 and 2 properties in 2007). The proceeds from sale of these properties were R$141 (2002 
R$71 (at a cost of R$36), 2004  R$70 (at a cost of R$41) and 2007  R$4). Therefore, based on the accounting practices disclosed in note 2(k) to our financial statements, the impacts on our statement of income for the
five years ended December 31, 2007, are as follows:

|                     |  |                    |  |        |  |         |  |         |  |       
|-------------------- |  | ------------------ |  | ------ |  | ------- |  | ------- |  | ------
|                     |  | As of December 31,
|                     |  |                    |  |       
|                     |  | 2003               |  | 2004   |  | 2005    |  | 2006    |  | 2007  
|                     |  |                    |  |        |  |         |  |         |  |       
|Deferral of net gain |  | R$   5             |  | R$   7 |  | R$   7  |  | R$   7  |  | R$   9
|Rental expenses      |  | R$   5             |  | R$   6 |  | R$   11 |  | R$   12 |  | R$   4

For all transactions that were qualified as sale-leasebacks involving operating leases, we recorded the sale, and removed all property from the balance sheet. The transactions that were not qualify for sale-leaseback
accounting because of any form of continuing involvement were accounted by the financing method.

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Note 13 - Other Assets

|                                                       |  |                    |  |            
|------------------------------------------------------ |  | ------------------ |  | -----------
|                                                       |  | As of December 31,
|                                                       |  |                   
|                                                       |  | 2006               |  | 2007       
|                                                       |  |                    |  |            
|Deferred tax assets, net (note 18)                     |  | R$   2,009         |  | R$   1,902 
|Restricted escrow deposits for contingencies (note 29) |  | 2,063              |  | 1,810      
|Prepaid taxes                                          |  | 1,352              |  | 1,822      
|Notes and credits receivable                           |  | 291                |  | 303        
|Prepaid expenses                                       |  | 803                |  | 932        
|Negotiation and intermediation of securities           |  | 127                |  | 822        
|Income receivable                                      |  | 158                |  | 320        
|Insurance premiums receivable                          |  | 189                |  | 336        
|Foreclosed assets, net                                 |  | 168                |  | 147        
|Foreign exchange portfolio, net                        |  | 852                |  | 1,149      
|Others                                                 |  | 702                |  | 988        
|                                                       |  |                    |  |            
|Total                                                  |  | R$   8,714         |  | R$   10,531
|                                                       |  |                    |  |            

Note 14  Time Deposits

The following table shows the maturity of outstanding deposits with balances issued by us.

|                                             |             |                    |             |       
|-------------------------------------------- | ----------- | ------------------ | ----------- | ------
|                                             |             | As of December 31,
|                                             |             |                   
|                                             |             | 2006               |             | 2007  
|                                             |             |                    |             |       
|Maturity within 3 months                     | R$   3,825  |                    | R$   3,816 
|Maturity after 3 months but within 6 months  |             | 3,839              |             | 2,215 
|Maturity after 6 months but within 12 months |             | 2,123              |             | 4,376 
|Maturity after 12 months                     |             | 14,606             |             | 13,194
|                                             |             |                    |             |       
|Total deposits                               | R$   24,393 |                    | R$   23,601
|                                             |             |                    |            

Note 15 - Federal Funds Purchased, Securities Sold under Repurchase Agreements and Short-term Borrowings

Financial data of our federal funds purchased, securities sold under repurchase agreements and short-term borrowings, were as follows:

|                                                                     |  |                    |  |            
|-------------------------------------------------------------------- |  | ------------------ |  | -----------
|                                                                     |  | As of December 31,
|                                                                     |  |                   
|                                                                     |  | 2006               |  | 2007       
|                                                                     |  |                    |  |            
|Federal funds purchased, securities sold under repurchase agreements |  | R$   16,991        |  | R$   27,197
|Short-term borrowings                                                |  |                    |  |            
|Import and export financings                                         |  | 2,420              |  | 4,057      
|Other interbank borrowings                                           |  | 533                |  | 3,452      
|Others                                                               |  | 92                 |  | 118        
|                                                                     |  |                    |  |            
|Total                                                                |  | R$   20,036        |  | R$   34,824
|                                                                     |  |                    |  |            

Import and export financings represent credit lines open for financing imports and exports of Brazilian companies, typically denominated in foreign currency. We then make corresponding extensions
of credit to exporters/importers denominated in Brazilian reais with payments made to us (in the case of exports) or paid by us (in the case of imports) in foreign currency.

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The following table presents the federal funds purchased, securities sold under repurchase agreements and short-term borrowings by maturities.

|                                                                         |       |                    |        |            
|------------------------------------------------------------------------ | ----- | ------------------ | ------ | -----------
|                                                                         |       | As of December 31,
|                                                                         |       |                   
|                                                                         |       | 2006               |        | 2007       
|                                                                         |       |                    |        |            
|Federal funds purchased and securities sold under repurchase agreements: |       |                    |       
|Overnight                                                                |       | R$   4,117         |        | R$   5,566 
|Due 1 month or less                                                      | 1,207 |                    | 5,991 
|Due between 1 and 3 months                                               |       | 1,033              |        | 1,943      
|Due between 3 and 6 months                                               |       | 1,138              |        | 2,920      
|Due after 6 months                                                       | 9,496 |                    | 10,777
|                                                                         |       |                    |       
|Total                                                                    |       | 16,991             |        | 27,197     
|                                                                         |       |                    |        |            
|                                                                        
|Short-term borrowings:                                                   |       |                    |       
|Due 1 month or less                                                      | 358   |                    | 1,661 
|Due between 1 and 3 months                                               |       | 382                |        | 1,748      
|Due between 3 and 6 months                                               |       | 613                |        | 1,377      
|Due after 6 months                                                       | 1,692 |                    | 2,841 
|                                                                         |       |                    |        |            
|Total                                                                    |       | 3,045              |        | 7,627      
|                                                                         |       |                    |        |            
|Total                                                                    |       | R$   20,036        |        | R$   34,824
|                                                                         |       |                    |        |            

The following table presents a summary of the primary short-term borrowings.

|                                                  |  |                             |  |            
|------------------------------------------------- |  | --------------------------- |  | -----------
|                                                  |  | As of or for the Year Ended
|                                                  |  |                            
|                                                  |  | 2006                        |  | 2007       
|                                                  |  |                             |  |            
|Federal funds purchased and securities sold under |  |                             |  |            
|repurchase agreements:                            |  |                             |  |            
|Amount outstanding                                |  | R$   16,991                 |  | R$   27,197
|Maximum amount outstanding during the period      |  | 17,939                      |  | 27,666     
|Weighted average interest rate at period-end      |  | 13.2%                       |  | 11.1%      
|Average amount outstanding during period          |  | 14,459                      |  | 23,272     
|Weighted average interest rate                    |  | 11.9%                       |  | 10.1%      
|Import and export financing:                      |  |                             |  |            
|Amount outstanding                                |  | R$   2,420                  |  | R$   4,057 
|Maximum amount outstanding during the period      |  | 2,932                       |  | 4,222      
|Weighted average interest rate at period-end      |  | 6.7%                        |  | 6.9%       
|Average amount outstanding during period          |  | 2,440                       |  | 3,372      
|Weighted average interest rate                    |  | (0.3)%                      |  | 4.2%       
|Other interbank borrowings:                       |  |                             |  |            
|Amount outstanding                                |  | R$   533                    |  | R$   3,452 
|Maximum amount outstanding during the period      |  | 803                         |  | 3,452      
|Weighted average interest rate at period-end      |  | 5.5%                        |  | 5.3%       
|Average amount outstanding during period          |  | 363                         |  | 1,502      
|Weighted average interest rate                    |  | 4.6%                        |  | 0.8%       
|Others                                            |  | R$   92                     |  | R$   118   
|                                                  |  |                             |  |            
|Total                                             |  | R$   20,036                 |  | R$   34,824
|                                                  |  |                             |  |            

Note 16 - Long-term Debt

The composition of long-term debt is as follows:

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|                                               |  |                    |  |            
|---------------------------------------------- |  | ------------------ |  | -----------
|                                               |  | As of December 31,
|                                               |  |                   
|                                               |  | 2006               |  | 2007       
|                                               |  |                    |  |            
|Local onlendings                               |  | R$   6,535         |  | R$   8,610 
|Subordinated debt                              |  | 3,240              |  | 5,757      
|Notes issued under securitization arrangements |  | 1,644              |  | 1,621      
|Mortgage indebtedness                          |  | 1,272              |  | 418        
|Euronotes                                      |  | 1,029              |  | 1,369      
|Debentures                                     |  | 765                |  | 2,747      
|Foreign onlendings                             |  | 64                 |  | 8          
|Agricultural notes                             |  | -                  |  | 1,052      
|Obligations under capital leases               |  | 63                 |  | 120        
|Others                                         |  | 26                 |  | 12         
|                                               |  |                    |  |            
|Total                                          |  | R$   14,638        |  | R$   21,714
|                                               |  |                    |  |            

Local onlendings

Local onlendings represent amounts borrowed from Brazilian agencies for loans to Brazilian entities to invest primarily in premises and equipment. These amounts are due in monthly installments through 2025 and bear
fixed interest between 1% per annum and 2.5% per annum, in 2006 and 0.5% per annum and 3.8% per annum, in 2007, plus variable interest based on the TJLP (Long-term interest rate determined by the Central Bank on a quarterly basis, not
inflation-adjusted), U.S. dollar or the BNDES (National Economic and Social Development Bank) basket of currencies. The borrowings are primarily from BNDES and FINAME (National Industrial Finance Authority) in the form of credit lines.

Subordinated debt

|                                                                     |  |               |  |               |  |                 |  |                 |  |         
|-------------------------------------------------------------------- |  | ------------- |  | ------------- |  | --------------- |  | --------------- |  | --------
|                                                                     |  |               |  |               |  |                 |  | Carrying amount
|                                                                     |  |               |  |               |  |                 |  |                
|                                                                     |  |               |  |               |  | Remuneration    |  |                 |  |         
|                                                                     |  | Issue         |  | Maturity      |  | per annum       |  | 2006            |  | 2007    
|                                                                     |  |               |  |               |  |                 |  |                 |  |         
|Step-up subordinated  callable notes (1)                             |  | April 2002    |  | April 2012    |  | 9.38%           |  | 412             |  | -       
|Step-up subordinated callable notes (2)                              |  | December 2003 |  | December 2013 |  | 7.38%           |  | 414             |  | 347     
|Floating subordinated notes (3)                                      |  | December 2004 |  | December 2009 |  | 4.74%           |  | 321             |  | 266     
|Perpetual Non-cumulative Junior 
        Subordinated securities (4) |  | July 2005     |  | No stated     |  | 8.70%           |  | 1,085           |  | 899     
|Subordinated time deposits (5)                                       |  | December 2002 |  | December 2012 |  | 102% of CDI (8) |  | 443             |  | 495     
|Subordinated time deposits (5)                                       |  | November 2003 |  | November 2013 |  | 102% of CDI (8) |  | 65              |  | 73      
|Subordinated time deposits (6)                                       |  | December 2006 |  | December 2016 |  | 0.47% + CDI (8) |  | 500             |  | 562     
|Subordinated time deposits (7)                                       |  | May 2007      |  | May 2012      |  | 104% of CDI (8) |  | -               |  | 1,508   
|Subordinated time deposits (7)                                       |  | July 2007     |  | July 2012     |  | 0.38% + CDI (8) |  | -               |  | 444     
|Subordinated time deposits (7)                                       |  | August 2007   |  | August 2012   |  | 0.38% + CDI (8) |  | -               |  | 209     
|Subordinated time deposits (7)                                       |  | August 2007   |  | August 2014   |  | 0.46% + CDI (8) |  | -               |  | 52      
|Subordinated time deposits (7)                                       |  | October 2007  |  | October 2012  |  | 7% + IGPM       |  | -               |  | 301     
|Subordinated time deposits (7)                                       |  | October 2007  |  | October 2012  |  | 104% of CDI (8) |  | -               |  | 95      
|Subordinated time deposits (7)                                       |  | October 2007  |  | October 2014  |  | 7% + IGPM       |  | -               |  | 35      
|Subordinated time deposits (7)                                       |  | October 2007  |  | October 2012  |  | 0.45% + CDI (8) |  | -               |  | 461     
|Subordinated time deposits (7)                                       |  | December 2007 |  | December 2014 |  | 0.60% + CDI (8) |  | -               |  | 10      
|                                                                     |  |               |  |               |  |                 |  |                 |  |         
|Total                                                                |  |               |  |               |  |                 |  | R$ 3,240        |  | R$ 5,757
|                                                                     |  |               |  |               |  |                 |  |                 |  |         

|_______________
|---------------
|(1)            
|               
|(2)            
|               
|(3)            
|               
|(4)            

F-45

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Table of Contents

|(5) | The debts can be redeemed as from December 2007 and November 2008, respectively.
|--- | --------------------------------------------------------------------------------
|    |                                                                                 
|(6) | The debts can be redeemed as from December 2011.                                
|    |                                                                                 
|(7) | The debt can not be redeemed prior to contractual maturity.                     
|    |                                                                                 
|(8) | CDI.                                                                            

Notes issued under securitization arrangements

The Branch has entered into a series of securitization transactions involving future flows of US dollar denominated electronic remittance payment orders (DPRs), pursuant to which the Head Office through the
Branch, sold DPRs to UBB Diversified Payment Rights Finance Company (UBB),with the purpose of acquiring US dollar payment orders received and processed by the Head Office through its correspondent banks and using them as an underlying asset that
guarantees note issuances in the international capital markets. A variable interest entity in which we are the primary beneficiary as under FIN 46R.

UBB pays for the DPRs purchased with funds received from notes issued that are collateralized by the DPRs. Upon the occurrence of certain events which have a material adverse effect on the existence of future flows of
DPRs, the Branch is required to repurchase the DPRs from UBB so that it may redeem any outstanding notes.

|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|------------- |  | -------------------------------- | ----- | -------------- | -------- | --------------- | ------ | ------------------------ | ---- | ------------------ | ---- | ----------
|              |  | Original
principal
amount issued |       |                |          |                 |        |                          |      | As of December 31,
|              |  |                                  |       |                |          |                 |        |                          |     
|              |  |                                  | Issue |                | Maturity |                 | Coupon |                          | 2006 |                    | 2007
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|Series 2002-1 |  | US$105 million                   |       | May 2002       |          | January 2016(1) |        | 3-month LIBOR (5)+ 1.20% |      | 221                |      | 219       
|             
|Series 2003-2 |  | US$105 million                   |       | June 2003      |          | July 2009(1)    |        | 6.50%                    |      | 138                |      | 66        
|             
|Series 2003-3 |  | US$227 million                   |       | November 2003  |          | October 2013(2) |        | 3-month LIBOR (5)+1.35%  |      | 517                |      | 349       
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|Series 2004-1 |  | US$200 million                   |       | May 2004       |          | July 2015(3)    |        | 3-month LIBOR (5)+ 0.80% |      | 441                |      | 359       
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|Series 2004-2 |  | US$150 million                   |       | September 2004 |          | July 2014(4)    |        | 3-month LIBOR (5)+ 0.23% |      | 327                |      | 269       
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|Series 2005-1 |  | US$200 million                   |       | April 2007     |          | April 2014      |        | 3-month LIBOR (5)+ 0.18% |      | -                  |      | 359       
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           
|              |  |                                  |       |                |          |                 |        |                          |      | R$   1,644         |      | R$   1,621
|              |  |                                  |       |                |          |                 |        |                          |      |                    |      |           

|_______________
|---------------
|(1)            
|               
|(2)            
|               
|(3)            
|               
|(4)            
|               
|(5)            

Mortgage indebtedness

Mortgage indebtedness represents borrowings with original terms generally between 15 and 33 months in 2006 and 6 and 60 months in 2007 and bears interest of TRF-R (Floating Reference Rate established daily by the
Central Bank) plus 11.5% per annum to 14.5% per annum in 2006 and 80% to 90% of CDI, in 2007.

These instruments are regularly rolled forward for periods of more than one year, and are entirely collateralized by housing loans.

F-46

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Euronotes

|                   |  |                                    |          |     |        |        |                   |                         |      |           
|------------------ |  | ---------------------------------- | -------- | --- | ------ | ------ | ----------------- | ----------------------- | ---- | ----------
|                   |  | Originalterm in
          years(a) |          |     |        |        |                   | Carrying amount (net of
|                   |  |                                    |          |     |        |        | repurchases)as of
|                   |  |                                    |          |     |        |        | December 31,     
|                   |  |                                    |          |     |        |        |                  
|Maturity date(a)   |  |                                    | Currency |     | Coupon |        | 2006              |                         | 2007
|                   |  |                                    |          |     |        |        |                   |                         |      |           
|March 6, 2007      |  | 0.3                                |          | US$ |        | -      |                   | R$   12                 |      | R$   -    
|March 19, 2007     |  | 0.3                                |          | US$ |        | 12.35% |                   | 16                      |      | -         
|March 26, 2007     |  | 0.3                                |          | US$ |        | -      |                   | 24                      |      | -         
|March 29, 2007     |  | 0.3                                |          | US$ |        | -      |                   | 11                      |      | -         
|May 25, 2007       |  | 1                                  |          | US$ |        | 14.75% |                   | 13                      |      | -         
|June 11, 2007      |  | 2                                  |          | US$ |        | 5.35%  |                   | 20                      |      | -         
|December 12, 2008  |  | 2.3                                |          | YEN |        | 1.00%  |                   | 318                     |      | 283       
|July 15, 2009      |  | 5                                  |          | US$ |        | 9.49%  |                   | 11                      |      | 15        
|July 15, 2009      |  | 5                                  |          | US$ |        | 7.74%  |                   | 31                      |      | 15        
|December 09, 2009  |  | 6                                  |          | US$ |        | 8.25%  |                   | 22                      |      | 18        
|February 11, 2010  |  | 5                                  |          | R$  |        | 8.70%  |                   | 231                     |      | 214       
|October 15, 2010   |  | 4.8                                |          | US$ |        | 6.50%  |                   | 19                      |      | 12        
|December 30, 2013  |  | 10                                 |          | US$ |        | 7.25%  |                   | 4                       |      | 2         
|January 02, 2014   |  | 10                                 |          | US$ |        | 7.25%  |                   | 6                       |      | 1         
|June 30, 2015      |  | 10.7                               |          | US$ |        | 12.75% |                   | 20                      |      | -         
|First quarter 2008 |  | 0.3                                |          | US$ |        | (b)    |                   | -                       |      | 400       
|Others             |  |                                    |          |     |        |        |                   | 271                     |      | 409       
|                   |  |                                    |          |     |        |        |                   |                         |      |           
|Total              |  |                                    |          |     |        |        |                   | R$   1,029              |      | R$   1,369
|                   |  |                                    |          |     |        |        |                   |                         |      |           

______________________________
(a) Maturity date and original term in years, consider, when applicable, the investor put rights.
(b) Coupon between 5.20% and 5.45%.

Agricultural notes

Agricultural notes represents borrowings with original terms generally between 2 and 35 months and bears interest 87% to 92.5% of CDI.

Maturity of long-term debt

|           |  |                    |  |            
|---------- |  | ------------------ |  | -----------
|           |  | As of December 31,
|           |  |                   
|           |  | 2006               |  | 2007       
|           |  |                    |  |            
|2007       |  | R$   4,787         |  | R$   -     
|2008       |  | 2,291              |  | 5,806      
|2009       |  | 1,647              |  | 2,674      
|2010       |  | 2,120              |  | 3,537      
|2011       |  | 595                |  | 1,008      
|2012       |  | 923                |  | 4,626      
|Thereafter |  | 2,275              |  | 4,063      
|           |  |                    |  |            
|Total      |  | R$   14,638        |  | R$   21,714
|           |  |                    |  |            

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Note 17 - Other Liabilities

|                                                                |  |                    |  |            
|--------------------------------------------------------------- |  | ------------------ |  | -----------
|                                                                |  | As of December 31,
|                                                                |  |                   
|                                                                |  | 2006               |  | 2007       
|                                                                |  |                    |  |            
|                                                               
|Pension investment contracts                                    |  | R$   6,328         |  | R$   7,924 
|Provision for litigations (note 29)                             |  | 2,968              |  | 4,099      
|Payable to merchants - credit card                              |  | 3,202              |  | 4,327      
|Insurance claims reserve                                        |  | 1,672              |  | 1,941      
|Income taxes and other taxes payable                            |  | 831                |  | 1,169      
|Social and statutory                                            |  | 647                |  | 1,042      
|Accounts pending settlement                                     |  | 310                |  | 824        
|Retirement plan reserve                                         |  | 461                |  | 515        
|Collection of third-party taxes, social contributions and other |  | 623                |  | 736        
|Derivatives liability (note 27):                                |  |                    |  |            
|Swaps                                                           |  | 226                |  | 1,839      
|Forward contracts                                               |  | 197                |  | 597        
|Option contracts                                                |  | 329                |  | 906        
|Non deliverable forward                                         |  | 12                 |  | 173        
|Employee related liabilities                                    |  | 238                |  | 310        
|Others                                                          |  | 2,355              |  | 3,378      
|                                                                |  |                    |  |            
|Total                                                           |  | R$   20,399        |  | R$   29,780
|                                                                |  |                    |  |            

Note 18 - Income Taxes

Under the Brazilian Income Tax Law, Holdings, Unibanco and our subsidiaries are treated as separate taxable entities and are required to file a separate tax return.

HOLDINGS

Dividends received and equity in Unibancos undistributed earnings are not subject to Brazilian federal income tax and social contribution.

UNIBANCO

Income taxes in Brazil comprise federal income tax of 25% and social contribution of 9%, which is an additional federal tax, resulting in a statutory tax rate of 34%. See note 33 (a) for further discussion about future
changes in the tax law.

The amounts reported as income tax expense in the consolidated financial statements are reconciled to the statutory rates as follows:

|                                                                       |  |                                 |  |            |  |             
|---------------------------------------------------------------------- |  | ------------------------------- |  | ---------- |  | ------------
|                                                                       |  | For the year ended December 31,
|                                                                       |  |                                
|                                                                       |  | 2005                            |  | 2006       |  | 2007        
|                                                                       |  |                                 |  |            |  |             
|                                                                      
|Income before income taxes                                             |  | R$   2,268                      |  | R$   2,642 |  | R$   5,633  
|Less: Equity in results of unconsolidated companies                    |  | 158                             |  | 195        |  | 261         
|                                                                       |  |                                 |  |            |  |             
|Tax basis                                                              |  | 2,110                           |  | 2,447      |  | 5,372       
|                                                                       |  |                                 |  |            |  |             
|Tax expense at statutory rates                                         |  | (717)                           |  | (832)      |  | (1,826)     
|                                                                       |  |                                 |  |            |  |             
|Adjustments to derive effective tax rate:                              |  |                                 |  |            |  |             
|Tax benefit on interest on capital stock paid to our shareholders, net |  | 260                             |  | 325        |  | 468         
|Non-deductible losses on foreign assets                                |  | (51)                            |  | (33)       |  | (221)       
|Non-taxable gain on sale of shares of equity investee                  |  | -                               |  | -          |  | 218         
|Derecognition of tax benefits                                          |  | -                               |  | -          |  | (48)        
|Other permanent differences, net                                       |  | 48                              |  | 8          |  | 63          
|                                                                       |  |                                 |  |            |  |             
|Income tax expense                                                     |  | R$   (460)                      |  | R$   (532) |  | R$   (1,346)
|                                                                       |  |                                 |  |            |  |             

As an option for profit distribution, the payment to shareholders of tax-deductible interest on capital stock was introduced as from January 1, 1996 based on the application of the long-term interest rate
(Taxa de Juros de Longo Prazo or TJLP) on net equity accounts (excluding certain equity accounts), and to treat those payments as a deductible expense for purposes of calculating corporate income tax and, since 1997, the social
contribution on net income. The amount of the tax deduction in each year is limited to the greater of (i) 50.0% of our net income (after the deduction of social contribution on net income but before considering the mentioned distribution and any
deduction of income tax) for the period in respect of which the payment is made; or (ii) 50.0% of our accumulated profits and profit reserves at the beginning of the relevant period. Payments of interest on capital stock, net of withholding income
tax, may be considered as part of the mandatory dividend distribution. Under applicable law, we are required to pay to our shareholders an amount sufficient to ensure that the net amount they receive in respect of interest on capital stock, after
payment of any applicable withholding tax, plus the amount of distributed dividends, is at least equivalent to the minimum mandatory dividend amount.

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The major components of the deferred tax accounts in the consolidated balance sheet are as follows:

|                                                                                                                                                          |  |                    |  |         
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | --------
|                                                                                                                                                          |  | As of December 31,
|                                                                                                                                                          |  |                   
|                                                                                                                                                          |  | 2006               |  | 2007    
|                                                                                                                                                          |  |                    |  |         
|                                                                                                                                                         
|Provision for loan losses                                                                                                                                 |  | R$ 689             |  | R$ 843  
|Other provisions not currently deductible (mainly provision for litigations)                                                                              |  | 867                |  | 1,407   
|Tax benefit on reorganization of subsidiaries                                                                                                             |  | 62                 |  | -       
|Tax losses carryforwards                                                                                                                                  |  | 581                |  | 389     
|Fair value adjustments on securities and derivatives financial instruments                                                                                |  | 25                 |  | -       
|Valuation allowance                                                                                                                                       |  | -                  |  | (114)   
|Other temporary differences                                                                                                                               |  | 222                |  | 367     
|                                                                                                                                                          |  |                    |  |         
|Deferred tax assets                                                                                                                                       |  | 2,446              |  | 2,892   
|                                                                                                                                                          |  |                    |  |         
|Effect of differences between indexes used for price-level restatement purposes for tax and U.S. GAAP purposes, mainly relating to premises and equipment |  | 7                  |  | 4       
|Temporary differences relative to leasing depreciation                                                                                                    |  | 88                 |  | 280     
|Tax benefit on reorganization of subsidiaries                                                                                                             |  | -                  |  | 141     
|Fair value adjustments on securities and derivatives financial intruments                                                                                 |  | -                  |  | 35      
|Other temporary differences                                                                                                                               |  | 342                |  | 530     
|                                                                                                                                                          |  |                    |  |         
|Deferred tax liabilities                                                                                                                                  |  | 437                |  | 990     
|                                                                                                                                                          |  |                    |  |         
|Net deferred tax asset, included in other assets                                                                                                          |  | R$ 2,009           |  | R$ 1,902
|                                                                                                                                                          |  |                    |  |         

The tax loss carryforwards have no expiration date, but are subject to a limitation of 30% of taxable income for the year. No valuation allowances have been created for these tax losses carryforwards, since we currently
believe the realization of these future tax benefits to be more likely than not.

We adopted the provisions of FASB Interpretation No. 48  Accounting for Uncertainty in Income Taxes, effective the beginning of the year of 2007 and a reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:

|Balance at January 1, 2007                  | R$ 346
|------------------------------------------- | ------
|Additions for tax positions of prior years  | 484   
|Reductions for tax positions of prior years | (1)   
|Settlements                                 | (4)   
|Balance at December 31, 2007                | R$ 825

Of the above balance at the end of the year, approximately R$212 represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. Included in
the additions for tax positions of prior years are R$155 of which R$107 were recorded against deferred tax assets. Because of the impact of deferred tax accounting such tax positions do not affect the annual
effective tax.

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We recognize interest accrued and penalties related to unrecognized tax benefits in other non interest expenses. During the years ended December 31, 2007, 2006, and 2005, we recognized approximately R$329, R$18,
and R$88 in interest and penalties. We had approximately R$506 and R$182 for the payment of interest and penalties accrued at December 31, 2007, and 2006, respectively.

As of December 31, 2007, we have been involved in several tax disputes, including judicial lawsuits and administrative proceedings, mainly relating to the constitutionality and legality of certain taxes imposed on us by
the Brazilian government, among which the most relevant are related to: (i) deductibility of taxes and interests thereon which collection is restrained, representing R$394, and (ii) the imposition of social contribution taxes on income (CSLL) on
companies with no employees, representing R$206.

Although it is possible that a change in the gross balance of unrecognized tax benefits may occur within 12 months of December 31, 2007, we cannot quantify an estimated range at this time due to the uncertainty of the
potential outcome of outstanding issues in Brazilian courts. However, we do not anticipate any adjustments would result in a material change to its financial position.

We file income tax returns in the Brazilian federal jurisdiction, the major tax jurisdictions in which we operate, and we are no longer subject to examinations by Brazilian tax authority for tax years prior to 2003.

Note 19 - Shareholders Equity, Shareholders and Board of Directors Meetings

HOLDINGS

On December 31, 2005, 2006 and 2007, the capital of Holdings comprised the following shares, without par value:

|                            |  |                    |  |               |  |              
|--------------------------- |  | ------------------ |  | ------------- |  | -------------
|                            |  | As of December 31,
|                            |  |                   
|                            |  | 2005(1)            |  | 2006(1)       |  | 2007         
|                            |  |                    |  |               |  |              
|                           
|Voting common shares        |  | 553,735,904        |  | 553,735,904   |  | 553,735,904  
|Non-voting preferred shares |  | 1,106,931,840      |  | 1,089,851,783 |  | 1,089,851,783
|                            |  |                    |  |               |  |              
|Total shares                |  | 1,660,667,744      |  | 1,643,587,687 |  | 1,643,587,687
|                            |  |                    |  |               |  |              




On December 31, 2007, the market value of Units was R$24.73.

The preferred shares have no voting rights, but are entitled to receive (i) priority in the distribution of a semi-annual minimum dividend equal to the greater of (a) R$0.15 (fifteen cents) per twenty shares
(adjusted for any applicable share split or reserve share split) or (b) 1.5% per share, at book value resulting in an annual priority dividend of 3% (three percent) per share, at book value; (ii) participation on the same basis as the common shares
in the distribution of dividends, after the common shares ́ rights to receive its respective dividends; (iii) priority in the reimbursement of capital in the case of liquidation of Holdings up to the amount of capital represented by such
preferred shares and (iv) participation in equal conditions with common shareholders in capital increases resulting from the capitalization of reserves and profits and monetary adjustments.

The Extraordinary Shareholders Meeting of Holdings held on June 29, 2006, amended the bylaws of Holdings in order to clarify its policies with respect to the use of profits accrued at the end of each fiscal year,
including the payment of dividends for each fiscal year. As of June 29, 2006, Holdings bylaws set forth the following relevant provisions:

- Holdings shall distribute as dividends the net profits accrued in the previous fiscal year, which remain after the deduction of the legal reserve and of the contingency reserve. The net profits that will be distributed to Holdings shareholders as dividends are derived from the dividend payments that Holdings receives from us in available funds.

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- After the distribution of the mandatory dividends, Holdings may distribute additional dividends with funds from the equalization of equity reserve created by the Extraordinary Shareholders Meeting of Holdings on June 29, 2006, in order to assure
that Holdings profits are equal to the income that it receives from its shares of us.
- Before the annual shareholders meeting, Holdings Board of Directors may determine the payment of interim dividends out of earnings based on (i) semiannual balance sheets or earning reserves; or (ii) balance sheets issued on shorter periods, in
which case the distribution of dividends shall not exceed the amount of capital reserves. These interim payments may be offset against the annual mandatory dividend.

Our preferred shares and those of Holdings are traded also in the form of share deposit certificates (Units) or global depositary shares (GDS"). Each GDS represents 10 Units and is traded in the
international market. Each Unit represents one of our preferred shares, and one preferred share of Holdings.

At the Holdings ́Extraordinary Shareholders Meeting held on June 29, 2006, it was also approved the increase of Holdings ́ capital stock in the amount of R$2,692 through the capitalization of retained
earnings, with the issuance of 813,253,815 new shares , entitling each shareholders of Holdings to receive a share bonus  in 100% proportion by the record date registered on July 17, 2006.

As a result, on July 17, 2006, the amounts and prices of Units were adjusted in accordance with the issuance of the above mentioned share bonus  and those approved by our shareholders on the same date. This issuance
entitled every shareholder of the companies to receive one new Unit for each Unit currently held on this date. Shares kept in treasury were not affected by this action. At the same time, the price of each Unit was reduced by half. For accounting
purposes, the above mentioned share bonus  was considered to be a stock split. Therefore, the disclosed quantity of common and preferred shares regarding the years of 2006 and 2005 and calculations of earnings per share for those years were
adjusted to reflect those share bonus  occurred in 2006. According to the provisions of the Brazilian Federal Revenue (Receita Federal do Brasil), the Units cost that shall be ascribed to the new shares is R$3.31 for the Holdings
shares.

Appropriated retained earnings -Brazilian law and the Holdings by-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis. The purpose and basis of
appropriation to such reserves are described below:

Legal reserve - this reserve is required for all Brazilian corporations and represents the appropriation of 5% of the net income in the statutory accounting records up to a limit of 20% of capital share.

Contingency Reserveaccording to Holdings by-laws, portion of the profits may be allocated to the constitution of this reserve.

Equalization of Equity Reservethis reserve shall have the purpose to assure the equalization of Holdings profits with the incomes coming from the investments on its controlled
company, and shall contemplate the remaining balance of the net profit, after distribution of the mandatory dividends, up to the limit of the capital.

Special dividends reserves - represents the amount of profits verified in Holdings' subsidiaries during the fiscal years from 1989 to 1993 and based upon the fiscal regime set forth in Article 35 of law
No. 7,713 of Dec. 22, 1988 and Article 75 of Law 8,383, of Dec. 30, 1991 and in the CST Declaratory Act n°  49 of Sep. 23, 1994.

There are no Unappropriated retained earnings in Holdings statutory accounts (Brazilian GAAP) on December 31, 2006 and 2007.

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UNIBANCO

On December 31, 2005, 2006 and 2007, our capital comprised the following shares, without par value:

|                            |  |                    |  |               |  |              
|--------------------------- |  | ------------------ |  | ------------- |  | -------------
|                            |  | As of December 31,
|                            |  |                   
|                            |  | 2005(1)            |  | 2006(1)       |  | 2007         
|                            |  |                    |  |               |  |              
|                           
|Voting common shares        |  | 1,511,316,336      |  | 1,511,316,336 |  | 1,511,316,336
|Non-voting preferred shares |  | 1,306,400,328      |  | 1,296,439,472 |  | 1,296,439,472
|                            |  |                    |  |               |  |              
|Total shares                |  | 2,817,716,664      |  | 2,807,755,808 |  | 2,807,755,808
|                            |  |                    |  |               |  |              




On December 31, 2007, the fair value of the Units was R$24.73.

Except in certain circunstances our preferred shares of Unibanco carry no voting rights, but have priority over common shareholders in the return of capital, without a premium, in the case of our liquidation, up to the
amount of capital represented by such preferred shares, and the right to receive a priority dividend per share at least 10% greater than that distributed per share to common shareholders. In addition, the holders of our preferred shares are entitled
to participate, on an equal basis with holders of our common shares, in capital increases resulting from the capitalization of reserves, profits and monetary adjustments.

Our bylaws contain the following provisions with respect to dividends for each fiscal year:

- The distributable amount for each fiscal year is equal to our net profit less the legal, contingency, statutory and unrealized income reserves;
- Our mandatory dividend is equal to 35% of the distributable amount, to the extent profits are available for distribution. The management is entitled to decide upon the distribution of a higher amount, and it usually decides to distribute an amount
slightly higher than the mandatory dividend.
- For each preferred share, we must pay more 10% of the dividend paid with respect to each common share;
- Before the annual shareholders meeting, our Board of Directors may determine the payment of interim dividends out of earnings based on (i) semiannual balance sheets or earning reserves; or (ii) balance sheets issued on shorter periods, in which case
the distribution of dividends shall not exceed the amount of capital reserves. These interim payments may be offset against the annual mandatory dividend.

At our Extraordinary Shareholders Meeting held on June 29, 2006 our shareholders approved an increase of the capital stock in the amount of R$3,000 through the partial capitalization of statutory reserves, with the
consequent issuance of 1,398,897,476 new shares, entitling each of our shareholders to receive a share bonus  in 100% proportion, by the record date registered on July 17, 2006, designated after the approval given by the Brazilian Central Bank on
July 7, 2006.

As a result, on July 17, 2006, the amounts and prices of Units were adjusted in accordance with the issuance of the above mentioned share bonus  and those approved by Holdings on the same date. This issuance entitled
every our shareholder to receive one new Unit for each Unit currently held on this date. Shares kept in the treasury were not affected by this action. At the same time, the price of each Unit was reduced by half. For accounting purposes, the share
bonus was considered to be a stock split. Therefore, the disclosed quantity of common and preferred shares regarding the years of 2006, 2005 and the calculations of earnings per share for those years were adjusted to reflect those share bonus
occurred in 2006. According to the provisions of the Brazilian Federal Revenue the Units cost that shall be ascribed to the new shares is R$2.14 for our shares.

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Appropriated retained earnings -Brazilian law and the our by-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis. The purpose and basis of appropriation
to such reserves are described below:

Legal reserve - this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of the net income in the statutory accounting records up to a limit of 20% of capital
share.

Contingency Reserve according to our by-laws, portion of the profits shall be allocated to the constitution of this reserve.

Reserves for Unrealized Profitsthis reserve may be established in those fiscal years in which the amount of the mandatory dividends exceeds the effected portion of the fiscal
years net profit.

Reserves for Operating Margin- the balance shall be allocated for a reserve designed to ensure that we maintain adequate operating margin, up to one hundred percent of the capital.

Special dividends reserves- represents the amount of profits verified during the fiscal years of 1989 to 1993 and based upon the tax regimen set forth in Article 35 of Law No.7,713 of
Dec. 22, 1988 and Article 75 of Law 8,383, of Dec. 30, 1991 and in the CST Declaratory Act n°  49 of Sep. 23, 1994.

Unappropriated retained earnings in our statutory accounts (Brazilian GAAP) at December 31, 2006 and 2007 were R$1,282 and R$3,067, respectively.

Exchange Offer

We and Holdings offered to the holders of preferred shares in the Brazilian market the opportunity to exchange pairs of preferred shares for Units.

As from November 2003, a conversion program was launched, which allowed holders of our preferred shares and holders of Holdings preferred shares as of the date of the Exchange Offer Announcement to convert their pairs
of preferred shares into Units. On August 11,2005, the Brazilian Securities Commission, issued Oficio/CVM/SEP/GEA-1/No 440/05, whereby it approved the inclusion of a new data base in this conversion program. The conversion program was effective for
2 years, and expired on November 4, 2005. During the conversion program, 2,619 thousand preferred shares issued by us and by Holdings were converted into Units.

Global Offer

In 2005, we placed two well-received secondary offerings of Unit and GDS. At the first offering, in February, two shareholders, Commerzbank and BNL, sold 45,897,387 Units, for a total amount of R$718, at R$15.65
per Unit.

The second offering, with Units held by Caixa Geral de Depósitos, was completed in September of 2005. This transaction was one of the largest in the local market in the last few years and involved approximately
R$1.8 billion. The final price was R$20.49 per Unit and R$44.00 per GDS for a discount of less than 0.3% of closing price at the pricing date. It is worth mentioning that 1,415 investors participated in the offerings Brazilian
tranche, of which over 900 were individual investors.

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Note 20 - Fee and Commission Income

|                                               |  |                                 |  |          |  |         
|---------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                               |  | For the year ended December 31,
|                                               |  |                                
|                                               |  | 2005                            |  | 2006     |  | 2007    
|                                               |  |                                 |  |          |  |         
|                                              
|Banking tariffs and other fees and commissions |  | R$ 1,569                        |  | R$ 1,792 |  | R$ 1,817
|Credit card fees                               |  | 627                             |  | 738      |  | 728     
|Asset management fees                          |  | 268                             |  | 259      |  | 290     
|Collection fees                                |  | 248                             |  | 219      |  | 249     
|                                               |  |                                 |  |          |  |         
|Total                                          |  | R$ 2,712                        |  | R$ 3,008 |  | R$ 3,084
|                                               |  |                                 |  |          |  |         

Note 21  Insurance, Private Retirement Plan and Pension Investment Contracts

(a)Income

|                                 |  |                                 |  |          |  |         
|-------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                 |  | For the year ended December 31,
|                                 |  |                                
|                                 |  | 2005                            |  | 2006     |  | 2007    
|                                 |  |                                 |  |          |  |         
|                                
|Insurance premiums               |  | R$ 2,474                        |  | R$ 2,859 |  | R$ 3,342
|Pension investment contracts fee |  | 17                              |  | 16       |  | 17      
|Private retirement plan fee      |  | 125                             |  | 345      |  | 778     
|                                 |  |                                 |  |          |  |         
|Total                            |  | R$ 2,616                        |  | R$ 3,220 |  | R$ 4,137
|                                 |  |                                 |  |          |  |         

(b)Expenses

|                                                           |  |                                 |  |          |  |         
|---------------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                           |  | For the year ended December 31,
|                                                           |  |                                
|                                                           |  | 2005                            |  | 2006     |  | 2007    
|                                                           |  |                                 |  |          |  |         
|                                                          
|Adjustment to insurance and private reserves for claims    |  | R$ 864                          |  | R$ 915   |  | R$ 1,155
|Investment income credited to pension investment contracts |  | 614                             |  | 788      |  | 1,086   
|Insurance claims incurred                                  |  | 887                             |  | 1,012    |  | 1,204   
|Private retirement plans benefits expenses                 |  | 108                             |  | 264      |  | 69      
|Commission expenses                                        |  | 357                             |  | 569      |  | 891     
|                                                           |  |                                 |  |          |  |         
|Total                                                      |  | R$ 2,830                        |  | R$ 3,548 |  | R$ 4,405
|                                                           |  |                                 |  |          |  |         

Note 22 - Administrative Expenses

|                                                  |  |                                 |  |          |  |         
|------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                  |  | For the year ended December 31,
|                                                  |  |                                
|                                                  |  | 2005                            |  | 2006     |  | 2007    
|                                                  |  |                                 |  |          |  |         
|                                                 
|Net occupancy expenses for premises and equipment |  | 833                             |  | 833      |  | 860     
|Communication expenses                            |  | 547                             |  | 614      |  | 548     
|Technology expenses                               |  | 293                             |  | 327      |  | 351     
|External administrative services                  |  | 436                             |  | 548      |  | 507     
|Banking and brokerage fees                        |  | 214                             |  | 245      |  | 218     
|Advertising and publicity                         |  | 254                             |  | 264      |  | 304     
|Supplies                                          |  | 40                              |  | 38       |  | 38      
|Other                                             |  | 123                             |  | 232      |  | 156     
|                                                  |  |                                 |  |          |  |         
|Total                                             |  | R$ 2,740                        |  | R$ 3,101 |  | R$ 2,982
|                                                  |  |                                 |  |          |  |         

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Note 23 - Other Non-interest Income and Expense

|                                                     |  |                                 |  |         |  |         
|---------------------------------------------------- |  | ------------------------------- |  | ------- |  | --------
|                                                     |  | For the year ended December 31,
|                                                     |  |                                
|                                                     |  | 2005                            |  | 2006    |  | 2007    
|                                                     |  |                                 |  |         |  |         
|Other non-interest income:                           |  |                                 |  |         |  |         
|Gain on change in interest in subsidiary (Note 30)   |  | R$ -                            |  | R$ -    |  | R$ 640  
|                                                     |  |                                 |  |         |  |         
|Other non-interest income:                           |  |                                 |  |         |  |         
|Premium bond income                                  |  | R$ 128                          |  | R$ 133  |  | R$ 151  
|Gain on sale of foreclosed assets, other investments |  |                                 |  |         |  |         
|and premises and equipment (a)                       |  | 93                              |  | 54      |  | 832     
|Gain on sale of equity investees (b)                 |  | -                               |  | -       |  | 1,865   
|Monetary correction of restricted escrow deposits    |  | 19                              |  | 16      |  | 79      
|Indemnity received (c)                               |  | 238                             |  | -       |  | -       
|Others                                               |  | 524                             |  | 647     |  | 251     
|                                                     |  |                                 |  |         |  |         
|Total                                                |  | R$ 1,002                        |  | R$ 850  |  | R$ 3,178
|                                                     |  |                                 |  |         |  |         
|                                                    
|                                                     |  |                                 |  |         |  |         
|Total                                                |  | R$ 1,002                        |  | R$ 850  |  | R$ 3,818
|                                                     |  |                                 |  |         |  |         
|                                                    
|                                                     |  | For the year ended December 31,
|                                                     |  |                                
|                                                     |  | 2005                            |  | 2006    |  | 2007    
|                                                     |  |                                 |  |         |  |         
|Other non-interest expense:                          |  |                                 |  |         |  |         
|Service, revenue and other taxes                     |  | R$ 442                          |  | R$ 602  |  | R$ 650  
|Tax litigation expenses                              |  | 513                             |  | 540     |  | 641     
|Credit card selling expenses                         |  | 222                             |  | 252     |  | 324     
|Civil litigation expenses                            |  | 154                             |  | 249     |  | 478     
|Expenses related to checks and billing, net          |  | 65                              |  | 100     |  | 118     
|Exchange loss on foreign investments (d)             |  | 150                             |  | 98      |  | 651     
|National financing system contributions              |  | 105                             |  | 95      |  | 55      
|Uninsured losses of branch network                   |  | 17                              |  | 49      |  | 16      
|Statutory profit sharing                             |  | 5                               |  | 40      |  | 6       
|Loss on sale of foreclosed assets, unconsolidated    |  |                                 |  |         |  |         
|investments and premises and equipment               |  | 24                              |  | 41      |  | 53      
|Others                                               |  | 604                             |  | 654     |  | 773     
|                                                     |  |                                 |  |         |  |         
|Total                                                |  | R$ 2,301                        |  | R$2,720 |  | R$3,765 
|                                                     |  |                                 |  |         |  |         

real


Note 24  Share based compensation

The Extraordinary Shareholders Meeting held on October 31, 2001, approved a stock option plan. Under this plan, we began granting stock options, with a vesting period of at least three years, on January 21, 2002.
The objective of the stock option plan is to foster high performance and a long-term commitment from our management, in addition to attracting, retaining and motivating our Executives.

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On April 8, 2005, our shareholders approved an amendment to the stock option plan which provides that (i) Executives may not exercise their options or sell their relevant shares or Units when we or Holdings are
prohibited by law from selling our own shares or Units; (ii) option exercises may be fulfilled with treasury shares or with shares issued in capital increases; and (iii) the exercise period for options may be extended under limited circumstances
from five to eight years.

At the Extraordinary Shareholders Meeting, held on March 21, 2007, a change in the current stock option plan was approved. As a result of the amendments, our stock option plan allows the granting of two kinds of
stock options: the regular stock options and the bonus stock options.

The regular stock options are granted to certain Executives for a price based on the market price of our shares or Units at the date of such grant. A special committee, composed of four to six members elected by the
President of the Board of Officers of Unibanco, as well as of one member of the Board of Directors of Holdings, is responsible for establishing the vesting period of the stock options, which shall be between two and eight years, as well as other
specific characteristics of each grant, such as the beneficiaries and the number and amount of options. The granted share or Unit options can be exercised between 3 to 6 years from issuance. This committee may not grant options that in any year
would represent more than 1% of our total authorized capital and there may not be outstanding options representing, in the aggregate, more than 10% of our total authorized capital at any time.

The bonus stock option has become the main incentive program to executives. These executives will be able to invest a percentage of their respective received bonuses to acquire shares or Units of Unibanco or Holdings.
For each acquired shares or units, the Partner will receive certain amount of Bonus Option (options to acquire shares and Units subjected to defined vesting conditions). The exercise of these bonus units is limited to the achievement of
individual objectives and the maintenance of the propriety of their own shares without changes and burden during the exercise period. The Bonus Options can be exercised by the Partner between 3 to 5 years.

The table below presents the assumptions used to measure the fair value at reporting date for stock options classified as liability using the binomial option-pricing model.

|                                   |  |                    |  |          
|---------------------------------- |  | ------------------ |  | ---------
|                                   |  | As of December 31,
|                                   |  |                   
|                                   |  | 2006               |  | 2007     
|                                   |  |                    |  |          
|Expected volatility (1)            |  | 28.1%              |  | 35.5%    
|Risk-free interest rate (2)        |  | 11.6%              |  | 11.9%    
|Expected annual dividends per Unit |  | 3.6%               |  | 1.5%     
|Expected annual forfeited          |  | 11.2%              |  | 5.8%     
|Expected option life               |  | 3-6 years          |  | 3-6 years




We recognized compensation cost expense of R$4, R$60 and R$66 during the year ended December 31, 2005, 2006 and 2007, respectively. At December 31, 2007 the compensation cost expense is represented by
R$60 stock options classified as liability at fair value on reporting date and R$6 stock options plan classified as equity instrument at fair value on grant date. The compensation cost expense is non-taxable.

The following table summarizes the changes in stock option plans during the years ended December 31, 2005, 2006 and 2007. For 2006, the table presents the changes in stock options classified as equity and the changes in
stock option classified as liability.

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|                                   |  |             |  |           |  |             |  |           |  |           |  |          
|---------------------------------- |  | ----------- |  | --------- |  | ----------- |  | --------- |  | --------- |  | ---------
|                                   |  | 2005(1)     |  | 2006(1)  
|                                   |  |             |  |          
|                                   |  | Equity      |  | Equity    |  | Liability  
|                                   |  |             |  |           |  |             |  |          
|                                   |  | Options     |  | Weighted  |  | Options     |  | Weighted  |  | Options   |  | Weighted 
|                                   |  | (in         |  | average   |  | (in         |  | average   |  | (in       |  | average  
|                                   |  | thousands   |  | exercise  |  | thousands   |  | exercise  |  | thousands |  | exercise 
|                                   |  | of Units)   |  | price     |  | of Units)   |  | price     |  | of Units) |  | price    
|                                   |  |             |  |           |  |             |  |           |  |           |  |          
|                                   |  |             |  |           |  |             |  |           |  |           |  |          
|Balance at beginning of year       |  | 22,607,240  |  | R$   4.88 |  | 14,955,460  |  | R$   4.86 |  | 9,680,000 |  | R$   7.56
|Granted                            |  | 8,610,000   |  | 7.87      |  | -           |  | -         |  | 630,000   |  | 14.44    
|Forfeited                          |  | (3,716,002) |  | 5.14      |  | (387,382)   |  | 4.83      |  | (680,000) |  | 8.55     
|Exercised                          |  | (2,865,778) |  | 4.60      |  | (4,892,393) |  | 4.62      |  | -         |  | -        
|                                   |  |             |  |           |  |             |  |           |  |           |  |          
|Balance at the end of year         |  | 24,635,460  |  | R$   5.92 |  | 9,675,685   |  | R$   4.98 |  | 9,630,000 |  | R$   8.55
|                                   |  |             |  |           |  |             |  |           |  |           |  |          
|Options exercisable at end of year |  | 483,224     |  | 4.24      |  | 799,613     |  | 4.51      |  | -         |  | -        
|                                   |  |             |  |           |  |             |  |           |  |           |  |          

|                                   |  |             |  |           |  |           |  |           |  |           |  |          
|---------------------------------- |  | ----------- |  | --------- |  | --------- |  | --------- |  | --------- |  | ---------
|                                   |  | 2007       
|                                   |  |            
|                                   |  | Equity      |  | Liability
|                                   |  |             |  |          
|                                   |  | Options     |  | Weighted  |  |           |  | Options   |  | Weighted  |  |          
|                                   |  | (in         |  | average   |  | Aggregate |  | (in       |  | average   |  | Aggregate
|                                   |  | thousands   |  | exercise  |  | Intrinsic |  | thousands |  | exercise  |  | Intrinsic
|                                   |  | of Units)   |  | price     |  | Value     |  | of Units) |  | price     |  | Value    
|                                   |  |             |  |           |  |           |  |           |  |           |  |          
|                                  
|Balance at beginning of year       |  | 9,675,685   |  | R$   4.98 |  |           |  | 9,630,000 |  | R$   8.55 |  |          
|Granted                            |  | 1,226,808   |  | -         |  |           |  | 500,000   |  | 18.70     |  |          
|Forfeited                          |  | (197,331)   |  | 4.91      |  |           |  | (466,664) |  | 12.44     |  |          
|Exercised                          |  | (5,575,060) |  | 4.75      |  |           |  | (146,668) |  | 7.04      |  |          
|                                   |  |             |  |           |  |           |  |           |  |           |  |          
|Balance at the end of year         |  | 5,130,102   |  | R$   4.04 |  | R$   106  |  | 9,516,668 |  | R$   9.26 |  | R$   147 
|                                   |  |             |  |           |  |           |  |           |  |           |  |          
|Options exercisable at end of year |  | 643,860     |  | 5.12      |  | 13        |  | 166,668   |  | 7.04      |  | 3        
|                                   |  |             |  |           |  |           |  |           |  |           |  |          

|                         |           |               |     |                  |      |                 
|------------------------ | --------- | ------------- | --- | ---------------- | ---- | ----------------
|                         |           | Options       |     | Weighted average |      |                 
|                         |           | (in thousands |     | remaining        |      | Weighted average
|Range of exercise prices |           | of Units)     |     | contractual life |      | exercise price  
|                         |           |               |     |                  |      |                 
|R$3.89 - R$5.00          | 2,788,468 |               | 0.9 |                  | 4.70
|R$5.01 - R$10.00         | 9,661,494 |               | 1.5 |                  | 8.25
|R$10.01 - R$15.00        |           | 370,000       |     | 2.8              |      | 13.66           
|R$15.01 - R$20.00        |           | 600,000       |     | 3.6              |      | 18.32           
|R$20.01 - R$24.67        |           | 1,226,808     |     | 3.7              |      | 22.31           
|                         |           |               |     |                  |      |                 
|                         |           | 14,646,770    |     | 1.7              |      | 9.30            
|                         |           |               |     |                  |      |                 




As of December 31, 2007, there was R$60 (2006 - R$58) of total unrecognized compensation cost related to nonvested share-based compensation arrangements. In 2007, this amount is represented by R$40 (2006 -
R$54) stock options classified as liability and R$20 (2006  R$4) stock options classified as equity, which cost is expected to be recognized over a weighted average period of 2.4 years.

The total fair value of options exercisable for the years ended December 31, 2005, 2006 and 2007, was R$1, R$2 and R$5.

As of December 31, 2007, there was R$121 (2006  R$73) of total recognized compensation cost related to nonvested share based compensation arrangements. In 2007, this amount is represented by R$110
(2006  R$52) stock options classified as liability and R$11 (2006  R$21) stock options classified as equity.

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At 2006 and 2007, the total amount received from grantees by the exercise of options was R$19 and R$ 27, respectively.

The intrinsic values of the options exercised during the years ended December 31, 2005, 2006 and 2007 were R$29, R$76 and R$114, respectively.

Note 25 - Comprehensive Income

HOLDINGS

|                                                                                                                                                |  |                                 |  |          |  |         
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                                                                                                                |  | For the year ended December 31,
|                                                                                                                                                |  |                                
|                                                                                                                                                |  | 2005                            |  | 2006     |  | 2007    
|                                                                                                                                                |  |                                 |  |          |  |         
|                                                                                                                                               
|Net income reported in statement of income                                                                                                      |  | R$   920                        |  | R$ 1,068 |  | R$ 1,934
|                                                                                                                                                |  |                                 |  |          |  |         
|Unrealized gains on securities available for sale:                                                                                              |  |                                 |  |          |  |         
|Unrealized holding gains arising during the period                                                                                              |  | 95                              |  | 4        |  | 41      
|Reclassification adjustment included in net income for (i) (gains) losses on available for sale securities and (ii) other than temporary losses |  | (49)                            |  | (77)     |  | (121)   
|Unrealized losses on cash flow hedging instruments:                                                                                             |  |                                 |  |          |  |         
|Unrealized losses arising during the period                                                                                                     |  | (19)                            |  | (56)     |  | -       
|Reclassification adjustment for losses on cash flow hedging instruments included in net income (Note 1)                                         |  | -                               |  | -        |  | 75      
|                                                                                                                                                |  |                                 |  |          |  |         
|Other comprehensive income (loss) before tax                                                                                                    |  | 27                              |  | (129)    |  | (5)     
|Income tax related to items of other comprehensive income (loss)                                                                                |  | (9)                             |  | 44       |  | 2       
|                                                                                                                                                |  |                                 |  |          |  |         
|Other comprehensive income (loss), net of tax                                                                                                   |  | 18                              |  | (85)     |  | (3)     
|                                                                                                                                                |  |                                 |  |          |  |         
|Comprehensive income                                                                                                                            |  | R$   938                        |  | R$ 983   |  | R$ 1,931
|                                                                                                                                                |  |                                 |  |          |  |         

Accumulated other comprehensive income (loss) is as follows:

|                              |  |                                 |  |           |  |          
|----------------------------- |  | ------------------------------- |  | --------- |  | ---------
|                              |  | For the year ended December 31,
|                              |  |                                
|                              |  | 2005                            |  | 2006      |  | 2007     
|                              |  |                                 |  |           |  |          
|                             
|Beginning balance             |  | R$    7                         |  | R$   25   |  | R$   (60)
|Current period change         |  | 18                              |  | (85)      |  | (3)      
|Securities available for sale |  | 31                              |  | (48)      |  | (53)     
|Cash flow hedging instruments |  | (13)                            |  | (37)      |  | 50       
|                              |  |                                 |  |           |  |          
|Ending balance                |  | R$   25                         |  | R$   (60) |  | R$   (63)
|                              |  |                                 |  |           |  |          

The total accumulated other comprehensive (losses) gains includes R$38 in 2005, R$(10) in 2006 and R$(63) in 2007 of securities available for sale and R$(13) in 2005, R$(50) in 2006 and R$0 in
2007 of cash flow hedging instruments (Note 1).

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UNIBANCO

|                                                                                                                                                |  |                                 |  |          |  |         
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                                                                                                                |  | For the year ended December 31,
|                                                                                                                                                |  |                                
|                                                                                                                                                |  | 2005                            |  | 2006     |  | 2007    
|                                                                                                                                                |  |                                 |  |          |  |         
|                                                                                                                                               
|Net income reported in statement of income                                                                                                      |  | R$ 1,650                        |  | R$ 1,951 |  | R$ 3,560
|                                                                                                                                                |  |                                 |  |          |  |         
|Unrealized gains on securities available for sale:                                                                                              |  |                                 |  |          |  |         
|Unrealized holding gains arising during the period                                                                                              |  | 164                             |  | 7        |  | 71      
|Reclassification adjustment included in net income for (i) (gains) losses on available for sale securities and (ii) other than temporary losses |  | (84)                            |  | (134)    |  | (208)   
|Unrealized losses on cash flow hedging instruments:                                                                                             |  |                                 |  |          |  |         
|Unrealized losses arising during the period                                                                                                     |  | (34)                            |  | (97)     |  | -       
|Reclassification adjustment for losses on cash flow hedging instruments included in net income (Note 1)                                         |  | 1                               |  | 1        |  | 129     
|                                                                                                                                                |  |                                 |  |          |  |         
|Other comprehensive income (loss) before tax                                                                                                    |  | 47                              |  | (223)    |  | (8)     
|Income tax related to items of other comprehensive income (loss)                                                                                |  | (16)                            |  | 76       |  | 3       
|                                                                                                                                                |  |                                 |  |          |  |         
|Other comprehensive income (loss), net of tax                                                                                                   |  | 31                              |  | (147)    |  | (5)     
|                                                                                                                                                |  |                                 |  |          |  |         
|Comprehensive income                                                                                                                            |  | R$ 1,681                        |  | R$ 1,804 |  | R$ 3,555
|                                                                                                                                                |  |                                 |  |          |  |         

Accumulated other comprehensive income (loss) is as follows:

|                              |  |                                 |  |            |  |           
|----------------------------- |  | ------------------------------- |  | ---------- |  | ----------
|                              |  | For the year ended December 31,
|                              |  |                                
|                              |  | 2005                            |  | 2006       |  | 2007      
|                              |  |                                 |  |            |  |           
|                             
|Beginning balance             |  | R$   12                         |  | R$   43    |  | R$   (104)
|Current period change         |  | 31                              |  | (147)      |  | (5)       
|Securities available for sale |  | 53                              |  | (84)       |  | (90)      
|Cash flow hedging instruments |  | (22)                            |  | (63)       |  | 85        
|                              |  |                                 |  |            |  |           
|Ending balance                |  | R$   43                         |  | R$   (104) |  | R$   (109)
|                              |  |                                 |  |            |  |           

The total accumulated other comprehensive (losses) gains includes R$65 in 2005, R$(19) in 2006 and R$(109) in 2007 of securities available for sale and R$(22) in 2005, R$(85) in 2006 and R$0 in
2007 of cash flow hedging instruments (Note 1).

Note 26 - Fair Value of Financial Instruments

SFAS 107 Disclosures about Fair Value of Financial Instruments requires disclosure of fair value information about financial instruments, whether or not required to be recognized in the consolidated balance
sheet, for which it is practicable to estimate such fair value. SFAS 107 defines a financial instrument as cash, evidence of ownership interest in an entity or a contractual obligation or right that will be settled with another financial instrument.

In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flow or other valuation techniques. Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Fair value estimates derived through those techniques cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of
the instrument. SFAS 107 excludes certain financial instruments and all non-financial instruments, including intangibles, from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value
of the Bank.

The following table summarizes the carrying amount and fair value estimates for our financial instruments:

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|                                                                                                                                       |  |                    |  |             |        |             |  |            
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | ----------- | ------ | ----------- |  | -----------
|                                                                                                                                       |  | As of December 31,
|                                                                                                                                       |  |                   
|                                                                                                                                       |  | 2006               |  | 2007       
|                                                                                                                                       |  |                    |  |            
|                                                                                                                                       |  | Carrying           |  | Fair Value  |        | Carrying    |  | Fair Value 
|                                                                                                                                       |  | amount             |  |             | amount |            
|                                                                                                                                       |  |                    |  |             |        |             |  |            
|Assets                                                                                                                                 |  |                    |  |             |        |             |  |            
|Cash, due from banks, federal funds sold and securities purchased under resale agreements and interest bearing deposits in other banks |  | R$   23,449        |  | R$   23,533 |        | R$   44,104 |  | R$   44,131
|Central Bank compulsory deposits                                                                                                       |  | 5,177              |  | 5,177       |        | 6,683       |  | 6,683      
|Trading assets, including derivatives                                                                                                  |  | 9,904              |  | 9,904       |        | 12,459      |  | 12,459     
|Securities available for sale                                                                                                          |  | 7,286              |  | 7,286       |        | 11,019      |  | 11,019     
|Securities held to maturity                                                                                                            |  | 1,576              |  | 1,749       |        | 1,312       |  | 1,521      
|Gross loans, excluding leases                                                                                                          |  | 42,747             |  | 41,453      |        | 54,014      |  | 52,680     
|Liabilities                                                                                                                            |  |                    |  |             |        |             |  |            
|Deposits                                                                                                                               |  | 36,201             |  | 36,241      |        | 46,495      |  | 46,519     
|Federal funds purchased and securities sold under repurchase agreements                                                                |  | 16,991             |  | 16,991      |        | 27,197      |  | 27,197     
|Short-term borrowings                                                                                                                  |  | 3,045              |  | 3,045       |        | 7,627       |  | 7,627      
|Long-term debt                                                                                                                         |  | 14,638             |  | 14,712      |        | 21,714      |  | 21,815     
|Derivatives liabilities (a)                                                                                                            |  | 764                |  | 764         |        | 3,515       |  | 3,515      

|_______________
|---------------
|(a)            
|               

We have reviewed the outstanding portion of commitments to extend credit as well as standby and other letters of credit, and have determined the difference between the amounts committed and the fair value of such
financial instruments (note 28).

Fair value estimates, methods and assumptions are set forth below for our financial instruments.

Financial assets

Cash and cash equivalents, Interest-bearing deposits in other banks and Central Bank compulsory deposits

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, Interest-bearing deposits in other banks, Federal funds sold and securities purchased under resale agreements and Central
Bank compulsory deposits approximate their fair values. Cash and cash equivalents include: interest-bearing deposits in other banks, federal funds sold and securities purchased under resale agreements, all of which generally have original maturities
of less than three months, except for R$5,225 in 2006 and R$4,601 in 2007 of interest-bearing deposits in other banks and R$6,585 in 2006 and R$5,815 in 2007 of federal funds sold and securities purchased under resale agreements,
with original maturities higher than three months.

Trading assets, including derivatives

Fair values for trading assets, which also are the amounts recognized in the consolidated balance sheet, are based on quoted market prices obtained from independent sources (note 6). For some products that prices not
always be available, the fair value has been determined from quoted prices for similar instruments in the market or based on pricing models as discounted cash flows or similar techniques. The fair value of derivatives is based on quoted market
prices, when available. If quoted market prices are not available, fair values are obtained using internal valuation techniques such as Black-Scholes or Monte Carlo simulation. The valuation techniques depend on the type of derivatives and the
nature of the underlying. Fair value is also calculated for derivatives recorded as Other liabilities.

We have entered into a freestanding financial instrument that consists of options indexed to purchase 14,509,519 Unibancos subsidiary equity shares which is required to be physically settled at a strike price of
R$127.89 and with expiration date at June 29, 2011. As of December 31, 2007, the total amount required to redeem the instrument and that would be paid if the settlement occurred at that date was R$1,856 and the instruments fair value
amounted to approximately R$24.

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Securities available for sale

Fair values for securities available for sale, which also are the amounts recognized in the consolidated balance sheet, are based on quoted market prices, when available. If quoted market prices are not available, fair
values are based on quoted market prices of comparable securities. See Note 7 for further details regarding the amortized cost and fair values of securities available for sale.

Securities held to maturity

Held to maturity securities are carried at amortized cost. Fair values are based on quoted market prices of comparable securities. See Note 8 for further details regarding the amortized cost and fair values of held to
maturity securities.

Loans

Fair values for loans are estimated by groups of loans with similar financial and risk characteristics. Loans are segregated by type, including commercial and industrial, real estate, credit card and other consumer
loans, agricultural, import and export financing and international. Each loan type is further segmented into fixed and variable rate interest terms and by corresponding credit categories in order to estimate their fair value.

The fair values for performing loans are calculated by discounting scheduled principal and interest cash flows through maturity using market discount rates and yield curves that reflect the credit and interest rate risk
inherent in the loan type at each reporting date. The fair values for impaired loans are based on discounting estimated cash flows using a rate commensurate with the risk associated with the estimated cash flows, the loans quoted rate, if
available, or the value of any underlying collateral. Assumptions regarding cash flows and discount rates are determined using available market information and specific borrower information.

Financial liabilities

Deposits

The carrying amounts reported in the consolidated balance sheet for deposits from banks (interbank deposits) approximate their fair values.

The fair values disclosed for demand deposits (non-interest bearing checking accounts and savings accounts) are, by SFAS 107 definition, equal to the amount payable on demand at the reporting date (i.e. their carrying
amounts).

Fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates offered by us on certificates at each reporting date to an estimate of aggregate expected maturities for
those deposits.

Short-term borrowings

Fair value for federal funds purchased and securities sold under repurchase agreements, import and export financing and other short-term borrowings which also are the amounts recognized in the consolidated balance
sheet, since the rates are comparable to those currently practical in the market.

Long-term debt

The fair value for variable-rate and fixed-rate Euronotes and subordinated debt was based on the average quoted prices in effect on the correspondent markets on the last business day of the year, for similar
instruments.

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The fair value for mortgage indebtedness is estimated using a discounted cash flow calculation based on market interest rates for similar instruments.

The fair value of Notes issued under securitization arrangements was computed considering the value that could be obtained in the corresponding market.

The carrying amounts of other long-term debt instruments approximate their fair values since these bear floating rates comparable to those being currently practiced in the market.

Derivatives

The fair value of derivatives is included in trading assets and other liabilities as described in note 2(d) and (e) and as presented in notes 6 and 17 (see note 27 for the notional value of our derivative financial
instruments).

Off-balance sheet financial instruments

The fair value of commitments to extend credit is estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit quality
of the counterparties. The fair value of standby and commercial letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate the agreements or otherwise settle the obligations with the
counterparties (note 28).

Note 27  Derivatives and Risk Management

(a) Purposes and Use Policies

We use derivative financial instruments to manage our own overall exposures or to assist our clients, in managing market risks, foreign exchange rates risk and interest rate risk. We also enter into derivative contracts
for trading purposes to take advantage of market opportunities in order to aggregate value in our results.

We manage financial derivative risks as part of our asset and liability management process and through credit policies and procedures. The counterparty credit risks are minimized by entering into transactions with only
a select number of high-quality institutions.

A large part of the derivatives are negotiated on the Brazilian Futures and Commodities Exchange (BM&F). Exchange-traded instruments conform to standard terms and are subject to policies set by the
BM&F, including counterpart approval, daily margin requirements and security deposit requirements. For the remaining derivative financial instruments, which are negotiated in a Clearing House for Custody and Financial Settlement of Securities
(CETIP) or in an over-the-counter transaction, the counterparty credit risks are analyzed.

(b) Risk Management

Risk management is an independent unit responsible for identifying, measuring and managing market, credit and operational risk on an institution-wide basis. Through the development and use of tools based on the best
practices adopted in the market, we seek to optimize our risk-return relation, as well as to assure the continuous improvement of risk management at all organizational levels. Risk Management at Unibanco is based on tools and parameters associated
with risk/return optimization, taking into account, among others, risk diversification and maximum exposure limits.

Credit Risk

Credit risk is related to the ability of a borrower to meet its financial obligations and is associated with exposures that are more likely to be held to maturity, such as corporate and retail loans. Our credit policy
is designed to manage risk while maintaining the flexibility required by market conditions and customer needs. We limit our credit risk exposure by avoiding concentration on single clients or particular
sectors. Our credit policy establishes various approval levels for both retail and wholesale customers. Depending on the size and type of exposure and the customers ́prior credit history, approval levels range from the branch general manager or
account manager to the Retail or Wholesale credit committees, which are composed of members of senior management. Our centralized credit decision making process is based on strict limits, set by the Wholesale and Retail committees. We pre-approve
credit limits to our customers based on their creditworthiness and size. We believe these limits and pre-approved credit lines, as well as a rigid hierarchical approval structure and committees, assure a robust credit risk management process.

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Wholesale Risks: Our Wholesale segment encompasses economic groups with annual sales in excess of R$150. The evaluations are carried out on an individual and periodic basis, by means of a proprietary risk rating
system. The system comprises quantitative and qualitative elements, such as the company ́s economic and financial status, management capacity, financial background, relationship with us and the conditions of the market in which it operates,
among others. Credit lines for corporate customers are reviewed every 60 to 360 days, depending on the borrower ́s rating and the economic environment.

Retail Risks: Credit management in our Retail banking business is characterized by the processing of a large volume of credit request, which requires specialized systems and processes. Our Retail segment includes
individuals, as well as firms annual sales of up to R$150. Exposures to individuals and companies with sales of up to R$10 are managed through proprietary statistical credit scoring and behavior scoring tools, in line with the
portfolio ́s high volume of customers. Companies with annual sales in excess of R$10, in turn, are evaluated through a risk system, similar to the one used in the Wholesale business.

Market Risk

We believe we have a conservative policy regarding market risk exposures. All financial and main non-financial subsidiaries, such as our credit cards, capitalization, private pension funds and insurance business are
evaluated on a daily basis.

Our market risk management group has an independent line of communication with senior management as the division is headed by a member of the Executive Committee, who reports directly to our CEO. As a result, the market
risk exposure of our portfolio is independently supervised and controlled by our senior management.

Our market risk management group is heavily involved in the process of approving new products. For each product launched by our business segments, our market risk group provides a formal statement in respect of the
product, approving conditions and suggesting improvements in controls.

Market risk management is based on limits established by the financial, risk and cash committees.

We limit our market risk exposure by managing our currencies, maturities, and interest rates mismatches. Securities, derivatives, loans and funding are analyzed on both a detailed and consolidated basis. Exposure limits
for our treasury unit are established considering market volatilities, scenario forecasts, opportunities for profit and the funding needs of the Commercial Bank. Trading and positioning activities are conducted within clear limits suggested by the
risk team and ratified by the financial committee. These limits and policies are reviewed monthly or when a new risk or opportunity arises.

We have adopted several different sets of tools and methodologies in order to manage our market risks, as Stress Testing, Sensitivity Analysis, Value at Risk (VaR) and Backtesting.

We use derivatives as the main market instrument for our trading activities. By trading derivatives, we are able to achieve lower credit risk exposure than would be achieved with a position in the corresponding cash
instruments. Another important role for derivatives is in managing asset and liability mismatches and for hedging purposes, when it is not intended to run a specific risk or situation. The most common derivatives traded are interest rate and foreign
exchange futures, options, forwards and swaps.

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A large portion of our swap portfolio has financial institutions as counterparts. Most of this portfolio is guaranteed by the Brazilian Commodities & Future Exchange (BM&F). We also trade with non-bank
counterparties, most of whom are customers of our commercial banking operations. Generally, these swaps have a time deposit as collateral.

Liquidity Risk

The liquidity risk is related to the management of the gap in assets and liabilities financial cash flow which results in the financial capacity of the institution by taking additional funds and honor positions.

The liquidity contingency and planning policies are defined by the financial committee and are reported to the decision makers and are controlled by independent areas on a daily basis. The liquidity risk is evaluated by
a similar methodology as the market risk, considering the different impacts of the exchange rates and macroeconomic scenarios and stress tests to simulate changes in the availability and costs of funds in the financial market. Maturity, exchange
rates, financial instruments and different markets are analyzed daily in order to assure compliance with the established limits. Those limits and policies are periodically reviewed and the strategies are defined in order to assure a conservative
monitoring of the liquidity risk.

Operational risks

Operating risks are related to an institutions unexpected losses due to inadequate or failed internal processes, human and systems behavior or from external events. We maintain an Operational Risk Area that
manages operational risks and undertakes several initiatives to ensure compliance with the requirements of Basel II and the regulatory criteria of the Central Bank.

Unibancos Operational Risk Area has established a set of tools and procedures to manage and control operational risks, which include:

Risk and Control Assessment  structured approach that enables mapping, evaluating and reviewing objectives, activities and workflows of a given unit.

New Products and Services Approval Process  ensures that prior to the launch of a new Unibanco product or service all relevant business areas have formal knowledge and understanding, issuing their respective
approval.

Loss Database  an important internal database used to store all loss events arising from our operations due to operational risk. This data is carefully classified in order to enable tracking, measuring, monitoring
and reporting loss occurrences. Our Loss Database was created in 2006, and is continuously improved and updated with new and relevant loss events.

Key Risk Indicators  provide indication and warnings of risk concerns, based upon predetermined risk levels.

Business Continuity Plan (BCP)  a set of measures and procedures aimed to limit losses and recover business operation in the event of a crisis or a disaster with severe business disruption.

These tools promote the integration among our managers and establish an internal culture dedicated to identifying and analyzing operational risks. In addition, it provides senior management with the tools to assess
operational risks and supply a basis for economic and regulatory capital allocation under Basel II. By stimulating and maintaining an internal culture focused on efficient and integrated risk management, we aim to reduce costs and operational losses
and explore business opportunities, maximizing return to our shareholders.

As banking operations diversify and the volume of transactions involving computers and telecommunication networks increases, the importance of information technology and the potential impact of system failures or
electronic security breaches have grown.  Accordingly, we have devoted substantial resources to ensure the reliability, stability and security of our computer and related systems.
Our main computer facility is located in São Paulo, where we maintain a backup system to provide automatic coverage in the case of system failures.  We also store backup files recording all banking operations and conduct periodic testing to
check all the procedures and identify points of attention.

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(c) Derivatives

We use a variety of derivatives, such as forwards, futures, swaps and options, as part of our overall asset and liability risk management. As required by SFAS 133, all these transactions are recorded at fair value as
either assets or liabilities and are designated as hedging or non-hedging transactions.

The following table presents the notional and credit risk amounts at December 31, 2006 and 2007 of derivative positions held for trading and hedging purposes.

|                                                  |  |                    |  |             |  |           |  |            
|------------------------------------------------- |  | ------------------ |  | ----------- |  | --------- |  | -----------
|                                                  |  | As of December 31,
|                                                  |  |                   
|                                                  |  | 2006               |  | 2007       
|                                                  |  |                    |  |             |  |          
|                                                  |  | Notional           |  | Credit risk |  | Notional  |  | Credit risk
|                                                  |  |                    |  |             |  |           |  |            
|Interest rates:                                   |  |                    |  |             |  |           |  |            
|Swap contracts - Non Hedge                        |  | R$ 8,939           |  | R$ 424      |  | R$ 19,404 |  | R$ 671     
|Future contracts - purchased position:            |  |                    |  |             |  |           |  |            
|Hedge (1)                                         |  | 1,935              |  | -           |  | -         |  | -          
|Non Hedge                                         |  | 29,310             |  | -           |  | 50,298    |  | -          
|Future contracts - sold position:                 |  |                    |  |             |  |           |  |            
|Hedge (1)                                         |  | (13,680)           |  | -           |  | -         |  | -          
|Non-Hedge                                         |  | (9,187)            |  | -           |  | (49,637)  |  | -          
|Forward contracts - Non Hedge                     |  | 498                |  | 101         |  | 910       |  | 68         
|Option contracts - purchase option - Non Hedge    |  | 79,087             |  | 123         |  | 145,062   |  | 573        
|Option contracts - sale option - Non Hedge        |  | 67,728             |  | -           |  | 111,571   |  | -          
|Foreign currency:                                 |  |                    |  |             |  |           |  |            
|Swap contracts - Non Hedge                        |  | 2,210              |  | 47          |  | 3,690     |  | 53         
|Future contracts - purchased position - Non Hedge |  | 1,083              |  | -           |  | 1,215     |  | -          
|Future contracts - sold position - Non Hedge      |  | (1,895)            |  | -           |  | (8,360)   |  | -          
|Forward contracts - Non Hedge                     |  | 2,785              |  | 10          |  | 12,790    |  | 105        
|Option contracts - purchase option - Non Hedge    |  | 17,375             |  | 47          |  | 49,068    |  | 180        
|Option contracts - sale option - Non Hedge        |  | 9,187              |  | -           |  | 61,104    |  | -          
|Exchange:                                         |  |                    |  |             |  |           |  |            
|Forward contracts - Non Hedge                     |  | -                  |  | -           |  | 304       |  | 301        
|Equity Securities:                                |  |                    |  |             |  |           |  |            
|Future contracts - purchased position - Non Hegde |  | 44                 |  | -           |  | -         |  | -          
|Future contracts - sold position - Non Hedge      |  | (57)               |  | -           |  | -         |  | -          
|Option contracts - purchase option - Non Hedge    |  | 56                 |  | 18          |  | 1,825     |  | 44         
|Option contracts - sale option - Non Hedge        |  | R$ 21              |  | -           |  | R$ 22     |  | -          
|                                                  |  |                    |  |             |  |           |  |            
|Total credit risk                                 |  |                    |  | R$ 770      |  |           |  | R$ 1,995   
|                                                  |  |                    |  |             |  |           |  |            

(1) As from January 1, 2007, we have discontinued our hedging accounting (Note 1).

Non-hedging transactions

Interest rate and currency swaps are contracts in which a series of interest rate cash flows of a single currency or interest or principal payments in two different currencies are exchanged for a contractual period. The
notional amount represents the basis on which the cash flows are determined. The original maturity on these contracts at December 31, 2007 ranges from two days to twelve years. The risks associated with swaps relate to the potential inability or
unwillingness of the counterparties to perform according to the contractual terms and the risk associated with changes in market conditions, due to movements in interest rates and the exchange rate of currencies. We have liabilities related to
interest rate and currency swaps in the amounts of R$226 and R$1,839 that are classified as Other liabilities at December 31, 2006 and 2007, respectively.

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Interest rate and currency futures and forwards contracts are contracts for the delayed delivery of an instrument at a specified price or yield. The notional amounts represent the face value of the underlying instrument for which daily cash settlements of the price movements are made for the future contracts. Maturities of these contracts at December 31, 2007 range from two days to twelve years. The credit risk associated with future and
forwards contracts is minimized due to daily or monthly cash settlements and by entering into transactions with a select number of high-quality institutions. We have liabilities related to interest rate, currency and exchange forwards in the amounts
of R$209 and R$770 that are classified as Other liabilities at December 31, 2006 and 2007, respectively.

Options are contracts which (i) transfer, modify, or reduce interest rate risk, or (ii) allow us to purchase or sell a currency in exchange for the payment of a premium at inception of the contract. As a purchaser of
options, we pay a premium and as the writer of options, receive a premium in exchange for bearing the risk of unfavorable movements in future interest rates and market prices for the underlying currency. We have liabilities related to interest rate,
currency and equity securities option in the amounts of R$329 and R$906 that are classified as Other liabilities at December 31, 2006 and 2007, respectively.

Note 28  Off-balance Sheet Financial Arrangements

Financial guarantees

As part of our lending operations, we enter into various off-balance sheet credit instruments with our customers which are summarized as follows:

|                              |  |                     |  |        |  |        |  |         |  |           |  |        |  |      
|----------------------------- |  | ------------------- |  | ------ |  | ------ |  | ------- |  | --------- |  | ------ |  | -----
|                              |  | Contractual amounts
|                              |  |                    
|                              |  | As of December 31, 
|                              |  |                    
|                              |  | Less than           |  | 1 to 3 |  | 3 to 5 |  | After 5 |  | No stated |  |        |  |      
|                              |  | 1 year              |  | years  |  | years  |  | years   |  | maturity  |  | 2007   |  | 2006 
|                              |  |                     |  |        |  |        |  |         |  |           |  |        |  |      
|                             
|Co-obligation for credit      |  |                     |  |        |  |        |  |         |  |           |  |        |  |      
|assignment                    |  | R$ 3                |  | R$ -   |  | R$ -   |  | R$ -    |  | R$ 17     |  | R$ 20  |  | R$25 
|Guarantees                    |  | 3,785               |  | 2,173  |  | 997    |  | 7,466   |  | 414       |  | 14,835 |  | 8,960
|Standby letters of credit and |  |                     |  |        |  |        |  |         |  |           |  |        |  |      
|other letter of credit        |  | 222                 |  | -      |  | -      |  | -       |  | -         |  | 222    |  | 134  

At December 31, 2006 and 2007, the carrying value of financial guarantees is recorded in Other liabilities in the amount of R$60 and R$91, including the provision for probable losses in the amount of
R$39 and R$57, respectively.

Co-obligation for credit assignment are assignments of credit in which we continue to have a co-payment obligation in the event of default by borrower.

Standby letters of credit and guarantees are our conditional commitments to guarantee the performance of a customer to a third party in borrowing arrangements. Other letters of credit are issued to support transactions
on behalf of customers.

Additionally, at December 31, 2006 and 2007 we have contractual amounts of R$27,263 and R$33,270, respectively, of unfunded commitments to extend credit for a specified time period to lend to customers who have
complied with predetermined contractual conditions. These contracts have maturities of less than one year and can be renewed.

The maximum potential credit risk of these contracts is equal to the contractual amounts shown above if the counterparty does not perform under the respective contract. Generally, these contracts expire without being
drawn upon; therefore, the contractual amounts are not indicative of the actual credit exposure or future cash flow requirements for such commitments. To mitigate credit risk, we may require the counterparty to pledge collateral in the form of cash,
securities or other assets to support the extension of credit similar to the collateral required for our lending operations.

Note 29 - Commitments and Contingent Liabilities

Assets under management

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We manage a number of investment funds which are available to institutional investors and the general public. These assets in the amount of R$35,893 and R$45,087 at December 31, 2006 and 2007, respectively, are
not included in our consolidated balance sheet. Fees are generally charged monthly, at average rates of 0.9% for 2005, 0.8% for 2006 and 0.7% for 2007 of the market value of the assets under management. We do not guarantee minimum returns or the
principal amount invested on such funds.

Litigation

We and our subsidiaries are defendants in several legal actions, mainly relating to income taxes, indirect taxes and civil and labor claims. Based on the advice of our legal counsels, we believe that an unfavorable
outcome in any or all of these actions will not have a material effect on our financial condition or results of operations.

The changes in the provision for probable losses in 2005, 2006 and 2007 were as follows:

|                                          |  |                    |  |          |  |         
|----------------------------------------- |  | ------------------ |  | -------- |  | --------
|                                          |  | As of December 31,
|                                          |  |                   
|                                          |  | 2005               |  | 2006     |  | 2007    
|                                          |  |                    |  |          |  |         
|                                         
|Balance, beginning of year                |  | R$ 2,378           |  | R$ 2,707 |  | R$ 2,968
|Provision charged                         |  | 1,252              |  | 1,552    |  | 2,093   
|Payments (1)                              |  | (923)              |  | (1,015)  |  | (659)   
|Reversal of provisions no longer required |  | -                  |  | (276)    |  | (303)   
|                                          |  |                    |  |          |  |         
|Balance, end of year (note 17)            |  | R$ 2,707           |  | R$ 2,968 |  | R$ 4,099
|                                          |  |                    |  |          |  |         

|(1) | Includes R$644 and R$299 of payments in Labor Litigation at December 31, 2006 and 2007.
|--- | ---------------------------------------------------------------------------------------

The related restricted escrow deposits for contingencies are shown in Note 13.

Tax litigation (other than Income taxes)

We are defendants in several judicial lawsuits and administrative proceedings arising out of certain indirect taxes and social security matters, mainly relating to their legality, and we recognized provisions to face
probable losses relating those disputes. According to our policy for tax disputes, including those involving social security debts, we only record provisions when we believe it is probable that we will incur losses as a result of such disputes or
when the tax or social security obligation under discussion is expressly due by force of law or regulation. With respect to tax administrative proceedings, we do not record provisions when the probability of loss is remote or possible and we usually
pay the amounts due thereunder when there is high probability of loss.

As of December 31, 2007, we have provisioned R$1,955 in connection with our indirect taxes and social security pending disputes, among which the most relevant are claims in connection with the increase of the basis
of PIS and COFINS set forth by Law 9.718, representing R$1,566.

In addition to the foregoing, we have off record indirect taxes and social security disputes in which we believe, based on the opinion of our legal counsel, that it is possible that we will incur losses. As of December
31, 2007, such lawsuits represented R$323 net of tax effects, and the main discussions thereunder are (i) CPMF tax on leasing companies  R$ 145, (ii) Social security contribution levy on non-wage income  R$94 and (iii) ISS
taxation on leasing operations  R$21.

For information related to income taxes contingencies, see note 18.

Labor litigation

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Labor unions and former employees have filed several lawsuits against Unibanco and its subsidiaries to seek compensation for labor rights. The determination of the amount of reserves required for labor contingencies is made according to two different criteria. For strategic cases, which involve amounts substantially higher than the average for similar matters, the determination of the reserve amount is made after a careful and individual analysis
of each case. For other labor contingencies, such determination is based on average amounts paid for similar claims during the previous twelve-month period.

Civil litigation

We are involved in numerous civil lawsuits that have arisen during the normal course of our business. We are not able to currently predict the total amounts involved with these claims, due to the nature of the matters
involved. However, we believe that any potential liabilities related to these lawsuits will not have a material adverse effect on our financial condition or results. We are a party to (a) certain lawsuits filed by individual minority shareholders
related to equity losses arising from corporate reorganizations associated with our acquisition of certain Brazilian financial institutions, (b) several class action suits that are primarily related to our banking activities (e.g. personal and moral
injury due to among other reasons, returns of checks and protests of notes considered not due) and Brazilian government economic policies (we are a defendant in these lawsuits with certain other Brazilian financial institutions) and (c) other
lawsuits. Those actions and claims are recorded in accordance with the probability of loss in each type of claim.

The determination of the amount of reserves required civil contingencies is made according to two different criteria. For strategic cases, which involve amounts substantially higher than the average for similar matters,
the determination of the reserve amount is made after a careful and individual analysis of each case. For other civil contingencies, such determination is based on average amounts paid for similar claims during the previous twelve-month period.

Other commitments

We lease many properties under standard real estate leases that can be canceled at our option and include renewal options and escalation clauses for adjusting rentals to reflect changes in price indices. Expenses of
real estate leases were R$225, R$229 and R$229, in 2005, 2006 and 2007, respectively.

During 2004, we sold many properties used as branches and, subsequently, we rented them for the purpose of continuing our operations. As of December 31, 2007 the future liabilities for the payment of leases related to
financing through 2009, totalized R$1.

Note 30 - Regulatory Matters

We are subject to regulation by the Central Bank, which promulgates various regulations regarding currency and credit policies for financial institutions operating in Brazil. Additionally, the Central Bank determines
minimum capital requirements, lending limits, accounting practices and compulsory deposit requirements (note 5). Failure to meet these requirements is subject to penalties imposed by the Central Bank.

The Central Bank requires banks to comply with regulations, which currently are similar to the Basel Accord as regards capital adequacy, except for the 11% capital minimum requirement in lieu of the 8% minimum capital
requirement of the Basel Accord.

In accordance with the Central Bank rules, banks are required to calculate compliance with the minimum requirement on either a partial consolidated basis (considering only the institutions regulated by the Central Bank,
including investments and branches abroad) or full consolidated basis (considering all institutions owned by the banks, including insurance, savings and annuities products, private retirement and credit card companies). The minimum capital ratio
requirement in Brazil is 11%. The following table sets forth the capital ratios:

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|                                                |  |                          |  |   |  |                       |  |   |  |      |  |   |  |      |  |  
|----------------------------------------------- |  | ------------------------ |  | - |  | --------------------- |  | - |  | ---- |  | - |  | ---- |  | -
|                                                |  | As of December 31,       |  |  
|                                                |  |                          |  |  
|                                                |  | Partial consolidation(a) |  |   |  | Full consolidation(b) |  |  
|                                                |  |                          |  |   |  |                       |  |  
|                                                |  | 2006                     |  |   |  | 2007                  |  |   |  | 2006 |  |   |  | 2007 |  |  
|                                                |  |                          |  |   |  |                       |  |   |  |      |  |   |  |      |  |  
|In accordance with the Central Bank requirement |  |                          |  |   |  |                       |  |   |  |      |  |   |  |      |  |  
|Tier I Capital                                  |  | 12.2                     |  | % |  | 10.4                  |  | % |  | 12.9 |  | % |  | 12.0 |  | %
|Tier II Capital                                 |  | 3.8                      |  |   |  | 4.3                   |  |   |  | 3.7  |  |   |  | 4.3  |  |  
|                                                |  |                          |  |   |  |                       |  |   |  |      |  |   |  |      |  |  
|Total Capital                                   |  | 16.0                     |  | % |  | 14.7                  |  | % |  | 16.6 |  | % |  | 16.3 |  | %
|                                                |  |                          |  |   |  |                       |  |   |  |      |  |   |  |      |  |  

|(a) | Partial consolidation excludes non-financial subsidiaries.                
|--- | --------------------------------------------------------------------------
|(b) | Full consolidation includes both financial and non-financial subsidiaries.

Currently, the Central Bank does not limit the amount of dividends which may be paid subject to the capital requirements set forth above. As of each reporting date, we were in compliance with all capital requirements
imposed by the Central Bank.

In June 2004, after five years of debates and revisions, the Bank for International Settlements Committee on Banking Supervision, or BIS, endorsed the publication of the International Convergence of Capital Measurement
and Capital Standards: a Revised Framework, commonly known as Basel II. On December 9, 2004, the Central Bank, in Communication 12,746, expressed its intention to adopt Basel II in Brazil. The Communication indicates that the Central Bank intends to
adopt Basel II gradually, with caution and appropriate adaptation to Brazilian needs.

Additionally, the Central Bank limits the amount of investments in consolidated subsidiaries not engaged in banking, leasing or securities activities and in unconsolidated companies, premises and equipment to 50% of
shareholders equity on a consolidated basis. The Central Bank also limits unconsolidated investments, premises and equipment to 50% of shareholders equity on a full consolidated basis. On December 31, 2006 and 2007 our total investment
in such assets was less than the Central Bank limit.

In February 2007, the CMN enacted Resolution 3.444/07 which redefined (i) the concepts of Reference Capital, (ii) the calculation method of both Tier 1 and Tier 2 capital, and (iii) the terms and conditions required for
subordinated debt or hybrid bond instruments to compose Tier 2 capital and the terms and conditions required for hybrid bond instruments to compose Tier 1 capital.

We had adopted the new CMN Resolution to calculate our capital ratios, in accordance with presentation of table above.

During 2007, we established a strategic alliance with the Deutsche Bank group (Deutsche) through a transaction that allowed us to relieve its investments in permanent assets of non-financial activities and use more of its capital to finance its core financial activities and improved its regulatory ratios.

Unibanco Participações Societarias S.A. ("UPS"), a then wholly-owned subsidiary of Unibanco, issued to a wholly-owned subsidiary of Deutsche 14,509,519 non-redeemable preferred shares at a price per share of R$ 134.51 resulting in total cash consideration of R$ 1,952. After the share subscription by Deutsche, our ownership in UPS decreased from 100% to 51%. UPS is a non-financial company subsidiary which holds several of our investments in strategic companies, such as Redecard, Tecnologia Bancária S.A. and Interchange. In July 2007 we sold part of the shares of Redecard held by UPS (see Note 11).

Since UPS shares are not listed, the parties have established a transferable freestanding put and call option agreements in case either party decides to terminate the partnership. Currently, there is no intention of Unibanco to terminate the partnership. The put and call option agreements is classified as an asset and initially and subsequently recorded at fair value with changes in fair value recognized in income and classified as Trading assets or Other liabilities.

The non-redeemable preferred shares issued by UPS are considered to be in substance common stock following the guidance provided in EITF 02-14 "Whether an Investor Should Apply the Equity Method of Accounting to Investments other than Common Stock". We recognized R$640 in income (See note 2 (z)) because realization is reasonably assured and R$338 in equity because the realization is not reasonably assured . For tax purposes, this transaction resulted in non-taxable equity income in a subsidiary.

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Note 31 - Segment Information

Our segment financial information is based on how our operations are managed. Our senior management utilizes this segment information to assess segment performance and to allocate resources. Such information is prepared
based on management criteria defined by our executive committee and is duly reconciled with our financial statements prepared in accordance with Brazilian GAAP.

Throughout this annual report, we present financial information by operating segment, with respect to our five business segments: Retail, Wholesale, Treasury, Insurance and Pension Plans and Wealth Management; and one
non-operating Corporation segment.

The measurement methods used to segment our net income by business segment considers: (i) interest paid to the non-operating Corporation Segment on capital allocated on each business; and (ii) full cost allocation, including direct and overhead costs. In the Adjustments and Reclassifications column, we disclose the differences between the management reporting basis and the USGAAP criteria.

Beginning 2007, operational changes in the measurement methods enabled us to describe our non-operating Corporation segment, which captures (i) the interest earned on the capital allocated to the operating segments; (ii) temporary
differences between management criteria and Brazilian GAAP; and (iii) the effects of certain corporate matters, which occur as a result of management decisions, such as the sale of an investment. Additionally, beginning in 2007, the treasury
activities currently performed by recently created Treasury segment were performed before 2007 by our Wholesale segment.

For comparison purposes, we have also presented all segment financial information for the years ended December 31, 2005 and 2006 based on the current methodology.

The following tables present a summary of our operations for the years ended December 31, 2005, 2006 and 2007 by segment, in accordance with SFAS 131 Disclosures about Segments of an Enterprise and Related
Information.

|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|------------------------------------------------------------------------ |  | ------------------------------------ |  | ----------- |  | ---------------- |  | ----------- |  | --------------------------- |  | ----------- |  | -------------------------------------------- |  | --------------------------------- |  | -------------------
|                                                                         |  | For the year ended December 31, 2005
|                                                                         |  |                                     
|                                                                         |  | Retail                               |  | Wholesale   |  | Wealthmanagement |  | Treasury    |  | Insurance and Pension Plans |  | Corporation |  | Consolidated on a management reporting basis |  | Adjustments and Reclassifications |  | Consolidated USGAAP
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|                                                                        
|Net interest income                                                      |  | R$   6,406                           |  | R$   551    |  | R$   58          |  | R$   295    |  | R$   229                    |  | R$   677    |  | R$   8,216                                   |  | R$   361                          |  | R$   8,577         
|Provision for loan losses                                                |  | (1,804)                              |  | 130         |  | 3                |  | -           |  | (1)                         |  | (232)       |  | (1,904)                                      |  | 34                                |  | (1,870)            
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net interest income after provision for loan losses                      |  | 4,602                                |  | 681         |  | 61               |  | 295         |  | 228                         |  | 445         |  | 6,312                                        |  | 395                               |  | 6,707              
|Insurance, private retirement plan and pension investment contracts, net |  | 117                                  |  | -           |  | -                |  | -           |  | 329                         |  | 12          |  | 458                                          |  | (672)                             |  | (214)              
|Equity in results of unconsolidated companies                            |  | 1                                    |  | -           |  | -                |  | -           |  | 42                          |  | (3)         |  | 40                                           |  | 118                               |  | 158                
|Fee and commission income                                                |  | 2,754                                |  | 320         |  | 179              |  | -           |  | 126                         |  | 114         |  | 3,493                                        |  | (781)                             |  | 2,712              
|Salaries and benefits and administrative expense                         |  | (4,500)                              |  | (207)       |  | (87)             |  | (29)        |  | (263)                       |  | (92)        |  | (5,178)                                      |  | (578)                             |  | (5,756)            
|Financial transaction and other taxes                                    |  | (682)                                |  | (50)        |  | (9)              |  | (6)         |  | (105)                       |  | (145)       |  | (997)                                        |  | 997                               |  | -                  
|Other non interest income (expense)                                      |  | (681)                                |  | (90)        |  | (3)              |  | -           |  | (61)                        |  | (392)       |  | (1,227)                                      |  | (112)                             |  | (1,339)            
|Non-operating income (expense)                                           |  | (29)                                 |  | (11)        |  | -                |  | -           |  | 11                          |  | 58          |  | 29                                           |  | (29)                              |  | -                  
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Income before taxes and minority interest                                |  | 1,582                                |  | 643         |  | 141              |  | 260         |  | 307                         |  | (3)         |  | 2,930                                        |  | (662)                             |  | 2,268              
|Profit sharing                                                           |  | (154)                                |  | (59)        |  | (10)             |  | (5)         |  | (22)                        |  | (75)        |  | (325)                                        |  | 325                               |  | -                  
|Income taxes                                                             |  | (394)                                |  | (198)       |  | (37)             |  | (88)        |  | (41)                        |  | 157         |  | (601)                                        |  | 141                               |  | (460)              
|Minority interest                                                        |  | -                                    |  | -           |  | -                |  | -           |  | (155)                       |  | (11)        |  | (166)                                        |  | 8                                 |  | (158)              
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net income                                                               |  | R$   1,034                           |  | R$   386    |  | R$   94          |  | R$   167    |  | R$   89                     |  | R$   68     |  | R$   1,838                                   |  | R$   (188)                        |  | R$   1,650         
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Identifiable assets                                                      |  | R$   30,873                          |  | R$   24,773 |  | R$   622         |  | R$   22,735 |  | R$   9,796                  |  | R$   3,032  |  | R$   91,831                                  |  | R$   (2,013)                      |  | R$   89,818        
|                                                                         |  |                                      |  |             |  |                  |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|                                                                        

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|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|------------------------------------------------------------------------ |  | ------------------------------------ |  | ----------- |  | ----------------- |  | ----------- |  | --------------------------- |  | ----------- |  | -------------------------------------------- |  | --------------------------------- |  | -------------------
|                                                                         |  | For the year ended December 31, 2006
|                                                                         |  |                                     
|                                                                         |  | Retail                               |  | Wholesale   |  | Wealth management |  | Treasury    |  | Insurance and Pension Plans |  | Corporation |  | Consolidated on a management reporting basis |  | Adjustments and Reclassifications |  | Consolidated USGAAP
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|                                                                        
|Net interest income                                                      |  | R$   7,242                           |  | R$   690    |  | R$   63           |  | R$   492    |  | R$   194                    |  | R$   1,020  |  | R$   9,701                                   |  | R$   (126)                        |  | R$   9,575         
|Provision for loan losses                                                |  | (2,476)                              |  | 130         |  | -                 |  | -           |  | 7                           |  | (84)        |  | (2,423)                                      |  | 393                               |  | (2,030)            
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net interest income after provision for loan losses                      |  | 4,766                                |  | 820         |  | 63                |  | 492         |  | 201                         |  | 936         |  | 7,278                                        |  | 267                               |  | 7,545              
|Insurance, private retirement plan and pension investment contracts, net |  | 94                                   |  | -           |  | -                 |  | -           |  | 350                         |  | (24)        |  | 420                                          |  | (748)                             |  | (328)              
|Equity in results of unconsolidated companies                            |  | (10)                                 |  | -           |  | -                 |  | -           |  | 64                          |  | 9           |  | 63                                           |  | 132                               |  | 195                
|Fee and commission income                                                |  | 3,000                                |  | 388         |  | 199               |  | -           |  | 152                         |  | 85          |  | 3,824                                        |  | (816)                             |  | 3,008              
|Salaries and benefits and administrative expense                         |  | (4,665)                              |  | (209)       |  | (80)              |  | (35)        |  | (281)                       |  | (506)       |  | (5,776)                                      |  | (369)                             |  | (6,145)            
|Financial transaction and other taxes                                    |  | (712)                                |  | (84)        |  | (13)              |  | (18)        |  | (80)                        |  | (44)        |  | (951)                                        |  | 951                               |  | -                  
|Other non interest income (expense)                                      |  | (962)                                |  | (88)        |  | (2)               |  | -           |  | (22)                        |  | (285)       |  | (1,359)                                      |  | (284)                             |  | (1,643)            
|Non-operating income (expense)                                           |  | (105)                                |  | (6)         |  | -                 |  | -           |  | (22)                        |  | 101         |  | (32)                                         |  | 32                                |  | -                  
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Income before taxes and minority interest                                |  | 1,406                                |  | 821         |  | 167               |  | 439         |  | 362                         |  | 272         |  | 3,467                                        |  | (835)                             |  | 2,632              
|Profit sharing                                                           |  | (227)                                |  | (80)        |  | (12)              |  | (7)         |  | (23)                        |  | (130)       |  | (479)                                        |  | 479                               |  | -                  
|Income taxes                                                             |  | (299)                                |  | (249)       |  | (48)              |  | (147)       |  | (58)                        |  | 199         |  | (602)                                        |  | 70                                |  | (532)              
|Minority interest                                                        |  | -                                    |  | -           |  | -                 |  | -           |  | (166)                       |  | (11)        |  | (177)                                        |  | 28                                |  | (149)              
|Profit from non-recurring events(1)                                      |  | -                                    |  | -           |  | -                 |  | -           |  | -                           |  | (459)       |  | (459)                                        |  | 459                               |  | -                  
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net income                                                               |  | R$   880                             |  | R$   492    |  | R$   107          |  | R$   285    |  | R$   115                    |  | R$   (129)  |  | R$   1,750                                   |  | R$   201                          |  | R$   1,951         
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Identifiable assets                                                      |  | R$   34,672                          |  | R$   27,252 |  | R$   647          |  | R$   27,616 |  | R$   11,233                 |  | R$   2,358  |  | R$   103,778                                 |  | R$   (1,215)                      |  | R$   102,563       
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|                                                                        

___________________  
(1) In 2006, profit from non-recurring events considers the acceleration of the goodwill amortization period from ten to five years.

|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|------------------------------------------------------------------------ |  | ------------------------------------ |  | ----------- |  | ----------------- |  | ----------- |  | --------------------------- |  | ----------- |  | -------------------------------------------- |  | --------------------------------- |  | -------------------
|                                                                         |  | For the year ended December 31, 2007
|                                                                         |  |                                     
|                                                                         |  | Retail                               |  | Wholesale   |  | Wealth management |  | Treasury    |  | Insurance and Pension Plans |  | Corporation |  | Consolidated on a management reporting basis |  | Adjustments and Reclassifications |  | Consolidated USGAAP
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|                                                                        
|Net interest income                                                      |  | R$   7,586                           |  | R$   813    |  | R$   78           |  | R$   664    |  | R$   217                    |  | R$   1,080  |  | R$   10,438                                  |  | R$   63                           |  | R$   10,501        
|Provision for loan losses                                                |  | (2,149)                              |  | (11)        |  | (1)               |  | -           |  | (1)                         |  | 7           |  | (2,155)                                      |  | 220                               |  | (1,935)            
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net interest income after provision for loan losses                      |  | 5,437                                |  | 802         |  | 77                |  | 664         |  | 216                         |  | 1,087       |  | 8,283                                        |  | 283                               |  | 8,566              
|Insurance, private retirement plan and pension investment contracts, net |  | 102                                  |  | -           |  | -                 |  | -           |  | 516                         |  | (93)        |  | 525                                          |  | (793)                             |  | (268)              
|Equity in results of unconsolidated companies                            |  | 12                                   |  | -           |  | -                 |  | -           |  | 49                          |  | 42          |  | 103                                          |  | 158                               |  | 261                
|Fee and commission income                                                |  | 3,176                                |  | 544         |  | 245               |  | 4           |  | 104                         |  | 46          |  | 4,119                                        |  | (1,035)                           |  | 3,084              
|Salaries and benefits and administrative expense                         |  | (4,763)                              |  | (161)       |  | (84)              |  | (57)        |  | (294)                       |  | (522)       |  | (5,881)                                      |  | (615)                             |  | (6,496)            
|Financial transaction and other taxes                                    |  | (842)                                |  | (87)        |  | (15)              |  | (31)        |  | (127)                       |  | (106)       |  | (1,208)                                      |  | 1,208                             |  | -                  
|Other non interest income (expense)                                      |  | (1,281)                              |  | (183)       |  | (3)               |  | -           |  | (124)                       |  | (276)       |  | (1,867)                                      |  | 2,353                             |  | 486                
|Non-operating income (expense)                                           |  | 3                                    |  | (49)        |  | -                 |  | -           |  | 9                           |  | 50          |  | 13                                           |  | (13)                              |  | -                  
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Income before taxes and minority interest                                |  | 1,844                                |  | 866         |  | 220               |  | 580         |  | 349                         |  | 228         |  | 4,087                                        |  | 1,546                             |  | 5,633              
|Profit sharing                                                           |  | (257)                                |  | (92)        |  | (13)              |  | (11)        |  | (25)                        |  | (161)       |  | (559)                                        |  | 559                               |  | -                  
|Income taxes                                                             |  | (465)                                |  | (262)       |  | (55)              |  | (185)       |  | (75)                        |  | 287         |  | (755)                                        |  | (591)                             |  | (1,346)            
|Minority interest                                                        |  | -                                    |  | -           |  | -                 |  | -           |  | (145)                       |  | (28)        |  | (173)                                        |  | (554)                             |  | (727)              
|Profit from non-recurring events(1)                                      |  | -                                    |  | -           |  | -                 |  | -           |  | -                           |  | 848         |  | 848                                          |  | (848)                             |  | -                  
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Net income                                                               |  | R$   1,122                           |  | R$   512    |  | R$   152          |  | R$   384    |  | R$   104                    |  | R$   1,174  |  | R$   3,448                                   |  | R$   112                          |  | R$   3,560         
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    
|Identifiable assets(2)                                                   |  | R$   48,582                          |  | R$   32,375 |  | R$   928          |  | R$   50,513 |  | R$   13,635                 |  | R$   3,564  |  | R$   149,597                                 |  | R$   (1,326)                      |  | R$   148,271       
|                                                                         |  |                                      |  |             |  |                   |  |             |  |                             |  |             |  |                                              |  |                                   |  |                    

___________________ 
(1) In 2007, profit from non-recurring events considers the gains from our partial or complete divestures of our investments in Serasa, Redecard, Bovespa and BM&F and the admittance of a minority partner into UPS, deducted from provisions
(mainly provisions for loan losses and civil, labor and tax litigations) and accelerated amortization of a portion of our goodwill. 
(2) Identifiable assets represent the total assets of the segment (current, long-term and permanent assets).

Our operations are primarily carried out in Brazil; however, we have operations in the United States, Grand Cayman, Luxembourg and Paraguay, none of which are individually material to Unibanco and its subsidiaries as a
whole.

Note 32 - Parent Company Financial Information

Condensed financial information of Holdings, the Parent Company, is presented below:

F-71

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|                                           |  |                    |  |         
|------------------------------------------ |  | ------------------ |  | --------
|                                           |  | As of December 31,
|                                           |  |                   
|Balance sheet:                             |  | 2006               |  | 2007    
|                                           |  |                    |  |         
|                                          
|Interbank investments                      |  | R$ 138             |  | R$ 201  
|Investment in Unibanco                     |  | 6,068              |  | 7,580   
|Dividends receivable                       |  | 202                |  | 382     
|Other assets                               |  | 70                 |  | 95      
|                                           |  |                    |  |         
|Total assets                               |  | R$ 6,478           |  | R$ 8,258
|                                           |  |                    |  |         
|Dividends payable                          |  | R$ 206             |  | R$ 325  
|Other liabilities                          |  | 153                |  | 265     
|Shareholders' equity                       |  | 6,119              |  | 7,668   
|                                           |  |                    |  |         
|Total liabilities and shareholders' equity |  | R$ 6,478           |  | R$ 8,258
|                                           |  |                    |  |         

|                                                    |  |                                 |  |          |  |         
|--------------------------------------------------- |  | ------------------------------- |  | -------- |  | --------
|                                                    |  | For the year ended December 31,
|                                                    |  |                                
|Statement of income:                                |  | 2005                            |  | 2006     |  | 2007    
|                                                    |  |                                 |  |          |  |         
|                                                   
|Interest on deposits in other banks                 |  | R$ 12                           |  | R$ 17    |  | R$ 22   
|Dividends from Unibanco                             |  | 412                             |  | 500      |  | 756     
|Equity in undistributed earnings of Unibanco        |  | 539                             |  | 592      |  | 1,254   
|Non-interest expense, net                           |  | 43                              |  | 41       |  | 98      
|                                                    |  |                                 |  |          |  |         
|Net income                                          |  | R$ 920                          |  | R$ 1,068 |  | R$ 1,934
|                                                    |  |                                 |  |          |  |         
|Statement of cash flows:                            |  |                                 |  |          |  |         
|Operating activities:                               |  |                                 |  |          |  |         
|Net income                                          |  | R$ 920                          |  | R$ 1,068 |  | R$ 1,934
|Less  Equity and dividends in earnings of Unibanco |  | 951                             |  | 1,092    |  | 2,010   
|Change in assets and liabilities                    |  |                                 |  |          |  |         
|Other assets                                        |  | (42)                            |  | (1)      |  | (25)    
|Other liabilities                                   |  | 61                              |  | 24       |  | 113     
|                                                    |  |                                 |  |          |  |         
|Net cash used in operating activities               |  | (12)                            |  | (1)      |  | 12      
|                                                    |  |                                 |  |          |  |         
|Investing activities:                               |  |                                 |  |          |  |         
|Cash dividends received                             |  | 394                             |  | 459      |  | 576     
|Cash dividends paid                                 |  | (336)                           |  | (407)    |  | (525)   
|                                                    |  |                                 |  |          |  |         
|Net cash provided by investing activities           |  | 58                              |  | 52       |  | 51      
|                                                    |  |                                 |  |          |  |         
|Financing activities:                               |  |                                 |  |          |  |         
|Net increase in cash and cash equivalents           |  | 46                              |  | 51       |  | 63      
|Cash and cash equivalents at beginning of year      |  | 41                              |  | 87       |  | 138     
|                                                    |  |                                 |  |          |  |         
|Cash and cash equivalents at end of year            |  | R$ 87                           |  | R$ 138   |  | R$ 201  
|                                                    |  |                                 |  |          |  |         

Note 33  Subsequent Events

(a) Changes in Tax legislation

(i) The Provisional Measure (MP) no. 413, of January 3, 2008, and converted into law no 11,727 on June 23,2008, increased the rate of the Social Contribution on the Net Income  CSLL of the financial sector
from 9% to 15% of the taxable income, enacted from May 1, 2008, as well as increased the deferred tax asset, due to the increase in the rate on deferred tax assets carried in the balance sheet (Note 18).

(ii) On December 17, 2007, Decree no 6,306 introduced new provisions regarding the Tax on Credit, Exchange and Insurance Transactions (IOF) effective January 4, 2008. This Decree increased the IOF rate
on several financial transactions involving loans, insurance and foreign exchange transactions by 0.38% . Furthermore, the daily IOF rate applied on loans to individuals was increased from 0.0041% to 0.0082%, subject to a 3.0% cap. For financial
institutions, IOF is just a secondary obligation, as it is withheld and transferred to Brazilian Federal Tax Authorities on behalf of customers.

F-72

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(b) Stock Repurchase Program

On February 13, 2008, the Board of Directors of both Unibanco and Holdings approved the acquisition of up to 20 million Units for the purpose of maintaining these Units in treasury for further sale or cancellation,
without reducing the share capital of Unibanco or Holdings. Unibancos executive board of officers shall decide the timing and volume of the acquisitions within the limits established by Unibanco and Holdings ́ Boards of Directors. The
authorization will be valid for 12 months as from February 15, 2008, and the acquisition of the Units will be carried out at fair market value through the broker Unibanco Investshop Corretora de Valores Mobiliários S.A. or other that comes to
be defined by the executive board of officers of Unibanco.

(c) Central Bank Compulsory Deposit

The Brazilian Central Bank determined through Circular no. 3,375/08, a compulsory liquidity reserve deposit on interbank deposits of leasing companies in other financial institutions. The initial deposit is 5% of
interbank deposits from March 2008, with a progressive increase up to 25% by January 2009.

(d) Notes Issued Under Securitization Arrangements

On April 2008 Unibanco concluded the issue of a sindicated loan in the amount of US$210, with maturity up to 5 years. In the same period, Unibanco concluded another issuance under securitization program in
the amount of US$200, with final maturity of 7 years, with a 2-year grace period, through an international private market placement.

(e) Capitalization of Reserves with Bonus Stock

On May 29, 2008, Holdings ́Board of Directors proposed to an increase of R$1,745 to the capital stock, thereby increasing our overall capital stock from R$4,555 to R$6,300 through the capitalization of
R$1,468 of the funds currently in the equalization of equity reserve and R$277 of the funds currently in the reserve for unrealized profits.

In the same date, Unibanco ́s Board of Directors proposed an increase of R$3,000 to the capital stock, thereby increasing our overall capital stock from R$8,000 to R$11,000 through the capitalization of
funds currently in the reserve designed to ensure that Unibanco has adequate operating margins.

In the event both our shareholders and those of Holdings approve the proposal, the shareholders who hold Units shall receive, on a determined record date to be determined after the Central Bank approval, for each ten
Units held, one additional Unit and the shareholders who hold GDS, shall receive, for each ten GDSs held, one additional GDS.

These decisions, however, are pending Shareholders and Central Bank approval.

(f) Change the ratio of the GDS

At the Extraordinary Shareholders ́Meeting, held by us and by Holdings on May 29, 2008, our Board of Directors proposed the capitalization of reserves with Bonus Stock (see item (e)) and to change the ratio of the
GDSs to Units to one GDS per two Units.

The ratio ́s change is pending CVM approval.

F-73

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Redecard S.A.

Financial statements 
December 31, 2007, 2006 and 2005 (With independent auditors report thereon)

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Financial statements

December 31, 2007, 2006 and 2005

Contents

|                                              |  |       
|--------------------------------------------- |  | ------
|Independent auditors report                  |  | 3     
|Balance sheets                                |  | 4     
|Statements of income                          |  | 5     
|Statements of changes in shareholders equity |  | 6     
|Statements of changes in financial position   |  | 7     
|Statements of cash flows                      |  | 8     
|Notes to the financial statements             |  | 9 - 46

2

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Independent auditors report

The Board of Directors 
Redecard S.A.:

We have audited the accompanying balance sheet of Redecard S.A. (the Company) as of December 31, 2007, and the related statements of income, changes in shareholders equity and changes in financial position for the year then ended.
These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Redecard S.A. as of December 31, 2007, and the results of its operations, changes in its shareholders equity and
changes in its financial position for the year then ended in conformity with accounting practices adopted in Brazil.

Accounting practices adopted in Brazil vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature of such differences is provided in Note 20 to the financial
statements.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The statement of cash flows included in the financial statements for the year ended December 31, 2007 is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.

June 13, 2008

|                             |  |                             
|---------------------------- |  | ----------------------------
|KPMG Auditores Independentes |  |                             
|CRC 2SP014428/O-6            |  |                             
|                            
|Ricardo Anhesini Souza       |  | Giuseppe Masi               
|Accountant CRC 1SP152233/O-6 |  | Accountant CRC 1SP176273/O-7

3

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Redecard S.A.

Balance sheetsDecember31, 2007 and 2006(In thousands of Reais)

|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|-------------------------------------------------------------------- | ---- | ---------- |  | ----------- |  | ------------------------------------------ | ------- | ---------- |  | -----------
|Assets                                                               | Note | 2007       |  | 2006        |  | Liabilities and shareholders' equity       | Note    | 2007       |  | 2006       
|                                                                     |      |            |  | (Unaudited) |  |                                            |         |            |  | (Unaudited)
|Current                                                              |      |            |  |             |  | Current                                    |         |            |  |            
|Cash and cash equivalents                                            |      | 24,321     |  | 215,370     |  | Accounts payable to merchants              |         | 11,979,696 |  | 9,420,451  
|Accounts receivable - Issuers                                        |      | 13,027,701 |  | 9,940,542   |  | Suppliers                                  |         | 20,627     |  | 22,188     
|Other accounts receivable                                            | 6    | 71,137     |  | 50,599      |  | Labor obligations                          |         | 42,706     |  | 38,619     
|AdvanceAdvance tothirdthird partiesparties andand employeesemployees |      | 2,533      |  | 2,725       |  | TaxesTaxes payablepayable                  | 9       | 68,305     |  | 29,231     
|Deferred income and social contribution taxes                        | 5    | 45,400     |  | 69,229      |  | Borrowings                                 | 10      | 360,790    |  | 375,681    
|Prepaid expenses                                                     | 7    | 3,931      |  | 3,442       |  | Dividends payable                          | 11/14.b | 206,298    |  | 69,429     
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|                                                                     |      |            |  |             |  | Interest on shareholders' equity           | 14.b    | 13,638     |  | -          
|Total current assets                                                 |      | 13,175,023 |  | 10,281,907  |  | Participation in the consortium payable    |         | -          |  | 155,367    
|                                                                     |      |            |  |             |  | Other accounts payable                     | 12      | 117,756    |  | 152,746    
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|Noncurrent assets                                                    |      |            |  |             |  |                                            |         |            |  |            
|                                                                     |      |            |  |             |  | Total current liabilities                  |         | 12,809,816 |  | 10,263,712 
|Deferred income and social contribution taxes                        | 5    | 27,531     |  | 40,697      |  |                                            |         |            |  |            
|Judicial deposits                                                    | 13   | 10,687     |  | 13,834      |  | Noncurrent liabilities                     |         |            |  |            
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|Permanent assets                                                     |      |            |  |             |  | Provision for contingencies                | 13.a    | 80,973     |  | 183,743    
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|Fixed assets                                                         | 8    | 803,893    |  | 677,535     |  |                                            |         |            |  |            
|Accumulated depreciation                                             | 8    | (607,045)  |  | (502,257)   |  | Total noncurrent liabilities               |         | 80,973     |  | 183,743    
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|                                                                    
|Total noncurrent assets                                              |      | 235,066    |  | 229,809     |  | Shareholders' equity                       | 14      |            |  |            
|                                                                    
|                                                                     |      |            |  |             |  | Capital                                    |         | 473,551    |  | 53,551     
|                                                                     |      |            |  |             |  | Revenue reserves                           |         | 45,749     |  | 10,710     
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|                                                                    
|                                                                     |      |            |  |             |  | Total shareholders' equity                 |         | 519,300    |  | 64,261     
|                                                                     |      |            |  |             |  |                                            |         |            |  |            
|                                                                    
|Total assets                                                         |      | 13,410,089 |  | 10,511,716  |  | Total liabilities and shareholders' equity |         | 13,410,089 |  | 10,511,716 
|                                                                     |      |            |  |             |  |                                            |         |            |  |            

See the accompanying notes to the financial statements.

4

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Redecard S.A.

Statements of income

Years ended December 31, 2007, 2006 and 2005

(In thousands of Reais, except net income per share)

|                                                       |      |  |           |  |             |  |            
|------------------------------------------------------ | ---- |  | --------- |  | ----------- |  | -----------
|                                                       | Note |  | 2007      |  | 2006        |  | 2005       
|                                                       |      |  |           |  | (Unaudited) |  | (Unaudited)
|Gross revenues                                         |      |  |           |  |             |  |            
|                                                      
|Revenue from services rendered                         |      |  | 1,454,505 |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Credits                                                |      |  | 808,518   |  | -           |  | -          
|Debits                                                 |      |  | 205,477   |  | -           |  | -          
|Equipment leases                                       |      |  | 374,936   |  | -           |  | -          
|Others                                                 |      |  | 65,574    |  | -           |  | -          
|                                                      
|Deductions from gross revenues                         |      |  | (159,205) |  | -           |  | -          
|                                                      
|Tax on Services - ISS                                  |      |  | (52,927)  |  | -           |  | -          
|Profit Participation Program - PIS                     |      |  | (18,958)  |  | -           |  | -          
|Social Security Financing Contribution - COFINS        |      |  | (87,320)  |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Net operating revenues                                 |      |  | 1,295,300 |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Cost of services rendered                              |      |  | (436,679) |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Gross profit                                           |      |  | 858,621   |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|OperatingOperating expenses andand incomeincome        |      |  | (237,032) |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Personnel                                              |      |  | (93,801)  |  | -           |  | -          
|Administrative                                         |      |  | (82,523)  |  | -           |  | -          
|Marketing                                              |      |  | (45,049)  |  | -           |  | -          
|Depreciation and amortization                          |      |  | (6,007)   |  | -           |  | -          
|Other operating expenses, net                          |      |  | (9,652)   |  | -           |  | -          
|                                                       |      |  |           |  | -           |  | -          
|Financial results                                      |      |  | 264,009   |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Financial income                                       |      |  | 391,262   |  | -           |  | -          
|Financial expenses                                     |      |  | (96,571)  |  | -           |  | -          
|Other financial expenses, net                          |      |  | (30,682)  |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Operating income                                       |      |  | 885,598   |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Non-operating income                                   |      |  | 15,971    |  | -           |  | -          
|Expenses related to the Initial Public Offering Shares |      |  | (17,552)  |  |             |  |            
|                                                      
|Income before the participation in the consortium      |      |  | 884,017   |  | -           |  | -          
|                                                       |      |  |           |  |             |  |            
|                                                      
|Participation in the Redecard Consortium               |      |  | 149,092   |  | 442,763     |  | 285,808    
|                                                      
|Income before social contribution, income tax,         |      |  |           |  |             |  |            
|profit sharing and reversal of                         |      |  |           |  |             |  |            
|interest on sharholders' equity                        | 14.b |  | 1,033,109 |  | 442,763     |  | 285,808    
|                                                       |      |  |           |  |             |  |            
|                                                      
|Income and social contribution taxes                   |      |  | (330,583) |  | (149,100)   |  | (99,054)   
|                                                       |      |  |           |  |             |  |            
|                                                      
|Income tax                                             |      |  | (238,398) |  | (109,425)   |  | (72,816)   
|Social conribution                                     |      |  | (92,185)  |  | (39,675)    |  | (26,238)   
|                                                       |      |  |           |  |             |  |            
|                                                      
|Income before profit sharing and reversal              |      |  |           |  |             |  |            
|of interest on shareholders' equity                    |      |  | 702,526   |  | 293,663     |  | 186,754    
|                                                       |      |  |           |  |             |  |            
|                                                      
|Provision for profit sharing                           |      |  | (17,814)  |  | -           |  | -          
|Reversal of interest on shareholders' equity           | 14.b |  | 16,053    |  | -           |  | -          
|                                                      
|Net income for the year                                |      |  | 700,765   |  | 293,663     |  | 186,754    
|                                                       |      |  |           |  |             |  |            
|                                                      
|Net income per share (*)                               |      |  | 1.04      |  | 156.37      |  | 99.44      
|                                                       |      |  |           |  |             |  |            

(*) As of June 15, 2007, after the splitting of the total amount of the common shares, each one (1) registered common share without par value (Common share), held at that date by the Companys shareholders, represents 350 common
shares, upon free distribution of 349 new shares for each existing share. On July 11, 2007 a Shareholders' Meeting decided on the increase of the capital, upon the issuance of 15,555,555 shares, equally subscribed by the controlling shareholders,
Citi, Itaú, Unibanco and paid up on July 17, 2007, in the total amount of R$ 420 million. After such increase, Capital of the Company is divided into 672,970,705 common shares.

See the accompanying notes to the financial statements.

5

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Table of Contents

Redecard S.A.

Statement of changes in shareholders' equity

Years ended December 31, 2007, 2006 and 2005

(In thousands of Reais)

|                                               |  |      |  |         |  |          |  |              |  |             
|---------------------------------------------- |  | ---- |  | ------- |  | -------- |  | ------------ |  | ------------
|                                               |  |      |  |         |  | Revenue  |  | Retained     |  |             
|                                               |  |      |  | Capital |  | Reserves |  | earnings     |  | Total       
|                                              
|Balances as of December 31, 2004 (Unaudited)   |  | Note |  | 45,199  |  | 8,352    |  | -            |  | 53,551      
|                                              
|Capital increase                               |  |      |  | 8,352   |  | (8,352)  |  | -            |  | -           
|                                              
|Net income for the year                        |  |      |  | -       |  | -        |  | 186,754      |  | 186,754     
|                                              
|Distributions:                                 |  |      |  |         |  |          |  |              |  |             
|Legal reserve                                  |  |      |  | -       |  | 9,338    |  | (9,338)      |  | -           
|Dividends distributed                          |  |      |  | -       |  | -        |  | (120,513)    |  | (120,513)   
|Dividends to be distributed                    |  |      |  | -       |  | -        |  | ((56,903), ) |  | ((56,903), )
|                                               |  |      |  |         |  |          |  |              |  |             
|                                              
|Balances as of December 31, 2005 (Unaudited)   |  |      |  | 53,551  |  | 9,338    |  | -            |  | 62,889      
|                                               |  |      |  |         |  |          |  |              |  |             
|                                              
|Net income for the year                        |  | 14   |  | -       |  | -        |  | 293,663      |  | 293,663     
|                                              
|Distributions:                                 |  |      |  |         |  |          |  |              |  |             
|Legal reserve                                  |  | 14   |  | -       |  | 1,372    |  | (1,372)      |  | -           
|Dividends                                      |  | 14   |  | -       |  | -        |  | (292,291)    |  | (292,291)   
|                                               |  |      |  |         |  |          |  |              |  |             
|                                              
|Balances as of December 31, 2006 (Unaudited)   |  |      |  | 53,551  |  | 10,710   |  | -            |  | 64,261      
|                                               |  |      |  |         |  |          |  |              |  |             
|                                              
|Capital increase approved at the shareholders' |  |      |  |         |  |          |  |              |  |             
|meeting at July 11, 2007                       |  | 14.a |  | 420,000 |  | -        |  | -            |  | 420,000     
|Net income for the year                        |  | 14.b |  | -       |  | -        |  | 700,765      |  | 700,765     
|                                              
|Distributions:                                 |  |      |  |         |  |          |  |              |  |             
|Legal reserve                                  |  |      |  | -       |  | 35,039   |  | (35,039)     |  | -           
|Dividends                                      |  | 14.b |  | -       |  | -        |  | (649,673)    |  | (649,673)   
|Interest on shareholders' equity               |  | 14.b |  | -       |  | -        |  | (16,053)     |  | (16,053)    
|                                               |  |      |  |         |  |          |  |              |  |             
|                                              
|Balances as of December 31, 2007               |  |      |  | 473,551 |  | 45,749   |  | -            |  | 519,300     
|                                               |  |      |  |         |  |          |  |              |  |             

See the accompanying notes to the financial statements.

6

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Table of Contents

Redecard S.A.

Statements of changes in financial position

Years ended December 31, 2007, 2006 and 2005

(In thousands of Reais)

|                                              |  |            |  |             |  |           |  |             |  |            
|--------------------------------------------- |  | ---------- |  | ----------- |  | --------- |  | ----------- |  | -----------
|                                              |  |            |  | Note        |  | 2007      |  | 2006        |  | 2005       
|Sources of funds                              |  |            |  |             |  |           |  | (Unaudited) |  | (Unaudited)
|From operations                               |  |            |  |             |  |           |  |             |  |            
|Net income for the year                       |  |            |  | 14.b        |  | 700,765   |  | 293,663     |  | 186,754    
|                                              |  |            |  |             |  |           |  |             |  |            
|Items not affecting working capital           |  |            |  |             |  |           |  |             |  |            
|Depreciation and amortization                 |  |            |  |             |  | 113,496   |  | 134,195     |  | 153,587    
|Gains (Losses) on the sale of fixed assets    |  |            |  | (1,910)     |  | (1,111)   |  | 110        
|Gains (Losses) on investments                 |  |            |  |             |  | (15,629)  |  | (28,313)    |  | 116        
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|                                              |  |            |  |             |  | 796,722   |  | 398,434     |  | 340,567    
|                                              |  |            |  |             |  |           |  |             |  |            
|From shareholders                             |  |            |  |             |  |           |  |             |  |            
|Capitalp increase                             |  |            |  | 14.a        |  | 420,000   |  | -           |  | -          
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|                                              |  |            |  |             |  | 420,000   |  | -           |  | -          
|                                              |  |            |  |             |  |           |  |             |  |            
|From third parties                            |  |            |  |             |  |           |  |             |  |            
|Reduction of long-term assets                 |  |            |  |             |  | 16,313    |  | 6,852       |  | -          
|Proceeds from disposal of fixed assets        |  |            |  |             |  | 3,822     |  | 4,097       |  | 903        
|Proceeds from disposal of investments         |  |            |  |             |  | 15,629    |  | 28,313      |  | -          
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|                                              |  |            |  |             |  | 35,764    |  | 39,262      |  | 903        
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|Total sources of funds                        |  |            |  |             |  | 1,252,486 |  | 437,696     |  | 341,470    
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|Application of funds                          |  |            |  |             |  |           |  |             |  |            
|Operations                                    |  |            |  |             |  |           |  |             |  |            
|Fixed assets                                  |  |            |  |             |  | 136,978   |  | 107,565     |  | 124,293    
|Reduction (increase) of long-term liabilities |  |            |  | 102,770     |  | 12,027    |  | (31,065)   
|Dividends distributed                         |  |            |  | 14.b        |  | 649,673   |  | 292,291     |  | 177,416    
|Interest on shareholders' equity              |  |            |  | 14.b        |  | 16,053    |  | -           |  | -          
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|Total applications of funds                   |  |            |  |             |  | 905,474   |  | 411,883     |  | 270,644    
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|Increase in working capital                   |  |            |  |             |  | 347,012   |  | 25,813      |  | 70,826     
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|                                              |  |            |  | 2007        |  |           |  | 2006        |  | 2005       
|                                              |  |            |  |             |  |          
|                                              |  |            |  |             |  |           |  | (Unaudited) |  | (Unaudited)
|Represented by                                |  | Beginning  |  | End of year |  | Variation |  | Variation   |  | Variation  
|Current assets                                |  | 10,281,907 |  | 13,175,023  |  | 2,893,116 |  | 2,181,265   |  | 2,081,796  
|Current liabilities                           |  | 10,263,712 |  | 12,809,816  |  | 2,546,104 |  | 2,155,452   |  | 2,010,970  
|                                              |  |            |  |             |  |           |  |             |  |            
|                                             
|                                              |  | 18,195     |  | 365,207     |  | 347,012   |  | 25,813      |  | 70,826     
|                                              |  |            |  |             |  |           |  |             |  |            

See the accompanying notes to the financial statements.

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Table of Contents

Redecard S.A.

Statements of cash flows

Years ended December 31, 2007, 2006 and 2005

(In thousands of Reais)

|                                                                        |  |             |  |             |  |            
|----------------------------------------------------------------------- |  | ----------- |  | ----------- |  | -----------
|                                                                        |  | 2007        |  | 2006        |  | 2005       
|                                                                        |  |             |  | (Unaudited) |  | (Unaudited)
|Cash flows from operating activities                                    |  |             |  |             |  |            
|Net income for the year, after distribution of the Consortium's results |  | 700,765     |  | 293,663     |  | 186,754    
|                                                                        |  |             |  |             |  |            
|Adjustments to reconcile net income to net cash from                    |  |             |  |             |  |            
|operating activities:                                                   |  |             |  |             |  |            
|Depreciation and amortization                                           |  | 113,496     |  | 134,195     |  | 153,587    
|(Gains) losses on sale of fixed assets                                  |  | (1,910)     |  | (1,111)     |  | 110        
|(Gains) losses on investments                                           |  | (15,629)    |  | (28,313)    |  | 116        
|                                                                       
|Decrease (increase) in operating assets                                 |  |             |  |             |  |            
|Accounts receivable - Clients                                           |  | (3,107,994) |  | (1,955,904) |  | (2,069,140)
|Recoverable deferred tax                                                |  | 36,995      |  | (15,633)    |  | (24,534)   
|Contingency provision                                                   |  | 3,147       |  | (1,399)     |  | (3,059)    
|                                                                        |  |             |  |             |  |            
|                                                                       
|Increase (decrease) in operating liabilities                            |  |             |  |             |  |            
|Payroll and related charges                                             |  | 4,087       |  | 1,130       |  | 1,251      
|Suppliers                                                               |  | 2,557,684   |  | 2,107,131   |  | 1,922,602  
|Others                                                                  |  | (39,850)    |  | 12,877      |  | 121,205    
|Tax payable                                                             |  | 39,074      |  | 20,669      |  | (2,917)    
|Provision for contingency                                               |  | (102,770)   |  | (12,026)    |  | 46,482     
|                                                                        |  |             |  |             |  |            
|                                                                       
|Net cash from operating activities                                      |  | 187,095     |  | 555,279     |  | 332,457    
|                                                                        |  |             |  |             |  |            
|                                                                       
|Cash flows from investing activities                                    |  |             |  |             |  |            
|Additions of plant and equipment                                        |  | (136,977)   |  | (107,565)   |  | (124,293)  
|Proceeds from disposal of assets                                        |  | 3,822       |  | 4,098       |  | 903        
|Proceeds from disposal of investments                                   |  | 15,629      |  | 28,313      |  | -          
|                                                                        |  |             |  |             |  |            
|                                                                       
|Net cash used in investing activities                                   |  | (117,526)   |  | (75,154)    |  | (123,390)  
|                                                                        |  |             |  |             |  |            
|                                                                       
|Cash flows from financing activities                                    |  |             |  |             |  |            
|Net short-term debt borrowings and financing                            |  | (14,891)    |  | 13,646      |  | (31,171)   
|Payment of dividends and interest on shareholders' equity               |  | (665,727)   |  | (292,292)   |  | (177,416)  
|Capital increase                                                        |  | 420,000     |  | -           |  | -          
|                                                                        |  |             |  |             |  |            
|                                                                       
|Net cash used in financing activities                                   |  | (260,618)   |  | (278,646)   |  | (208,587)  
|                                                                        |  |             |  |             |  |            
|                                                                       
|                                                                       
|Net increase (decrease) in cash and cash equivalents                    |  | (191,049)   |  | 201,479     |  | 480        
|                                                                        |  |             |  |             |  |            
|                                                                       
|Cash and cash equivalents at the beginning of the year                  |  | 215,370     |  | 13,891      |  | 13,411     
|Cash and cash equivalents at the end of the year                        |  | 24,321      |  | 215,370     |  | 13,891     
|                                                                        |  |             |  |             |  |            
|                                                                       
|                                                                        |  | (191,049)   |  | 201,479     |  | 480        
|                                                                        |  |             |  |             |  |            

See the accompanying notes to the financial statements

8

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Table of Contents

Redecard S.A.

Notes to the financial statements

Years ended December 31, 2007, 2006 and 2005

(In thousands of Reais)

1Operations

Redecard S.A. was constituted on November 1, 1996, and its main activity is to act as a trader for transactions using the credit cards under the banners MasterCard®, MasterCard Electronic® and Diners Club International®, and with the
debit cards MasterCard Maestro®, RedeShop® and Maestro®, through registering and approving trade merchants.

The business model for Redecards trading activities consists of registering and approving trade and service entities, and also capturing, transmitting, processing and settling transactions that use the aforementioned credit and debit cards.

Redecards operations consist of the following businesses:

a.Credit and Debit cards: through capturing, processing and settling trade and financial transactions using the aforementioned cards.  For the services provided, Redecard charges these establishments an administration fee, which
comprises the issuers remuneration, referred to as interchange and remuneration for the services provided by Redecard;

b.Anticipated financial settlement to registered trade merchants for amounts receivable from the credit cards MasterCard and Diners Club International, through requests made by these establishments and only for those transactions made
using these cards. Redecard earns financial income from these operations;

c.Leasing of equipment to register the electronic transactions, referred to as Point-of-Sales or POS. The Company earns monthly income from leasing this equipment;

d.Services provided to partner companies through capturing, routing and transmitting transactions made using benefit cards (vouchers), such as: food, meals, fuel, etc, as well as Private Label cards, usually issued by financial
companies. The income earned by Redecard consists of the fees charged to the voucher and financial companies;

e.Credit check services provided to trade merchants by means of consultation with the credit-scoring agency Serasa through the POS equipment. The income earned by Redecard consists of the fees charged directly to these establishments
and a small margin on the costs from Serasa.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

2Redecard Consortium

Redecard S.A. was the leader of a consortium (Consórcio Redecard), constituted on November 1, 1996, the date the Company started operating, and which was terminated on March 31, 2007, consisting of the following consortium members: Banco
Itaucard S.A, Unibanco - União de Bancos Brasileiros S.A. and Banco Citibank S.A.  After the termination of the Consórcio Redecard, all of its activities were assumed by Redecard S.A.

Consórcio Redecard was not a corporate legal entity; and operated as a common enterprise to provide services related to the use of credit and debit cards and other means of payment, at establishments registered and approved by Redecard in
Brazil, and its activities included developing promotional and publicity activities to encourage the use of the aforementioned cards.

Background

At the end of 1970, three banks, Citibank, Itaú and Unibanco founded Credicard, a company set up to administer credit cards. Since its inception, Credicard has been a successful company, accumulating record number of cards issues and number
of establishments qualified. In 1983, it entered into a partnership with Visa International, and started issuing its cards under the rules of this Banner. In 1987, Credicard terminated its agreement with Visa and entered into a partnership with
MasterCard International.

In 1990, Credicard administered the credit card portfolio of 60 financial institutions in Brazil, sharing the results earned from the credit card portfolio, as it had exclusive right to issue the Mastercard credit cards.

Its exclusive right to issue credit cards under the MasterCard banner was interrupted in 1996, as a result of the changes in the market, mainly the incorporation of Banco Nacional by Unibanco. This incorporation resulted in the same corporate group
having an entity responsible for issuing Visa Cards (Banco Nacional) and another entity (Unibanco) being exclusively responsible for issuing, via Credicard, the credit cards with the MasterCard banner.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

Until then, both Credicard, the issuer authorized for the MasterCard banner, and also the issuers of credit cards authorized by Visa, maintained as part of their operations, the activities related to granting credit to the credit card holders and
the activities of registering merchant entities so that they could accept payments for their sales through the use of the credit cards. The end of the exclusive right to the MasterCard banners resulted therefore, in the need to define mechanisms and
processes that would encourage the issue of the maximum possible volume of its credit cards, but at the same time, mitigating risks and reducing costs.

Consequently, on September 2, 1996, Redecard was constituted from the spin off of the area responsible for registering merchant entities from Credicard, with the three main shareholders of Credicard being retained in the company. Later, during 1997,
MasterCard International became a shareholder of Redecard.  The focus of Redecard was on the relationships with the trading merchants and developing and maintaining the systems and specific processes to attend the credit card issuers with the
MasterCard banner in Brazil, as well as the debit card issuers with Redeshop and Maestro banners.

In addition, within the concept of a two sided market, it was necessary to create mechanisms to improve the incentive for issuing credit cards with the MasterCard and Redeshop banners, by other credit card administrators. The constitution of the
Redecard Consortium, since the first day of Redecards operations, on November 01, 1996, was the most effective means identified by the Controlling Shareholders to formalize the association and administer Redecard, taking into consideration the
credit card base issued by Credicard and the systems that had been operating at Credicard, which were transferred to Redecard.

Initially, the Redecard consortium was constituted with the participation of two consortium members: Credicard and Redecard.  In April 1997, in the first alteration to the Statutes of the Redecard Consortium, Credicard assigned part of its rights to
the results from the Consortium directly to the controlling shareholders, common to the two companies. In December 1997, in the second alteration to the Statutes, the shareholder Itaú was entitled to the results on the same basis as
Credicard, through the assignment of the participation equivalent to the credit card base issued by Itaucard.  In the third alteration in January 2006, Credicard withdrew from the Redecard Consortium and the controlling shareholders of Redecard
started to receive the results, which until then, were distributed to Credicard. Finally, the fourth and last alteration, dated March 31, 2007, refers to the interruption and liquidation of the Redecard Consortium. The legal basis for the Contract
for the Constitution of the Redecard Consortium was articles 278 and 279 of law 6.404 of December 15, 1976; it was not a legal entity, and its activities, according to the Third Clause of the Contract, consisted of common enterprise to produce the
following services related to the use, through the Redecard system, of credit cards issued by its Members:

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

a.Administration of the network of merchant entities that accept transactions using credit cards;

b.Obtaining, transmitting, processing and settling transactions generated from using credit cards;

c.Developing other activities that are similar to or related to the interests of the Consortium.

The rights and obligations related to income and the allocation of expenses were regulated in annexes I, II, III and IV. Annex I established the rules to preserve the results from the portfolio of credit cards issued by Credicard and subsequent to
December 1997, also by Itaucard. This Annex determined the distribution to the Consortium members Credicard and Itaucard, of the income from the discount rates charged to the merchant entities, from using the credit cards issued by Credicard and
Itaucard, in proportion to their participation in the income earned.

Annex II includes the income from the discount rates earned from transactions undertaken at the merchant entities, using credit cards issued by the other credit card administrators authorized by MasterCard, both in Brazil and overseas. In addition,
income from the hire of POS equipment was also included.  The income was distributed to the Consortium members based on their shareholding interest in Redecard, except MasterCard.

The purpose of separating the consortium members, in accordance with these two Annexes, was to admit new partners that issue credit cards with the MasterCard banner, increasing and encouraging business for Redecard, but, at the same time, the
shareholders did not wish to dilute the results that could be earned from the credit card base that Credicard had built up over the 25 years of its operations.

Annex III of the Consortiums contract included income from the discount rates charged to the establishments on transactions undertaken using debit cards with the banners Redeshop and Maestro, and also income from anticipation of amounts
payable to the establishments.

Annex IV of the Consortiums contract presented a summary and a diagram of the distribution of income according to Annexes I, II and III.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

Expenses incurred by Redecard, the leader of the consortium, were allocated between all of the consortium members based on the nature of the expense and considering the proportional participation of each member in the consortium income. Thus, all of
the expenses were allocated except those of a financial nature, which were allocated directly to the results from the business from the anticipation of amounts payable to the establishments.

The additional partnerships anticipated at the time of constituting the Redecard Consortium, however, did not occur, and changes in the corporate structure of Credicard in 2004, resulted in changes being made to the Consortium Contract.

The Redecard Consortium operated until March 31, 2007, and its social objects referred to the same activities as those currently undertaken by the Company, which include the registering of establishments to accept credit card payments and also
obtaining, transmitting, processing and settling transactions undertaken using MasterCard and Diners credit and debit cards in Brazil. On this date, the members of the Redecard Consortium were the controlling shareholders.

The Company, as the leader of the Redecard Consortium, performed all of the activities and acts of the Redecard consortium. Since March 31, 2007, with the end of the activities undertaken by the Redecard Consortium, the obligations, rights, income,
expenses and financial and operational results belong wholly to Redecard.

3Presentation of the financial statements and significant accounting policies

The financial statements were prepared in accordance with accounting practices derived from the Brazilian Corporation Law and the rules and regulations of the Brazilian Securities Commission (CVM). All amounts in the financial statements and related
notes for 2006 and 2005 are not audited in accordance with auditing standards generally accepted in the United States of America.

a.Statements of income

Income and expenses are recognized in the income statement on an accruals basis. Revenues earned from credit and debit card transactions are appropriated to results on the dates the transactions are processed. Revenues from services provided to
partners and to trade merchants are recognized in results based when the services are realized. Revenue is not recognized if there are significant uncertainties as to its realization.

b. Accounting estimates

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The preparation of the financial statements in accordance with accounting practices adopted in Brazil requires that management uses its judgment in determining and recording accounting estimates. Significant assets and liabilities subject to these
estimates and assumptions include the residual value of property, plant and equipment, the provision for doubtful accounts, deferred income tax and social contribution and the provision for contingencies.  The settlement of transactions involving
these estimates may result in significantly different amounts due to the inaccuracies inherent in determining them. The Company reviews the estimates and assumptions at least annually.

c.Foreign currency

Monetary assets and liabilities denominated in foreign currencies were translated into Reais at the foreign exchange rate ruling at the balance sheet date. Foreign exchange variations arising on translation are recognized in the income statement.
These balances originate mainly from transactions undertaken at establishments using credit and debit cards issued by foreign institutions, licensed to use MasterCard and Diners Club International cards.

d.Fixed assets

Fixed assets are recorded at acquisition cost and depreciated using the straight-line method at rates which take into account the estimated useful lives of the assets. The costs incurred from replacing a fixed asset component are not capitalized
given the difficulty in estimating the future economic benefit arising from them.

e.Income tax and social insurance contribution

The income and social contribution taxes, both current and deferred, are calculated based on the rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 thousand for income tax and 9% on taxable income for social contribution on
net income.

The provision for these taxes is recorded within Taxes Payable. The deferred tax assets arising from temporary differences have been recorded in accordance with CVM Instruction 371 of June 27, 2002, and take into consideration past
profitability and the expectation of future taxable income based on a technical viability study.

f.Accounts receivable from issuers and accounts payable to merchants

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

These amounts refer to the values of transactions undertaken by holders of credit cards issued by financial institutions licensed to use MasterCard and Diners Club International cards; the balances for accounts receivable from issuers are net of
interchange fees and the balances for accounts payable to merchants are net of administration fees (discount), with recovery from the issuers and payment to the merchants falling due within one year.

g.Other accounts receivable

The amounts recorded within Other accounts receivable refer to: (i) amounts receivable from partners clients for services rendered upon capture, routing and transmission of transactions carried out with benefit cards (voucher),
such as, but not limited to, food, meals, fuel, in addition to Private Label cards, usually issued by financial institutions; (ii) amounts receivable from the qualified establishments referring to the leasing of equipment for electronic capture of
transactions (POS) and for the rendering of credit check services through consultation with Serasas database by means of this equipment.

h.Provision for doubtful debts

The provision for doubtful debts is recorded based on an analysis of the risks of not recovering amounts receivable from issuers and merchants, mainly based on the historic recovery, default and inactivity of issuers and merchants, and is recorded
for an amount considered sufficient to cover possible losses. At December 31, 2007 and 2006, it was not necessary to record a provision for accounts receivable from issuers. A provision has been recorded for the leasing of equipment for capturing
transactions (POS) installed at merchants considered to be inactive by the Company, and for amounts claimed by credit-card holders against merchants that had not been registered and approved by the Company, at the time of the complaint or that do
not have credits receivable from transactions undertaken using MasterCard and Diners Club International credit cards.

i.Borrowings

Stated at the amounts borrowed from financial institutions, plus contractual charges incurred to the balance sheet date.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

j.Contingent liabilities

These arise from legal processes inherent to the normal course of business, filed by third parties and ex-employees, through civil and labor claims. The timing and amount of these contingencies are inherently uncertain. Management utilizes models,
strict criteria and legal advisors to enable their adequate quantification. The contingencies are classified as: probable, for which a provision is recorded; possible, which are disclosed but for which no provision is recorded; or remote, for which
disclosure or a provision is not required.

The provisions that involve tax processes are recorded for an amount equivalent to the total value of the taxes being legally disputed, plus updates for inflation and interest for late payment, as if due, to the balance sheet date.

The provisions for the proceedings with the Labor Courts related to Redecard have been recorded for the total value of the labor claims, updated for inflation, plus interest calculated to the balance sheet dates.

k.Provisions

A provision is recognized in the balance sheet when the Company has a legal obligation or is compelled as a result of a past event, and it is probable that economic resources will be required to settle the obligation. Provisions are recorded at the
best estimates of the risk involved.

l.Other current and long-term assets and liabilities

Stated at net realizable values, at known or calculated amounts, plus, when applicable, the related charges, monetary and/or exchange variations incurred to the balance sheet date.

4Cash and cash equivalents

Consist of amounts available in the Companys bank accounts, represented by amounts deposited with financial institutions that issue credit cards, with these amounts used to settle transactions with merchants on the first business day of the
month subsequent to the balance sheet date.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

5Deferred income and social contribution taxes

a.Composition

The main components of the deferred income and of social contribution taxes are stated below:

|                                         |  |        |  |            
|---------------------------------------- |  | ------ |  | -----------
|                                         |  | 2007   |  | 2006       
|Deferred taxes on temporary differences: |  |        |  | (Unaudited)
|Provision for civil contingencies        |  | 2,906  |  | 2,097      
|Provision for labor contingencies        |  | 3,831  |  | 2,520      
|Provision for tax contingencies          |  | 20,793 |  | 36,080     
|Other provisions                         |  | 45,401 |  | 69,229     
|                                         |  |        |  |            
|                                        
|Total deferred taxes                     |  | 72,931 |  | 109,926    
|                                         |  |        |  |            
|                                        
|Current                                  |  | 45,400 |  | 69,229     
|Non-current                              |  | 27,531 |  | 40,697     

b.Expected realization

The Company prepared projections of future taxable income, which were submitted to the Board of Directors and indicated the recoverability of the amounts recorded as deferred taxes as of December 31, 2007 in accordance with CVM instruction No. 371.

Deferred taxes are expected to be utilized as follows:

|                             |  |            |  |                        
|---------------------------- |  | ---------- |  | -----------------------
|Year of expected realization |  | Income tax |  | Social contribution tax
|                            
|2008                         |  | 33,382     |  | 12,018                 
|2009                         |  | 3,175      |  | 1,143                  

|      |  |        |  |       
|----- |  | ------ |  | ------
|2010  |  | 4,954  |  | 1,783 
|2011  |  | -      |  | -     
|2012  |  | 12,115 |  | 4,361 
|      |  |        |  |       
|     
|Total |  | 53,626 |  | 19,305
|      |  |        |  |       

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

Deferred income and social contribution taxes are recorded to reflect the future tax effects attributable to temporary differences between the tax base for assets and liabilities and the respective book values.

The book value of the deferred tax asset is periodically revised and in the event of significant factors that alter the projections of taxable income these are revised by the Company.

Management considers that the deferred assets arising from temporary differences will be realized at the time of the final resolution of the contingencies and events. At December 31, 2007 and 2006, the Company did not have significant balances of
tax losses carry forwards.

6Other accounts receivable

|                                 |  |          |  |            
|-------------------------------- |  | -------- |  | -----------
|                                 |  | 2007     |  | 2006       
|                                 |  |          |  | (Unaudited)
|Lease of POS equipment           |  | 47,273   |  | 39,879     
|Other Services                   |  | 39,573   |  | 23,227     
|(-) Provision for doubtful debts |  | (15,709) |  | (12,507)   
|                                 |  |          |  |            
|                                
|Total                            |  | 71,137   |  | 50,599     
|                                 |  |          |  |            

7Prepaid expenses

|                                      |  |       |  |            
|------------------------------------- |  | ----- |  | -----------
|                                      |  | 2007  |  | 2006       
|                                      |  |       |  | (Unaudited)
|Software maintenance                  |  | 2,862 |  | 3,295      
|Insurance premium                     |  | 84    |  | 68         
|Tax incentive - ISS (tax on services) |  | 985   |  | 79         
|                                      |  |       |  |            
|Total                                 |  | 3,931 |  | 3,442      
|                                      |  |       |  |            

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

8Fixed assets

|                                     |  |              |  |         |  |              |  |           |  |            
|------------------------------------ |  | ------------ |  | ------- |  | ------------ |  | --------- |  | -----------
|                                     |  |              |  |         |  |              |  |           |  | (Unaudited)
|                                     |  |              |  |         |  |             
|                                     |  |              |  |         |  | 12.31.2007   |  |           |  | 12.31.2006 
|                                     |  |              |  |         |  |             
|                                     |  | Annual       |  |         |  |              |  |           |  |            
|                                     |  | depreciation |  |         |  | Accumulated  |  | Net fixed |  | Net fixed  
|                                     |  | rates of %   |  | Cost    |  | depreciation |  | assets    |  | assets     
|                                    
|Equipment for recording transactions |  |              |  |         |  |              |  |           |  |            
|(POS)                                |  | 33.33        |  | 693,781 |  | (533,145)    |  | 160,636   |  | 142,187    
|Equipment for capturing transactions |  | 20.00        |  | 33,913  |  | (29,842)     |  | 4,071     |  | 6,841      
|Information Technology equipment     |  | 20.00        |  | 17,409  |  | (12,930)     |  | 4,479     |  | 4,321      
|Data processing systems - Software   |  | 20.00        |  | 37,845  |  | (22,874)     |  | 14,971    |  | 6,850      
|Vehicles                             |  | 20.00        |  | 3,918   |  | (1,493)      |  | 2,425     |  | 3,165      
|Furniture and fixtures               |  | 10.00        |  | 3,266   |  | (1,966)      |  | 1,300     |  | 1,420      
|Installations                        |  | 10.00        |  | 1,822   |  | (1,005)      |  | 817       |  | 973        
|Leasehold improvements               |  | 9.50         |  | 7,983   |  | (3,790)      |  | 4,193     |  | 4,780      
|Construction in progress             |  | -            |  | 3,956   |  | -            |  | 3,956     |  | 4,741      
|                                     |  |              |  |         |  |              |  |           |  |            
|                                    
|Total                                |  |              |  | 803,893 |  | (607,045)    |  | 196,848   |  | 175,278    
|                                     |  |              |  |         |  |              |  |           |  |            

The net amount reported as Equipment for Recording Transactions (POS) of R$ 160,636 as of December 31, 2007 (R$ 142,187 as of December 31, 2006), refers to the equipment for recording electronic transactions available at the
establishments registered with the Redecard System. As of December 31, 2007, the Company had installed 779,528 items of POS equipment (642,364 as of December 31, 2006), which represented 99.94% of the volume of transactions recorded
electronically by the Company (99.86% as of December 31, 2006). Redecard has two different types of equipment:

a.Fixed equipment, also called POS (Points of Sale) Desktop. As of December 31, 2007 the Company had installed 727,913 items of equipment (608,885 as of December 31, 2006).

b.Wireless equipment, also called POS Wireless. As of December 31, 2007, the Company had installed 51,615 items of equipment (33,479 as of December 31, 2006) which were separated between:

  Indoor: 2,214 for internal use by registered establishments.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

  Outdoor: 49,401 for external use by registered establishments.

9Taxes payable

|                                                |  |        |  |            
|----------------------------------------------- |  | ------ |  | -----------
|                                                |  | 2007   |  | 2006       
|                                                |  |        |  | (Unaudited)
|Income tax                                      |  | 27,901 |  | 13,184     
|Social contribution tax                         |  | 11,699 |  | 5,990      
|Cofins - Social Security Financing Contribution |  | 12,815 |  | 1,575      
|ISS - Tax on Services                           |  | 8,002  |  | 7,014      
|PIS - Profit Participation Program              |  | 2,782  |  | 342        
|Withholding income taxes                        |  | 5,106  |  | 1,126      
|                                                |  |        |  |            
|                                               
|Total                                           |  | 68,305 |  | 29,231     
|                                                |  |        |  |            

Reconciliation of income and social contribution taxes expenses:

|                                                       |  |           |  |             |  |            
|------------------------------------------------------ |  | --------- |  | ----------- |  | -----------
|                                                       |  | 2007      |  | 2006        |  | 2005       
|                                                       |  |           |  | (Unaudited) |  | (Unaudited)
|Net income before income and social contribution taxes |  | 1,015,295 |  | 442,763     |  | 285,808    
|Combined statutory rates for income and social         |  |           |  |             |  |            
|contribution taxes - 34%                               |  | 345,200   |  | 150,539     |  | 97,175     
|Permanent differences, net                             |  | (14,617)  |  | (1,440)     |  | 1,879      
|                                                      
|Income and social contribution taxes                   |  | 330,583   |  | 149,099     |  | 99,054     
|                                                       |  |           |  |             |  |            
|                                                      
|Current                                                |  | 293,588   |  | 164,732     |  | 74,520     
|                                                       |  |           |  |             |  |            
|                                                      
|Deferred                                               |  | 36,995    |  | (15,633)    |  | 24,534     
|                                                       |  |           |  |             |  |            

10Borrowings

|                |  |          |  |             |  |               |  |         |  |            
|--------------- |  | -------- |  | ----------- |  | ------------- |  | ------- |  | -----------
|Description     |  | Currency |  | Charges     |  | Maturity      |  | 2007    |  | 2006       
|                |  |          |  |             |  |               |  |         |  | (Unaudited)
|Working capital |  | R$       |  | 104.0% CDI  |  | -             |  | -       |  | 144.575    
|Working capital |  | R$       |  | 103.13% CDI |  | 30 to 60 days |  | 216,288 |  | 214,106    

|                |  |    |  |             |  |                 |  |         |  |        
|--------------- |  | -- |  | ----------- |  | --------------- |  | ------- |  | -------
|Working capital |  | R$ |  | 103.36% CDI |  | 120 to 180 days |  | 144,502 |  | -      
|                |  |    |  |             |  |                 |  |         |  |        
|Overdrafts      |  |    |  |             |  |                 |  | -       |  | 17,000 
|                |  |    |  |             |  |                 |  |         |  |        
|Total           |  |    |  |             |  |                 |  | 360,790 |  | 375,681
|                |  |    |  |             |  |                 |  |         |  |        

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

There are no guarantees, restrictive or reciprocity clauses (covenants) in the above stated contracts.

11Dividends payable

The amounts relating to fiscal year 2007 are being distributed to the Shareholders on a quarterly basis and paid according to the criteria defined in the Companys Bylaws, pursuant to chapter VI art. 31. See note 14.b.

Dividends payable related to fiscal years 2006 and 2005 were calculated as presented in note 14b and were fully paid in 2007 and 2006, respectively.

12Other accounts payable

|                                    |  |         |  |            
|----------------------------------- |  | ------- |  | -----------
|                                    |  | 2007    |  | 2006       
|                                    |  |         |  | (Unaudited)
|Private pension plan                |  | 965     |  | 1,397      
|Professional fees                   |  | 1,328   |  | 2,170      
|Customer service                    |  | 4,288   |  | 3,299      
|Marketing expenses                  |  | 5,383   |  | 7,770      
|Telecommunication services          |  | 7,702   |  | 7,664      
|Data processing services            |  | 11,295  |  | 15,186     
|Incentive payable to card issuers   |  | 23,607  |  | 42,072     
|Equipment Maintenance  POS         |  | 26,044  |  | 27,310     
|Brand rates (MasterCard and Diners) |  | 26,461  |  | 22,645     
|Others                              |  | 10,683  |  | 23,233     
|                                    |  |         |  |            
|                                   
|Total                               |  | 117,756 |  | 152,746    
|                                    |  |         |  |            

The amounts within Other Accounts Payable relate to provisions for expenses incurred in each of the above-mentioned fiscal years, recorded on an accrual basis.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

13Contingent liabilities

Redecard S.A. is a party to litigations and administrative proceedings before several governmental courts and agencies, arising in the normal course of its business, involving tax, labor and civil issues.

As of December 31, 2007 balances refer to provisions that according to the judgment of the Companys Management which also considers the opinion of its legal counsel were recorded for amounts deemed sufficient to cover eventual losses. These
provisions are periodically reassessed by the Companys Management. The Judicial Deposits relating to certain of these contingencies are recorded within Noncurrent assets in the group Long-Term Assets - R$
10,687 (R$ 13,834 on December 31, 2006).

a.Composition of provisions

Management, based on information from its legal advisors, analyses of pending legal claims and, with respect to labor claims, based on prior experience from amounts claimed, has recorded a provision for an amount considered sufficient to cover
losses from the outstanding claims, as follows:

|       |  |        |  |            
|------ |  | ------ |  | -----------
|Nature |  | 2007   |  | 2006       
|       |  |        |  | (Unaudited)
|Civil  |  | 8,547  |  | 6,168      
|Labor  |  | 11,269 |  | 7,412      
|Tax    |  | 61,157 |  | 170,163    
|       |  |        |  |            
|      
|Total  |  | 80,973 |  | 183,743    
|       |  |        |  |            

The amount of the total risk of the above-mentioned contingencies was calculated taking into consideration the claims filed by the Plaintiffs in each of the lawsuits.

b.Movements of provisions

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

|       |  |             |  |                   |  |             |  |           |  |        
|------ |  | ----------- |  | ----------------- |  | ----------- |  | --------- |  | -------
|       |  | December    |  |                   |  |             |  |           |  |        
|       |  | 31, 2006    |  | December 31, 2007
|       |  |             |  |                  
|       |  | (Unaudited) |  |                   |  |             |  |           |  |        
|       |  | Initial     |  | Addition to       |  |             |  |           |  | Ending 
|Nature |  | balance     |  | the reserve       |  | Utilization |  | Reversals |  | balance
|      
|Civil  |  | 6,168       |  | 3,085             |  | (706)       |  | -         |  | 8,547  
|Labor  |  | 7,412       |  | 4,308             |  | (451)       |  | -         |  | 11,269 
|Tax    |  | 170,163     |  | 25,920            |  | (60,132)    |  | (74,794)  |  | 61,157 
|       |  |             |  |                   |  |             |  |           |  |        
|      
|Total  |  | 183,743     |  | 33,313            |  | (61,289)    |  | (74,794)  |  | 80,973 
|       |  |             |  |                   |  |             |  |           |  |        

13.1 - ISS on lease of equipment- Service Tax or ISS, is a tax charged by the municipality and due on income earned from services of any nature. The Company, understanding that the lease of assets does not constitute an activity
subject to ISS, has not paid the tax on this income since November 2000. However, because it considers this tax a legal obligation, and also based on managements and the Companys legal advisors assessment that an unfavorable outcome on
this matter is probable, the Company has recorded a provision for the period until Complementary Law 116/03, of August 2003, came into force.  A Declaratory Action was filed, aimed at the anticipated concession of the effects of the court order
under the terms of article 273, I, of the civil process code, combined with article 151, V, of the National Tax Code, with the text provided by Complementary Law 104/2001, to suspend the liability for ISS, on leasing of assets, in the municipalities
of São Paulo, Belo Horizonte, Brasília, Rio de Janeiro, Recife, Salvador, Manaus and Maceió. The provision as of December 31, 2007 is R$ 48 thousand (R$ 41 thousand as of December 31, 2006).

13.2 - In 2001, the Company obtained a preliminary injunction, related to the month of February 1999 and subsequent periods, to suspend the liability for PIS and COFINS under the terms of Law 9.718/98, at the rate of 3%, on income that does
not fall within the concept of revenue (financial income, including monetary variations and interest income, etc.), guaranteeing the payment in accordance with Complementary Law 70/91, or, at least, to guarantee the right to set off in full the
expenses arising from foreign exchange variation, including that from financing and swap/hedge contracts, for purposes of calculating PIS and COFINS. In April 2002, a sentence was published which partially granted the injunction filed, which
declared the unconstitutional nature of paragraphs 1 of article 3, of Law 9.718/98, enabling the Company to pay PIS and COFINS - in accordance with the concept of revenue stated in Complementary Law 70/91, but maintaining the rate of 3%. The Federal
Government has appealed.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

In February 2007, a decision was published that was unfavorable to the Federal Government, confirming the sentence that declared the unconstitutional nature of the increase in the PIS and COFINS calculation base, which should be considered as
revenue to the Company, but retaining the rate of 3%.  The Company requested the Supreme Court to provide further clarifications as to the concept of revenue. With respect to the risk involved, the Supreme Court decided that COFINS and PIS, under the terms of Law 9.718/98, can only be demanded on income arising from the sale of goods and/or services. Given the jurisprudence established, as a result of the decisions passed by the Supreme Court, and
considering the evaluation of the loss, the Company has reversed R$ 48.3 thousand related to this provision, as reported in item b - Movements of provisions. Since the income arising from the foreign exchange variations was the specific
object of the declaratory appeals, the Company decided to maintain the provision recorded, thus observing the accounting concepts for registering legal obligations, in addition to the fact that the risk from loss is considered to be probable. The
provision as of December 31, 2007 is R$ 6 thousand (R$ 52.5 thousand as of December 31, 2006).

13.3 -PIS and Cofins:In March 2004, the Company filed a Writ of Mandamus against Laws 10.637/02 and 10.833/03, suspending the liability for PIS and COFINS contributions, calculated using the non cumulative method, at the rates of
1.65% and 7.60%, respectively, and made judicial deposits for the amounts calculated each month. In July 2004, a sentence was published judging the request to be unfounded. Consequently, the Company requested an official dispatch to Caixa
Econômica Federal, so that the judicial deposits could be converted to income for the State. The accumulated value of the judicial deposits as of December 31, 2007 was R$ 6.4 thousand.

13.4 -In October 2004, Redecard was informed of a tax foreclosure with respect to a debt from PIS Repique for 1999, for amounts declared in the DCTF (Declaration of Federal Contribution and Taxes) but not identified
in the governments payment system.  In the same month, Redecard requested the suspension (i) of the course of the tax foreclosure; and (ii) the cancellation of the Companys name in the register of tax debtors with the Federal Government.
In November 2004, a legal decision was passed in favor of the two requests. In July 2005, a petition was dispatched with a copy of the payment document and in the following month, a stay of execution was registered, which is awaiting an opinion to
be given by the National Treasury. The tax foreclosure has been suspended. The risk of loss has been classified as probable and a provision of R$ 0.6 thousand was recorded.

Since provisions have been made for all of the tax, labor and civil discussions, management does not anticipate additional significant reductions to the Companys shareholders equity/results, when the processes are concluded.

Tax proceedings closed during the 2007 fiscal year:

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

Economic Activities Intervention Contribution (CIDE) - Writ of Mandamus seeking to suspend the demand ability of the CIDE payment, Law no 10168/2000, amended by Law no 10332/2001. In July 2004, a decision was published considering the petition not valid. An appeal was filed in July 2004 and since then the Company has
been depositing the amounts in court. In September 2006, the Company requested the discontinuance of the appeal and that an official letter be sent to the Caixa Econômica Federal, so that the deposits in court can be converted into Federal
Governments revenue. On December 13, 2007, the deposits in court were converted into the Federal Governments revenues and the lawsuit was definitively terminated. The amount that was recorded as provision for contingencies in relation to
this case and settled after the conversion of the deposits was R$ 3.7 thousand.

Non-deductibility of the social contribution tax expense on the Income Tax basis - Redecard filed a Writ of Mandamus seeking to have its right to deduct Social Contribution Tax expense from the Income Tax calculation base for years ending after
December 31, 1997. The Company obtained a preliminary injunction and, later, a decision was rendered granting security to ensure Redecard the right to deduct the Social contribution tax expense from the Income Tax calculation base. In view of said
decision, the National Treasury filed an appeal to the 3rd Region of the TRF (Appellate Court), which reversed the decision that favored the Company. Redecard opted to pay the amounts relating to the period under discussion (January 2002
to October 2007) and no longer recorded the deductibility of this expense in the subsequent periods. The Company reversed a provision of R$ 26.5 thousand relating to the periods where it can no longer be assessed by the authorities due to the
statute of limitation. This decision is not definitive, since there are appeals pending judgment, without suspending procedures. The amount provisioned and paid was R$ 56.4 thousand.

14Shareholders equity

a.Capital

Capital is represented by 672,970,705 common shares, nominative, with no par value, distributed as follows:

|                                           |  |         
|------------------------------------------ |  | --------
|                                           |  | 2007 - %
|                                          
|Banco Citibank S.A.                        |  | 23.95   
|Banco Itaucard S.A.                        |  | 23.21   
|Dibens Leasing S.A. Arrendamento Mercantil |  | 18.99   
|Unibanco Participações Societárias S.A.    |  | 4.22    
|Others                                     |  | 29.63   

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

As of June 15, 2007, after the splitting of the total amount of the common shares, each one (1) common share without par value (Common share), held on this date by the Companys shareholders, has been represented by 350 common
shares, upon free distribution of 349 new shares for each existing share.

On July 11, 2007 the Company obtained its register as a public-held company, allowing its shares to be traded at the Bovespa. On the same date, the Company was also granted a registration of its Primary and Secondary offering of common shares. These
measures allowed the entrance of the Company on the New Market segment of Bovespa on July 13, 2007 and increased the Companys capital.

Also on July 11, 2007, there was a Shareholders meeting that decided on the increase of the capital, upon the issue of 15,555,555 shares, equally subscribed by the controlling shareholders, Citi, Itaú, Unibanco and paid up on July 17,
2007, in the total amount of R$ 420 thousand. After such increase, Capital is currently divided into 672,970,705 common shares and has gone from R$ 53 thousand to R$ 473 thousand.

The item Revenue Reserves represents the amounts recorded as Legal Reserve, at the rate of 5% of the net income for each year, under art. 193 of Law No. 6404/76, up to the limit of 20% of the corporate capital.

b.Dividends and interest on shareholders equity

Pursuant to chapter VI, article 29, letter c of the Bylaws, the minimum mandatory statutory dividends correspond to forty per cent (40%) of the adjusted net income for the year, as provided by article 202, of the Corporate
Law. In 2006 and 2005, the minimum mandatory statutory dividends corresponded to twenty-five percent (25%).

The Company, pursuant to article 9 of Law no 9249/95 and CVM Resolution No. 207/96, in the year ended December 31, 2007, credited Interest on Shareholders Equity pursuant to chapter VI, article 31 of the Bylaws. Dividends and interest on
the Shareholders Equity were computed pursuant the Companys Bylaws and in compliance with the Corporate Law, as follows:

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

|                        |  |         |  |             |  |            
|----------------------- |  | ------- |  | ----------- |  | -----------
|                        |  | 2007    |  | 2006        |  | 2005       
|                        |  |         |  | (Unaudited) |  | (Unaudited)
|Net income for the year |  | 700,765 |  | 293,663     |  | 186,754    

|                                                        |  |           |  |          |  |         
|------------------------------------------------------- |  | --------- |  | -------- |  | --------
|Apropriation of legal reserve                           |  | ( 35,039) |  | ( 1,372) |  | ( 9,338)
|                                                        |  |           |  |          |  |         
|Adjusted net income                                     |  | 665,726   |  | 292,291  |  | 177,416 
|Minimum mandatory dividends (pursuant to the Bylaws)    |  | 266,290   |  | 73,073   |  | 44,354  
|Dividends proposed                                      |  | 665,726   |  | 292,291  |  | 177,416 
|Interest on shareholders equity imputed to the minimum |  |           |  |          |  |         
|mandatory dividends                                     |  |           |  |          |  |         
|Interest on shareholders equity                        |  | 16,053    |  | -        |  | -       
|Withholding tax on Interest on Shareholders equity     |  | ( 2,415)  |  | -        |  | -       
|                                                        |  |           |  |          |  |         
|Interest on shareholders equity                        |  | 13,638    |  | -        |  | -       
|Supplementary dividends                                 |  | 385,798   |  | 219,218  |  | 133,062 
|Dividends paid                                          |  | 443,375   |  | 222,862  |  | 120,513 
|Dividends payable                                       |  | 206,298   |  | 69,429   |  | 56,903  
|Number of shares (by tranche of thousand)               |  | 672,971   |  | 1,878    |  | 1,878   
|Dividends and Interest on shareholders equity by share |  | 0.9892    |  | 155.64   |  | 94,47   
|                                                        |  |           |  |          |  |         

Interest on the Shareholders Equity net of Income tax shall be imputed in full to dividends pursuant to Law 9249/95. This interest on shareholders' equity was recorded under financial expenses, as required by tax legislation. For the purposes
of these financial statements, this interest was excluded from net income for the year ended December 31, 2007 and was charged to retained earnings

The dividends proposed by the Companys Management, as interest on the Shareholders Equity were recorded based on the assumption that they would be approved by the Shareholders General Meeting.

The tax benefit arising from the decision of the Company to pay interest on Shareholders Equity is R$ 5.5 thousand.

15Transactions with related parties

The transactions among related parties, on December 31, 2007, 2006 and 2005, related to accounts receivable from issuers that are also the Companys Controlling Shareholders, as well as to the expenses with services rendered by Orbitall.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

|                         |  |      |  |             |  |            
|------------------------ |  | ---- |  | ----------- |  | -----------
|                         |  | 2007 |  | 2006        |  | 2005       
|Assets                   |  |      |  | (Unaudited) |  | (Unaudited)
|Balance on bank accounts |  |      |  |             |  |            

|                                     |  |           |  |           |  |          
|------------------------------------ |  | --------- |  | --------- |  | ---------
|Citibank                             |  | 14,660    |  | 8,998     |  | 11,284   
|Itaú                                 |  | 862       |  | 494       |  | 1,786    
|Unibanco                             |  | 456       |  | 130       |  | 9,857    
|                                    
|Net accounts receivable from issuers |  |           |  |           |  |          
|Credcard Banco S.A.                  |  | -         |  | -         |  | 3,016,508
|Citibank                             |  | 1,846,181 |  | 2,208,104 |  | 231,272  
|Itaucard                             |  | 4,159,674 |  | 3,597,681 |  | 1,564,588
|Unibanco                             |  | 1,461,060 |  | 755,929   |  | 627,636  
|                                    
|Results                              |  |           |  |           |  |          
|Expenses with services rendered      |  |           |  |           |  |          
|Orbitall (1)                         |  | 50,738    |  | 48,942    |  | 63.447   
|                                    
|Financial expenses:                  |  |           |  |           |  |          
|Citibank                             |  | 1,065     |  | 25,676    |  | 2,344    
|Itaucard                             |  | 9,380     |  | 5,228     |  | 1,520    
|Unibanco                             |  | 6,080     |  | -         |  | 152      

(1) Orbitall Serviços e Processamento de Informações Comerciais S.A. is a company controlled by the Itaú Holding Financeira S.A., the same holding company that controls Itaú.

The amounts of Accounts Receivable from issuers refer to the amounts due to the Company by the Issuers, brought about the transactions carried out with credit and debit cards of MasterCard and Diners Club Banners, which will be passed on by the
Company to the qualified establishments.

Contracting conditions with issuers are established as a result of the regulations and manuals issued by MasterCard and Diners Banners Club. Thus, these transactions with related parties are performed at prices and conditions similar to those
practiced with the other issuers of credit or debit cards authorized by the MasterCard and Diners Club Banners.

The Company entered into a services agreement with Orbitall, including the maintenance and operation of hardware infrastructure, both for the mainframe platform and for the distributed platform, as well as for the management, operation and
management of the administration of communication between these platforms and the third parties platforms, in addition to the data processing. Contracting conditions, both the ones related to prices as well as the ones related to a minimum
level of the services contracted, are in line with conditions normally negotiated in the market.

On November 15, 1996, Redecard entered with MasterCard International into a Trademark License Agreement, by means of which MasterCard International licensed the Company, on a non-exclusive basis, to use the MasterCard Banners trademarks in the qualified establishments. This agreement was executed for an indeterminate term, and Redecard must follow the standards established by MasterCard to qualify the
establishments, which include, but are not limited to, the rules on signage (the trademark presentation patterns) of the establishment, and trademark property rights.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

On October 24, 2002, Redecard entered with MasterCard International into a Trademark License Agreement, by means of which MasterCard International licensed the Company, on a non-exclusive basis, to use the Redeshop trademark, which had been
previously acquired by MasterCard International from Credicard.

On April 27, 2005, Redecard entered with MasterCard International into a Trademark License Agreement, by means of which MasterCard International licensed the Company, on a non-exclusive basis, to use the MasterCard Banners trademarks,
including the MasterCard Maestro and other logos of the MasterCard trademarks.

16Financial instruments

The estimated realizable values of the Companys financial assets and liabilities were determined based on information available on the market and appropriate evaluation methodologies. However, considerable judgment was required in interpreting
market data to arrive at the most appropriate estimated realizable values. Consequently, the following estimates do not necessarily reflect the amounts that could be realized on a current exchange market.  The use of different market methodologies
could have a material effect on the estimated realizable values. These instruments are managed by means of operational strategies aimed at liquidity, profitability and security. The control policy consists of continually accompanying the rates
contracted compared to market rates in force. The Company does not make speculative investments in derivatives or any other high risk assets.

During the fiscal years of 2007 and 2006, the Company did not hold derivative financial instruments.

a.Composition of balances

In compliance with CVM Ruling no 235/95, the carrying amounts and the market values of the financial instruments included in the balance sheet as of December 31, 2007 and 2006, are identified below:

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

| |  |      |  |      |             |            
| |  | ---- |  | ---- | ----------- | -----------
| |  | 2007 |  | 2006
| |  |      |  |      |             |            
| |  |      |  |      | (Unaudited) | (Unaudited)

|                                   |  |          |         |  |          |        
|---------------------------------- |  | -------- | ------- |  | -------- | -------
|                                   |  | Carrying | Market  |  | Carrying | Market 
|Description                        |  | amount   | value   |  | amount   | value  
|                                  
|Borrowings - In Brazilian currency |  | 360,790  | 360,790 |  | 375,681  | 375,681

b.Criteria, assumptions and limitations adopted to calculate market values

Borrowings

The market values of borrowings were calculated based on their present values calculated based on future cashflows, using interest rates applicable to instruments of a similar nature, with similar terms and risks, or based on market quotations for
these securities.

Limitations

The market values were estimated at the balance sheet date, based on relevant market information. Any changes in the assumptions could significantly affect the estimates reported.

c.Credit risk

The values for accounts receivable from issuers represent the values of transactions undertaken by cardholders with cards issued by financial institutions licensed by the banners MasterCard and Diners Club International and are guaranteed by these
banner institutions in the event of default. These guarantees are stipulated in the regulations issued by these two credit card networks. In addition, MasterCard stipulates the requirement for effective guarantees (real or bank guarantees) for each
participant in the system, without which it is not possible to obtain a license, or the license could be lost if this requirement is not fulfilled. The Company is the only registering entity in Brazil for the banners MasterCard and Diners Club
International and has a specific policy for registering and approving trade merchants, for them to accept these two credit cards for their commercial and financial activities.

This policy defines the criteria for approving trade merchants, which considers, amongst other factors, the type of trade activity and the time they have been trading, and also specifies the documents required and the investigation method to enable
the Company to register the trade merchant.

The Company has operational systems and a portfolio management area that accompanies the sales performance recorded daily by the approved merchants, and any deviations in performance are monitored and measures are taken to mitigate losses being incurred by any of the participants in the credit card system.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

For those authorized merchants that do not have their own systems for recording transactions, the Company can deliver equipment for registering electronic transactions (POS), under leasing contracts.  The leasing amount is deducted, on the due date,
from the value of the transactions settled with the merchants. However, it is possible that the lease is not received on the due date in the event balances payable by the merchants do not exist. In such cases, the Company charges the amount using
firms specialized in recovering credits, but significant losses from leases may occur.

The systems used by the credit card companies also provide for the possibility that transactions undertaken using credit cards are questioned by the titleholders, within a certain period as from the date of performing the transaction. If the
merchant is not authorized on the date of the complaint or there are no amounts receivable from the Company, collection is made through firms specialized in recovering credits, with the possibility of losses being incurred by the Company.

The Company also has a provision for doubtful debts, for the amount of R$15.7 thousand (R$12.5 thousand as of December 31, 2006) representing 17% of the balance for other accounts receivable outstanding (18% as of December 31, 2006) to cover credit
risks.

d.Foreign exchange risk

The Companys income is not subject to significant variations from the effects of foreign exchange variations on its liabilities tied to foreign currencies, mainly the North American dollar.

e.Interest rate risk

The Companys results are susceptible to significant variations from borrowings contracted based on variable interest rates.

In accordance with its financial policies, the Company has not undertaken operations of a speculative nature involving financial instruments.

17Comparative statements of income

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The Redecard Consortium maintained its operations until March 31, 2007 and had as its business purpose the same activities that are currently undertaken by the Company, which are, qualification of establishments to accept payment cards, as well as
capture, processing and financial settlement of the transactions carried out with credit and debit cards of MasterCard and Diners Banners in Brazil. The members of Redecard Consortium were the Controlling Shareholders of Redecard S.A.

As of April 1, 2007, the obligations, rights, revenues, expenses and financial and operational results have been fully transferred to Redecard S.A.

With the purpose of presenting comparative results of Redecards operations in full and by the amounts effectively recorded for the years ended December 31, 2007, 2006 and 2005, we present below statements of income information that include
both the transactions recorded at the Redecard Consortium, until March 31, 2007, and at the legal entity Redecard S.A., from April 1, 2007 to December 31, 2007.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The Redecard Combined Result, for years ended December 31, 2007, 2006 and 2005, are as follows:

|                                                          |           |  |             |  |            
|--------------------------------------------------------- | --------- |  | ----------- |  | -----------
|Statements of income information                          |           |  |             |  |            
|                                                          | 2007      |  | 2006        |  | 2005       
|Gross revenues                                            |           |  | (Unaudited) |  | (Unaudited)
|Revenues from services rendered                           | 1,872,415 |  | 1,570,326   |  | 1,315,027  
|                                                          |           |  |             |  |            
|                                                         
|Credits                                                   | 1,032,585 |  | 891,687     |  | 790,787    
|Debits                                                    | 262,906   |  | 202,237     |  | 151,677    
|Equipment lease                                           | 489,972   |  | 406,342     |  | 317,699    
|Others                                                    | 86,952    |  | 70,060      |  | 54,864     
|                                                         
|Deductions from gross revenues                            | (193,959) |  | (139,567)   |  | (121,259)  
|                                                          |           |  |             |  |            
|                                                         
|Tax on Services-ISS                                       | (68,207)  |  | (58,776)    |  | (50,715)   
|Profit Participation Program-PIS                          | (21,716)  |  | (12,265)    |  | (9,350)    
|Social Security Financing Contribution-COFINS             | (104,036) |  | (68,526)    |  | (61,194)   
|                                                         
|Net operating revenues                                    | 1,678,456 |  | 1,430,759   |  | 1,193,768  
|                                                          |           |  |             |  |            
|                                                         
|Cost of services rendered                                 | (566,874) |  | (588,610)   |  | (565,862)  
|Cost of services rendered                                 | (461,690) |  | (463,355)   |  | (413,887)  
|Depreciation and amortization                             | (105,184) |  | (125,255)   |  | (151,975)  
|                                                         
|Gross profit                                              | 1,111,582 |  | 842,149     |  | 627,906    
|                                                          |           |  |             |  |            
|                                                         
|Operating (expenses)/income                               | (300,604) |  | (256,056)   |  | (277,486)  
|                                                          |           |  |             |  |            
|                                                         
|Personnel                                                 | (121,261) |  | (115,179)   |  | (88,246)   
|Administrative                                            | (110,283) |  | (100,364)   |  | (96,700)   
|Marketing                                                 | (49,180)  |  | (42,457)    |  | (38,900)   
|Depreciation and amortization                             | (8,312)   |  | (8,933)     |  | (5,141)    
|Other operating (expenses) income                         | (11,568)  |  | 10,877      |  | (48,499)   
|                                                         
|Financial results                                         | 426,052   |  | 348,638     |  | 323,818    
|                                                          |           |  |             |  |            
|                                                         
|Financial income                                          | 535,134   |  | 543,619     |  | 527,712    
|Financial expenses                                        | (134,595) |  | (178,585)   |  | (203,978)  
|Other financial (expenses) income                         | 25,513    |  | (16,396)    |  | 84         
|                                                         
|Operating income                                          | 1,237,030 |  | 934,731     |  | 674,238    
|                                                          |           |  |             |  |            
|                                                         
|Expenses related to the Initial Public Offering of Shares | (17,553)  |  | -           |  | -          
|Non-operating results                                     | 16,546    |  | 29,424      |  | -          

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

|                                               |            |  |           |  |          
|---------------------------------------------- | ---------- |  | --------- |  | ---------
|                                               | 2007       |  | 2006      |  | 2005     
|                                              
|Income before social contribution, income tax, |            |  |           |  |          
|profit sharing and reversal of                 |            |  |           |  |          
|interest on shareholders' equity               | 1,236,023  |  | 964,155   |  | 674,238  
|                                               |            |  |           |  |          
|                                              
|Income and social contribution taxes           | ( 330,583) |  | (149,100) |  | (99,054) 
|                                               |            |  |           |  |          
|                                              
|Income tax                                     | ( 238,398) |  | (109,425) |  | (72,816) 
|Social contribution                            | ( 92,185)  |  | (39,675)  |  | (26,238) 
|                                              
|Income before profit sharing and reversal      |            |  |           |  |          
|of interest on shareholders' equity            | 905,440    |  | 815,055   |  | 575,184  
|                                               |            |  |           |  |          
|                                              
|Provision for profit sharing                   | ( 24,551)  |  | (26,823)  |  | (19,367) 
|Reversal of interest on shareholders' equity   | 16,053     |  | -         |  | -        
|                                              
|Net income before distribution                 | 896,942    |  | 788,232   |  | 555,817  
|                                               |            |  |           |  |          
|of Redecard Consortium                         |            |  |           |  |          
|Distribution of the consortium results         | ( 196,177) |  | (494,569) |  | (369,063)
|                                              
|Net income for the year                        | 700,765    |  | 293,663   |  | 186,754  
|                                               |            |  |           |  |          

18Other information

a.On November 15, 1996, Redecard entered with MasterCard International into a Trademark License Agreement, by means of which MasterCard International licensed the Company, on a non-exclusive basis, to use the trademarks of the
MasterCard Banner in qualified establishments. This agreement was executed for an indeterminate term and Redecard has to follow the standards established by MasterCard to qualify establishments, which include rules about the establishments
signage, trademark property rights, but are not limited thereto.

Among the several obligations undertaken by Redecard with MasterCard International is the assignment or tendering of formal guarantees on all the amounts considered exposed, under the Regulations and Policies of the MasterCard Banner. The amounts
construed as exposed are those brought about by transactions carried out with the credit cards issued with the MasterCard Banner already received from the issuers by Redecard and that have not been paid to the establishments yet. This exposure is
equivalent to three days of the transactions amounts, on an average basis.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

In order to provide guarantees, the Company contracted with Brazilian non-shareholder financial institutions the formalization of letters of guarantees, in the amount of approximately R$ 1.1 thousand, having MasterCard International as the beneficiary.  The financial costs which are fully supported by Redecard, were R$ 5.2 thousand for the year ended December 31, 2007 (R$ 7.4 thousand in 2006). The letters of
guarantee were issued on March 13, 2007 and will mature on March 12, 2008. The tendering thereof to MasterCard is an essential condition for Redecard to continue being licensed by MasterCard:

|                      |  |            
|--------------------- |  | -----------
|                      |  | Amount - R$
|Financial institution |  | million    
|                     
|Banco Santander       |  | 342        
|Banco do Brasil       |  | 300        
|Banco Bradesco        |  | 246        
|Banco Real            |  | 142        
|Banco Safra           |  | 70         

The Companys Bylaws prohibit tendering bail, aval guarantee, endorsement or any other guarantee not related to the corporate purpose, or that is against the provisions in the Bylaws, except for the tendering of bail, aval
guarantee or some other guarantee needed for transferring and lodging of employees.

The Company does not tender aval guarantees, bails or guarantees without the prior authorization of its Board of Directors, under art. 16, letter f of the Companys Bylaws.

b.The Company, despite presenting a low level of claims has a policy to contract insurance coverage for its assets. The policies were contracted with the Royal SunAlliance, through the AON Risk Services, as the Companys insurance brokerage company, for the term from April 2007 to April 2008. The total cost of the risk premiums referring to years ended in 2007, 2006 and 2005 were R$282.4, R$240.6 and R$400, respectively, and
are divided into:

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

|                  |  |                                                       |  |                |  |               
|----------------- |  | ----------------------------------------------------- |  | -------------- |  | --------------
|                  |  |                                                       |  | Value          |  | Amounts       
|Field of activity |  | Assets secured                                        |  | at risk        |  | covered       
|                 
|RD Equity         |  | Buildings, furniture, fixtures and installations that |  | R$ 27 thousand |  | (*)           
|                  |  | constitute the Companys establishments               |  |                |  |               
|                  |  | (headquarters and branches), described in the         |  |                |  |               
|                  |  | policy                                                |  |                |  |               
|                 
|Vehicles          |  | All the Companys vehicles                            |  | R$ 5 thousand  |  | R$ 5 thousand 
|                 
|                  |  | Equipment allocated at the network of Redecards      |  |                |  |               
|                  |  | qualified establishments against risks of fire,       |  |                |  |               
|                  |  | thunderbolt strike, aggravated robbery and/or theft   |  |                |  |               
|POS equipment   |  | etc.                                                  |  | (**)           |  | R$ 500        
|                 
|                  |  | POS equipment and signage and marketing material      |  |                |  |               
|Corporate         |  | stored in third parties locations - Deposit          |  |                |  |               
|Comprehensive     |  | warehouse.                                            |  | R$ 12 thousand |  | R$ 12 thousand

(*) The most relevant amounts covered, according to the insurance policy are: (i) fire, thunderbolt, explosion, for the Companys offices - R$ 23 thousand; (ii) civil liability - R$ 2 thousand.

(**) The total amount of these equipment corresponds to approximately R$ 600 thousand, acquisition cost registered in the Fixed Assets (POS). This equipment is installed in the establishments qualified by Redecard throughout Brazil, currently over 1
million. For the purpose of defining value at risk, among other variables, the probability of the simultaneous occurrence of accidents in all the establishments is analyzed. Historically speaking, the amount of accidents that occurred
during the same period that the policy was effective was approximately R$ 100.

c.The participation of employees in the Companys results was computed based on the plan set by the Management and approved by the Board of Directors. Referring to the year ended on December 31, 2006, the Company paid R$ 15.6
thousand (R$ 12.9 thousand in 2005) to its employees as participation in the results, which were recorded in the Consortium. The expense accounted for at the year ended December 31, 2007 is R$ 24.5 thousand.

d.Remuneration of the Directors and of the Board of Directors: (i) the Directors are the Companys legal representatives, chiefly in charge of its daily management and the implementation of general policies and guidelines
established by the Board of Directors. They are all Brazilians and resident in Brazil. The Directors are elected by the Board of Directors, for a two-year term of office, reelection is permitted and they may at any time be removed from the office.
According to the Companys Bylaws, the body of Directors must be composed of, at least, three, and of no more than eight members. On December 31, 2007, the Companys body of Directors was composed of seven members, one of whom was the Chief Executive Officer. In the year ended December 31, 2007, the
Directors remuneration reached the amount of R$ 6.9 thousand (R$ 5.2 thousand in 2006 and R$ 4.9 thousand in 2005) according to a program approved by the Board of Directors. The Board of Directors is composed of at least five and no more than
ten members.

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The Company approved a stock option plan (the Plan), under article 168, Paragraph 3, of the Corporate Law, which establishes the general conditions for granting options of shares issued by the Company to its executive officers and, in
exceptional and justified cases, to employees.

Shareholders, under article 171, Paragraph 3, of the Corporate Law, shall not have preference in the exercise of the options.

The issue of shares, in the context of the Plan, will result in a dilution for the existing shareholders that, according to the Plan, cannot be in excess of 0.5% of the Companys capital.

The strike price of the options shall be fixed by the Companys Board of Directors, in compliance with the minimum price equivalent to the average value of the Companys shares, in the last 30 trading sessions at BOVESPA immediately prior
to the date the options are granted. Exceptionally, in the first allotment, the strike price will be equivalent to 75% of the Issue Price set forth by the Board of Directors in a meeting on July 11, 2007, based on the result of the book building
procedure carried out when the Company went public.

During the year ended 2007, there were no shares or options granted by the Company to its directors or employees.

e.Redecard sponsors Credicards retirement and supplementary retirement plans, both maintained by CITIPREVI - Closed Entity for Complementary Pensions. Redecard is not the only sponsor for these plans, but its liability to the
plans is not joint, i.e., the costing and the assets of the retirement plans to which Redecard is a sponsor are segregated from those of the other sponsors.

Redecard is responsible for 100% of the costs of the retirement benefits provided to its employees, under a defined benefit plan (Credicard Retirement plan - Sponsor: Redecard). In addition, it makes 50% of the contributions for a defined
contribution retirement plan (Credicard supplementary retirement plan - Sponsor: Redecard). The employees can participate in both plans, in one plan or in none of the plans.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The benefit plans are evaluated by an actuary at the end of each year, in order to ascertain that the contribution rates are sufficient to create the reserves necessary for the commitments towards existing and future payments.  CITIPREVI - Closed
Entity for Complementary Pensions, is a closed complementary pension entity, constituted in accordance with complementary law 109, of May 29, 2001, as a corporate entity that is separate from its sponsors.

The actuarial reports were prepared by Mercer Human Resource Consulting Ltda. The actuarial assumptions adopted as calculation basis were:

|                                                     |  |                   |  |                  
|---------------------------------------------------- |  | ----------------- |  | -----------------
|Assumptions                                          |  | 2007              |  | 2006             
|                                                     |  |                   |  | (Unaudited)      
|Nominal discount rate for actuarial obligation       |  | 10.25%            |  | 10.25%           
|Nominal income rate expected on the plans assets    |  | 12.50%            |  | 12.50%           
|Estimated inflation rate in the long term (basis for |  |                   |  |                  
|determining the nominal fees above)                  |  | 4.00%             |  | 4.00%            
|Salary growth                                        |  | 6.00%             |  | 6.00%            
|Biometric table of general mortality                 |  | AT83              |  | UP94             
|Biometric table of disability retirement             |  | Mercer Disability |  | Mercer Disability
|Table of expected rotativity                         |  | Mercer Service    |  | Mercer Service   

The plans assets used in this assessment are those of November 30, 2007 adjusted to their values at December 31, 2007. The individual data used is from July 31, 2007, updated to December 31, 2007.

The reconciliation of the assets and liabilities recorded are as follows:

|                                                                    |  |       |  |            |  |            
|------------------------------------------------------------------- |  | ----- |  | ---------- |  | -----------
|Description                                                         |  |       |  | 12/31/2007 |  | 12/31/2006 
|                                                                    |  |       |  |            |  | (Unaudited)
|Current value of actuarial obligations with coverage                |  | (+)   |  | 39,272     |  | 35,408     
|Fair value of the plans assets                                     |  | (-)   |  | (45,190)   |  | (35,505)   
|Current value of obligations in excess of the fair amount of assets |  | L/(A) |  | (5,918)    |  | (97)       
|                                                                    |  |       |  |            |  |            
|a) actuarial (gains) or losses not accounted for                    |  | (G)/L |  | (5,210)    |  | -          
|(=) Total net actuarial liability/(asset) to be provisioned         |  | (=)   |  | (707)      |  | ( 97)      

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

The statement of the activity of the net actuarial Liability/(Asset) is presented below:

|                                                             |  |     |  |           
|------------------------------------------------------------ |  | --- |  | ----------
|Description                                                  |  |     |  | 12/31/2007
|                                                            
|Net actuarial liability/(asset) at the beginning of the year |  | (+) |  | ( 97)     
|Expense (revenue) recognized in the last year results        |  | (+) |  | 1,813     
|Contributions from Supporter conveyed during the year        |  | (-) |  | 2,423     
|Impact brought about advance reduction in the benefit plan   |  | (+) |  | -         
|Impact brought about advance settlement in the benefit plan  |  | (+) |  | -         
|Actuarial net liability/(asset) at years end                |  | (=) |  | ( 707)    

The calculation of the actuarial amount of (gains) or losses, in the amount of R$ (5,210), shown on the reconciliation table of assets and liabilities is composed as follows:

|                                         |         |  |             |  |            
|---------------------------------------- | ------- |  | ----------- |  | -----------
|Description                              | 2007    |  | 2006        |  | 2005       
|                                         |         |  | (Unaudited) |  | (Unaudited)
|(Gain)/loss in the actuarial obligations | (2,010) |  | -           |  | -          
|(Gain)/loss in the plans assets         | (3,200) |  | -           |  | -          
|(Gain)/loss at years end                | (5,210) |  | -           |  | -          

There are no reserve insufficiencies in the plans and there are no overdue obligations.

The surplus amounts were not recorded as assets by the Company, because the Companys Management understands that there was no clear evidence that the surplus, would be used to effectively reduce the future contributions from the Company to the
plan. The Companys Bylaws have no provisions regarding any commitment connected to insufficient equity.

f.Management is currently analyzing the impacts, if any, on the Companys financial statements produced with the approval of Law no 11.638/07, which amends provisions Corporate Law no 6.404/76. In managements
preliminary understanding, there should be no expected significant adjustments in the Companys equity/results.

19Subsequent Events

a.Shares in MasterCard

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Table of Contents

Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

We are a principal member of MasterCard since we started operating. MasterCard International began the process of conversion into a private corporation in June 2002. At the time, principal members across the world received shares representing the
capital stock of MasterCard Incorporated at no cost, based on their share of MasterCard operations. As a result, the Company received 533,687 class A shares subject to a clause preventing their sale or assignment. In May 2006, MasterCard
Incorporated listed shares on the New York Stock Exchange. Concomitantly, the class A shares previously allocated to principal members were converted into class B shares, at a ratio of 1.35 class B share per class A share, such that Redecard
received 720,477 class B shares, which participate in dividend distributions while carrying no voting rights. Additionally, each principal member received one class M share not entitled to participate in dividend distributions, but carrying voting
rights for the appointment of two members of the board of directors of MasterCard Incorporated. In June 2006, MasterCard Incorporated repurchased from each principal member 59% of the holdings in class B shares. Pursuant to this transaction, we sold
425,225 class B shares for R$28.3 thousand, which generated a gain in the second quarter of 2006. After this transaction, our interest in the shares issued by MasterCard Incorporated comprised 295,495 class B shares and one class M share. In the
fourth quarter of 2007, MasterCard Incorporated established a program allowing for conversion of class B shares into class A shares, at a ratio of 1:1 share, which would then be traded on the New York Stock Exchange. The Company decided to take part
in this program, and converted and sold 44,324 class A shares for R$16 thousand, while keeping an interest in 251,171 class B shares. Finally, in the first quarter of 2008, the Company sold all its class B shares to Bank of America N.A, another
principal member. As a result of this sale, the Company recognized non-operating income of R$85.1 thousand, which accounted for 25% of our pre-tax income (income before social contribution and income tax) for the first quarter of 2008. Since then,
we hold no interest in the capital stock of MasterCard Incorporated other than the interest in one class M share we will hold as long as we are a principal member of MasterCard Incorporated.

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Redecard S.A.

Notes to the financial statements

(In thousands of Reais)

b.Follow-on

Pursuant to the minutes of the special shareholders meeting held on February 19, 2008, which was rectified and ratified on February 26, 2008, we approved a follow-on offering involving a secondary offering of a portion of the common shares
issued by us which Banco Citibank S.A. holds. The minutes of these shareholders meetings were published on the issues of March 6, 2008, of the State Official Gazette of São Paulo and in newspaper DCI  Comércio,
Indústria e Serviços. The offering price per share was approved at the special shareholders meeting of Banco Citibank S.A., held on March 12, 2008, whose minutes were published in the newspaper DCI - Comércio,
Indústria e Serviços and in the State Official Gazette of São Paulo, issued on March 13, 2008.

Banco Citibank S.A., as selling shareholder, offered 40,692,417 common, non-par, registered book-entry shares issued by us, which are free and unencumbered within the scope of a global offering conducted in Brazil and abroad.

The offering included an over-allotment option granted to the lead coordinator to cover over-allotment, exercisable for 6,103,860 supplementary shares held by the selling shareholder and representing a maximum of 15.0% of the initially offered
shares, which would sell at the same price and under the same conditions established in the global offering.

Ultimately, the total number of shares sold in the global offering was 46,771,464, such that our ownership structure after the closing of the offering is the following:

|                                           |  |                  |  |       
|------------------------------------------ |  | ---------------- |  | ------
|                                           |  | Number of shares |  | %     
|                                          
|Banco Citibank S.A                         |  | 114,405,020      |  | 17.00 
|Banco Itaucard S.A.                        |  | 156,196,501      |  | 23.21 
|Dibens Leasing S.A. Arrendamento Mercantil |  | 127,797,137      |  | 18.99 
|Unibanco Participações Societárias S.A.    |  | 28,399,364       |  | 4.22  
|Other                                      |  | 246,172,683      |  | 36.58 
|                                          
|Total                                      |  | 672,970,705      |  | 100.00
|                                           |  |                  |  |       

20Summary of certain accounting differences between Brazilian GAAP and

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Notes to the financial statements

(In thousands of Reais)

Generally Accepted Accounting Principles in the United States (U.S.GAAP)

There are certain significant differences between Brazilian GAAP and U.S.GAAP, which may be relevant to the financial information presented herein. The Company has made no attempt to identify all or to quantify the impact of these differences. The Company
has summarized certain aspects of those differences but this summary should not be construed to be exhaustive.

Future differences between Brazilian GAAP and U.S. GAAP resulting from changes in accounting standards or from transactions or events that may occur in the future have not been taken into account in this summary and we have not attempted to identify
them.

Ongoing projects of the regulatory bodies that promulgate Brazilian GAAP and U.S. GAAP can affect future comparisons between Brazilian GAAP and U.S. GAAP such as this summary.

This summary does not purport to be complete and is subject and qualified in its entirety by reference to the respective pronouncements of the Brazilian and United States accounting professional bodies.

a.Comprehensive Income

Brazilian GAAP does not generally recognize the concept of comprehensive income. Certain aspects of comprehensive income regarding the fair value of securities available for sale are considered under Brazilian GAAP.

Under U.S. GAAP, SFAS No. 130, Reporting Comprehensive Income, effective for years beginning after December 15, 1997, requires the disclosure of comprehensive income. Comprehensive income is comprised of net income and other
comprehensive income that includes charges or credits taken directly to equity which are not the result of transactions with owners. Examples of other comprehensive income items are cumulative translation adjustments under SFAS No. 52,
unrealized gains and losses under SFAS No. 115, and the effects of cash flow hedge accounting under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.

b.Use of Estimates

Under Brazilian GAAP, there are no requirements to disclose the use of estimates in the preparation of financial statements. Under U.S. GAAP, Statement of Position  SOP 94-6 requires financial statement disclosure about the nature of a companys operations and the use of estimates in the preparation of financial statements. In addition, if certain criteria are
met, it requires the disclosure of significant estimates affecting the financial statements and sensitivity to certain concentrations of business transactions, revenue and supply resources and areas of operation.

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c.Extraordinary Items

Under Brazilian GAAP, extraordinary items may be disclosed separately in the income statement but normally gross of the income tax effect. Under U.S. GAAP extraordinary items (i.e., items of unusual nature and infrequent occurrence) are
disclosed separately in the income statement, net of the income tax effect if applicable. Additionally, under U.S. GAAP extraordinary items are defined in a more restricted manner than under Brazilian GAAP.

d.Share Issuance Costs

Under Brazilian GAAP, costs related to public offering of shares are charged to expenses as incurred. Under U.S. GAAP, costs related to public offering of shares are deducted from the proceeds received from such offering, as a charge to capital.

e.Accrued Interest

Under Brazilian GAAP, accrued interest are presented with the principal amounts.

Under U.S. GAAP, accrued interest   would be separately recorded, from the principal amount.

f.Notional Interest Charge on Own Capital

Subject to certain limitations, Brazilian GAAP permits companies to distribute or capitalize an amount of interest on shareholders equity based on the TJLP. Such amounts are deductible for tax purposes and are presented as a direct reduction
of shareholders equity.

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Notes to the financial statements

(In thousands of Reais)

No similar concept exists under U.S. GAAP and such payments would be recorded in the same manner as dividends.

g.Income Taxes

Under Brazilian GAAP, the methods for the recording of income taxes are similar to U.S. GAAP, but their practical application may lead to different results in certain circumstances. The recognition of tax benefits derived from temporary differences
and tax losses is an area that requires, under Brazilian GAAP, a reasonable amount judgment. In general, tax benefits are recognized when there is evidence of future realization under a going-concern assumption.

Tax benefit rules prohibit the recognition of tax benefits whenever there has been a tax loss for the last three-year period (including the current year) or available evidence indicates that realization is unlikely.

Under U.S. GAAP, the asset and liability method is used to calculate the income tax provision, as specified in SFAS No. 109, Accounting for Income Taxes. Under the asset and liability method, deferred tax assets or liabilities are
recognized with a corresponding charge or credit to income (or in certain cases to shareholders equity) for differences between the financial and tax basis of assets and liabilities at each year/period end.  The deferred tax assets and
liabilities are measured using rates enacted by law. Entities operating in highly inflationary environments do not record deferred taxes for differences relating to certain assets and liabilities that are remeasured into U.S. dollars at historical
exchange rates, and that result from changes in exchange rates, or indexing to inflation in local currency for tax purposes.  Net operating loss carry forwards arising from tax losses are recognized as assets, and valuation allowances are
established to the extent it is not more likely than not that such assets will be recovered.  There may be differences in timing with respect to the recognition of the effects of changes in tax rates.  In addition, under SFAS No. 109, provisional
measures, which are temporary differences used by the Government to determine changes in tax rates, are not considered to be enacted law.

In July 2006, the FASB issued FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (FIN 48).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprises financial statements and prescribes a threshold of more-likely-than-not for recognition of tax benefits of uncertain tax positions taken or expected to be taken in a tax return.  FIN 48 also provides related guidance on
measurement, derecognition, classification, interest and penalties, and disclosure.  The provisions of FIN 48 are effective on January 1, 2007, with any cumulative effect of the change in accounting principle to be recorded as an adjustment to
opening retained earnings.

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h.Cash and Cash Equivalents

Under Brazilian GAAP, the concept of cash equivalents is less defined than under U.S. GAAP.

Under U.S. GAAP, SFAS No. 95 Statement of Cash Flows defines cash equivalents as short-term highly liquid investments that are both:

(a) readily
  convertible to known amounts of cash; and

(b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

(c) Generally, only investments with original maturities of three months or less qualify under that definition.

i.Profit Sharing

Under Brazilian GAAP expenses related to employees and officers profit sharing are generally accounted for as a non-operating item in the statement of income, while under US GAAP these expenses are accounted for as operating expenses
within operating results.

j.Share-based Compensation

Under Brazilian GAAP, no expense for stock-based compensation, such as stock options and warrants, is usually recognized in the financial statements. The purchase of the stock by employees is recorded as an increase in capital stock for the amount
of the purchase price. Footnote disclosure of details of stock-options and other stock based incentives is necessary.

SFAS No. 123R (Accounting for Stock Based Compensation) defines a fair value-based method of accounting for an employee stock option or similar equity instrument and encouraged all entities to adopt that method of accounting for all of their
employee stock compensation plans. Under the fair value-based method, compensation cost is measured at the date of the grant based on the value of the award and is recognized over the service period, which is usually the vesting period. For periods
beginning after June 15, 2005, U.S. GAAP requires a public entity that is not a small business issuer to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award
(with limited exceptions) under the provisions of SFAS No. 123R (which was issued in December 2004 and amends SFAS No. 123).

k.Earnings Per Share

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Notes to the financial statements

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Under Brazilian GAAP, disclosure of earnings per share is computed based on the number of shares outstanding at the end of the year. The number of shares and earnings per share are not restated retroactively for changes in capital structure, such as a stock split or reverse stock split.

Under U.S. GAAP, in accordance with SFAS No. 128, "Earnings per Share," the presentation of earnings per share includes earnings per share from continuing operations and net income per share on the face of the income statement, and the per share effect of changes in accounting principles, discontinued operations and extraordinary items either on the face of the income statement or in a note to the financial statements. A dual presentation is required: basic and diluted. Computations of basic and diluted earnings per share data is based on the weighted average number of common shares outstanding during the period and all potentially dilutive common shares outstanding during each period presented, respectively.

SFAS No. 128 requires the restatement of shares and earnings per share data if the number of common shares outstanding increases as a result of a share bonus or stock split or decreases as a result of a reverse stock split, such that the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If per-share computations reflect such changes in the number of shares, SFAS No. 128 requires that fact to be disclosed.

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