Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

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Sumário

Item 2.1/2.2

Due to restrictions in the Empresas.Net system, which stores and sends Reference Form-related data to the CVM, the actual period for which the independent auditors provided services could not be shown, since the periods extended beyond the fiscal year balance sheet dates.

Periods in which the services of audit firm PRICEWATERHOUSECOOPERS were provided are shown below:

3.3 – Events subsequent to the most recent financial statements

3.6 – Declaration of dividends charged to the retained earnings account or reserves

3.7 – Level of indebtedness

3.8 – Obligations by nature and due date

The selected financial information in this item refers to the consolidated accounting statements.

NB: Item 3.1: Breakdown of net income – consolidated

Distribution of dividends and retention of net income

Note that the accounting statements used policy for use of income and distribution of dividends and interest on own capital as per items 3.4 and 3.5, respectively, were prepared in accordance with accounting practices adopted in Brazil and applicable to institutions authorized to operate by the Central Bank of Brazil.

Alterations of the benchmark interest rate made by the Central Bank's monetary policy committee (COPOM) may substantially and adversely affect our margins and results from operations.

COPOM sets basic interest rates for the Brazilian banking system. Basic interest rates were 8.75%, 10.75% and 11.0% per annum on December 31, 2009, 2010 and 2011, respectively. Variations in the basic interest rate may substantially and adversely affect our results from operations for these reasons:

·    low basic interest rates may reduce our net financial income.

The monetary policy committee (COPOM) sets the benchmark interest rate to manage certain aspects of the Brazilian economy, including hedge capital reserves and flows. The basic interest rates set by COPOM or the frequency at which these rates are adjusted are not controlled.

Events and perception of risk in Brazil and in other countries, specially other emerging markets, may negatively affect the market value of Brazilian securities, including our preferred and common shares.

The market value of securities issued by Brazilian companies is affected to varying degrees by economic and market conditions in other countries including other Latin American countries, and other emerging countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors' reaction to events in these countries can have an adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging countries may reduce investor appetite for securities from Brazilian issuers, including the ones issued by Bradesco, which might negatively affect the market value of our preferred and common shares.

The recent global financial crisis had a significant impact around the world, including Brazil, such as volatility on capital markets, the credit crunch, higher interest rates, a slowdown in the world economy, volatile exchange rates, and inflationary pressure, among other factors that have had and may continue to have, directly or indirectly, a negative impact on our business, financial condition, results of operations, the market value of Brazilian issuers' securities, including ours, and our ability to fund our operations .

Risks related to Bradesco and the Brazilian banking sector

We may be faced with a high level of arrears in repayment of loans, to the extent that our loans and advances portfolio matures.

Our loans and advances portfolio has grown substantially since 2004, mainly due to Brazil's economic growth. Any corresponding increase in our level of borrowing taking an abnormal course may lead to a slower pace than the ratio of growth of non-performing loans and advances, since the latter are not normally repayable within a short period of their origination. Levels of past-due loans for our individual customers are higher than for corporate clients. From 2009 to 2011, our portfolio of loans and advances to customers grew 39.3% and our level of past-due loans rose 31.3%, due to the increase in the numbers of individual clients.

The weakening of economic conditions in Brazil, which began in mid-2008, resulted in higher unemployment, which in turn led to increases in our levels of non-performing loans, especially for personal customers’ portfolio. This trend towards higher levels of non-performing loans deteriorated in 2009. In 2010, there was an improvement in our customers' delinquency indicators as a result of economic recovery in Brazil, reflected in a reduction of expense due to impairment of loans and advances. Our level of past-due loans and advances rose in 2011, and our impairment of loans and advances rose 14.9% on 2010, while our loans and advances rose 16.8% in the same period. However, if economic conditions deteriorate in Brazil, we may have to increase our impairment of loans and advances in the future.

Rapid growth of loans may also reduce the ratio of non-performing loans compared to total loans, until the rate of growth slackens or the portfolio becomes more mature. Adverse economic conditions and a lower rate of growth of loans and advances to customers may result in an increase in our loss on impaired loans and advances, writedowns, and ratio of past-due loans to total loans, which may have an adverse effect on our business, financial condition and results of operations.

Adverse conditions in credit and capital markets may adversely affect our ability to obtain timely access to funds at reduced costs.

The recent volatility, disruption and uncertainty in credit and capital markets generally have lowered liquidity and led to higher funding costs for financial and non-financial institutions. These conditions may impact our ability to rollover obligations that are maturing at low cost and/or our ability to obtain timely access to funds in order to execute our growth strategy. If we are forced to postpone capital increases or pay unattractive interest rates in order to obtain capital, our financial condition and results of operations may be adversely affected.

The increasingly competitive environment in banking and insurance in Brazil may adversely affect our business prospects.

The Brazilian markets for financial, banking and insurance services are highly competitive. We face significant competition from other large Brazilian and foreign banks and insurance companies, both public and private, in all the key segments of its operations.

Competition has grown as a result of recent consolidations among financial institutions in Brazil and regulations of the National Monetary Council, which we call "CMN", which made it easier for customers to switch their banking funds/business. Heightened competition may significantly and adversely affect us, and among other effects, may limit our ability to retain and grow our existing customer base and expand our operations, and reduce our profit margins on banking products, thus restricting investment opportunities to some extent.

Moreover, Brazilian regulations create barriers to entry and make no distinction between foreign and Brazilian commercial and investment banks or between Brazilian and foreign insurance companies and insurers. Consequently, increased presence of foreign banks and insurance companies in Brazil, some with more resources than us, has heightened competitiveness in the banking and insurance markets in general and for certain products in particular. Privatization of public (government controlled) banks has also made the Brazilian banking and other financial services markets more competitive.

A higher level of competition may adversely affect our results and potential business, and may among other factors:

·    restrict our ability to build our customer base and expand our operations;

·     lower our profit margins on banking products and services, and insurance, leasing and other services and products offered by us; and

·    lead to more competition for foreign investment opportunities.

Losses on investments in securities may have a significant impact on our results from operations and are unpredictable.

The value of some of our investments in financial assets may fall significantly due to disruption in financial markets, and they may vary over short periods. On December 31, 2011, investments in financial assets accounted for 20.2% of our assets, and gains and losses from investments have had and continue to have a significant impact on results of our operations. The amounts of these gains and losses, which are journalized as investments in financial assets are sold, or in certain circumstances in which they are marked to market or recognized at fair value, may fluctuate substantially from one period to another. The extent of fluctuation depends partly on our investment policies and the market value of financial assets, which in turn may vary considerably. It is not possible to predict the amount of gains or losses realized in a certain future period and our management believes that variations from one period to another are of no practical value for the purposes of analysis. In addition, any income on our investment portfolio may no longer contribute to net interest income at the same levels as in recent periods, and we may not be able to show the gains currently made on our consolidated investment portfolio, or any portion of such gains.

We may suffer losses associated with exposure to counterparties.

We are subject to the possibility of a counterparty not honoring its contractual obligations. Counterparties default may be due to bankruptcy, lack of liquidity, operational failure, or other reasons. This risk may arise, for example, with swaps or other derivatives in which counterparties have an obligation to pay or execute currencies or other trades that do not occur when required due to inability to make delivery or system failures affecting clearing agents, currency exchange, clearing houses or other financial intermediaries. This counterparty risk is more pronounced in complex markets, on which there is greater risk of counterparty failure.

Our trading in derivatives and related transactions may cause substantial losses.

We are actively engaged in trading securities, and in buying fixed-income securities and equity shares, in particular, to sell them in the short-term with the aim of profiting from short-term price differentials. These investments may expose Bradesco to substantial financial losses in the future, since securities are subject to fluctuations in value and may lead to losses. In addition, we enter into derivative transactions to manage our exposure to currency risk and interest-rate risk. The purpose of these derivative transactions is to protect Bradesco against increases or decreases in exchange rates or interest rates, but not in both cases. For example, we may buy derivatives to hedge against reductions in the rate of the Brazilian real or a lower interest rate; if the Brazilian real appreciates, or interest rates rise, we may incur financial losses. Such losses could significantly and adversely affect our cash flow and future results of operations.

The Brazilian government regulates operations of local financial institutions and insurance companies, and changes in existing regulations and laws or new laws or regulations may adversely affect our operations and revenues.

Brazilian banks and insurance companies, including our banking and insurance operations, are subject to extensive and ongoing regulatory supervision by the Brazilian government. We have no control over government regulation, which governs all aspects of our operations, including the imposition of:

·                         minimum capital requirements;

·                         compulsory deposits/reserves;

·                         requirements for investment in fixed assets;

·                         lending limits and other credit restrictions;

·                         accounting and statistical requirements;

·                         solvency margins;

·                         minimum coverage levels; and

·                         mandatory policies for provisioning.

The regulatory framework for banks and insurance companies in Brazil is constantly evolving. Existing laws and regulations may be altered, or the ways in which the laws and regulations are implemented or interpreted may change, and new laws and new regulations may be introduced. These changes may adversely affect our operations and revenues.

The Brazilian government, in particular, has historically promulgated regulations affecting financial institutions in an attempt to implement its economic policies. These regulations aim to control the availability of credit and boost or lower consumption in Brazil. These alterations may adversely affect us since our returns on compulsory deposits are lower than those on our other investments.

Part of our business currently not subject to government regulations may be regulated in the future. For example, various legislative proposals to regulate the credit card sector are now being discussed in Brazil's Congress. Some of these proposals aim to increase competitiveness in the sector and restrict tariffs charged by credit card companies. On November 25, 2010, for example, the Central Bank issued new rules on tariff charges for financial institutions, and even set criteria for calculating minimum amounts to be paid on credit card invoices. These rules, which came into effect on June 1, 2011, for contracts signed after that date (and which will come into effect on June 1, 2012 for contracts signed before June 1, 2011), determine, among other things, that only five types of service fees may be charged, including annuities, fees for issuing duplicate drafts, withdrawals, bill payments and emergency requests for credit reviews, and the minimum amount to be paid on each invoice must be not less than 20.0% of the total. New regulations affecting the credit card industry may have a material negative effect on our revenues from credit card business. Such regulations and regulatory changes affecting other business dealings in which we are involved, including leasing and brokerage, may have a negative effect on our operations and revenues.

Brazil's Constitution set a ceiling for interest rates on loans, including interest rates on bank loans, and the impact of subsequent legislation containing regulations on this matter is uncertain.

The Brazilian constitution's Article 192, promulgated in 1988, set a 12% per annum cap for interest rates charged on bank loans. However, after promulgation of the constitution, this rate was not put into practice since the regulatory aspects for the cap were still pending. The interpretation that this ceiling has not yet come into force was recently confirmed by Binding Precedent No. 7, a final decision and binding precedent promulgated by Federal Supreme Court in 2008, confirming the court's previous view on this issue. Since 1988, several attempts have been made to adjust lending rates, particularly interest rates on bank loans, but none have been implemented or upheld by higher courts in Brazil.

On May 29, 2003, Constitutional Amendment No. 40 (locally known as EC 40/03) was enacted to repeal all paragraphs and subparagraphs of Article 192 of Brazil's constitution. This amendment allows the Brazilian financial system, also known as "SFB", to be regulated by specific laws for each system sector rather than a single law for the system as a whole.

Under the new Civil Code (Law 10406 of January 10, 2002), in its current wording, unless parties to a loan agreement have agreed on a different rate, the interest rate was capped at the basic interest rate charged by the National Treasury. This basic rate is now the SELIC rate, which stood at 9.0% per annum on April 19, 2012. However, there is some uncertainty as to whether this applicable base rate would be the SELIC rate or the 12% per annum interest rate stipulated in the Tax Code (Código Tributário).

The impacts of EC 40/03 and the determinations of the new Civil Code are uncertain at the moment, but any substantial increase or decrease in the interest rate may have a material effect on the financial conditions, results from operations or prospects of Brazilian financial institutions, including Bradesco.

Furthermore, some Brazilian courts have, in the past, issued rulings restricting interest rates on consumer financing transactions that are regarded as unfair or excessive in comparison with market practices. Future decisions by Brazilian courts, or changes in legislation and regulations restricting interest rates charged by financial institutions may have a negative effect on our business.

Our losses relating to insurance claims may vary from time to time and differences between losses on actual claims and underwriting assumptions and actuarial reserves may have an adverse effect on us.

Our result from operations depends significantly on the extent to which our actual level of claims is consistent with assumptions we used when valuing our obligations related to current and future claims and setting prices for our insurance products. We attempt to limit our liability and price our insurance products, based on expected payments of benefits calculated using several factors such as: assumptions for returns on investments, mortality and disability expenses, continuity and certain macroeconomic factors such as inflation and interest rates. These assumptions may deviate from our previous experience, due to factors beyond our control, such as natural disasters (floods, fires and explosions), human disasters (protests, terrorist or gang attacks) and changes in mortality and incapacity rates as a result of advances in medicine and increased longevity, among other factors. Therefore, we are unable to accurately determine the values that will ultimately be paid to settle these obligations, or when these payments will have to be made, or if the assets guaranteeing our insurance obligations, together with future premiums, will be sufficient to cover payments against these obligations. These values may vary in relation to estimates, especially when payments do not occur until the distant future, as is the case with some of our life insurance products. To the extent that the actual experience of loss events and claims is less favorable than the underlying assumptions used to calculate obligations, we may be required to increase our reserves, which may adversely affect our cash flow.

If our actual losses exceed our reserves for the risks we underwrite, we may be adversely affected.

Our results from operations and financial condition depend on our ability to accurately assess actual losses associated with the risks that we have underwritten. Our current reserves are based on estimates that rely on available information and involve many factors, including experiences of recent losses, current economic conditions, internal risk ratings, actuarial and statistical projections of expected costs of settling future claims, such as estimates of future trends for the severity and frequency of claims, legal theories concerning liability, levels and/or time of receipt or payment of premiums and retirement, mortality and incapacity rates, continuity, among others. Consequently, calculating reserves is inherently uncertain and our actual losses are often different from such estimates, sometimes by a substantial margin. Deviations occur for several reasons. For example: since we recognize our impaired loans and advances losses based on estimates of losses incurred, this amount may not be sufficient to cover losses; we have a larger number of claims; or our costs may be higher than our estimates. If actual losses significantly exceed our reserves, we may be adversely affected.

We are jointly liable for our customers' losses if our reinsurers fail to meet their obligations under reinsurance contracts.

Purchasing reinsurance does not exempt us from liability to our customers if a reinsurer fails to comply with its obligations under reinsurance contracts. Consequently, the reinsurer's insolvency or failure to make timely payments as described in the contracts could have an adverse effect on us, since we continue to be liable to our insured persons.

Our strategy of marketing and expanding Internet Banking in Brazil may not be well received or may be more costly than profitable.

 We have aggressively insisted on using the Internet for banking and other services to our customers and we expect to continue to do so. However, the market for our Internet products is evolving rapidly and becoming increasingly competitive. We cannot predict whether this market will grow or how fast it may grow. Additionally, should we fail to effectively adapt to growth and new developments in the Internet and technology market, our business, competitiveness or results from operations could be adversely affected.

The Internet may not prove to be a viable retail market in Brazil for a number of reasons, including lack of acceptable security technology, potentially inadequate development of the required infrastructure, lack of marketing and development required for improved performance, or visible lack of customer trust in our systems.

A fault in our operational or security systems, or a breach of these systems, may temporarily disrupt our business, increase our costs and lead to losses.

Although we have ostensible information security controls, continuous investments in infrastructure, operations and crisis management in good order, our data processing, business, financial, and accounting systems, or other operational systems or instruments may cease to function correctly for a limited period of time or become temporarily disabled or damaged due to a number of factors, including events that are wholly or partly beyond our control, such as: electrical or telecommunications faults; breakdowns; system failures or other events affecting third parties with whom we do business, or in our tools for business activities, including currency exchange, clearinghouses, financial intermediaries or service providers; and large-scale local political events, or social problems, or cyber attacks.

Cyber attacks and temporary interruptions or failures in our physical structure, operational systems supporting our business and customers, may result in friction with customers, regulatory fines, penalties or intervention, refunds or other compensation costs.

No reduction or increase in the issuer's exposure is expected in relation to risks mentioned in item 4.1.

In terms of assessing materiality, Bradesco has found that there are no cases that could materially damage its image or pose legal risks. Cases relating to this item were obtained from a materiality of R$ 359 million, which represents 0.5% of the issuer's capital base (R$ 71,746 million). Therefore, we selected cases whose financial impacts exceed this material amount. Any differences between the cases shown below and the values shown in Notes refer to processes that individually involve amounts below the level we consider material.

Bradesco is a party in judicial proceedings involving labor, civil-liability and tax claims arising in the normal course of its business.

Provisions were made taking into account: the opinion of legal advisors, the nature of the actions, similarity with previous cases, complexity and positioning of the courts, whenever loss is rated "probable".

Management believes that provision is sufficient to cover any losses arising from these cases.

Liabilities related to legal obligation currently in litigation is maintained until as case is conclusively won, which means favorable legal decisions that may no longer be appealed, or falls due to prescription.

Labor contingency

Currently we are defendants in labor proceedings or actions brought by former employees, claiming in particular "overtime payments”. In cases in which judicial deposit is required, the amount of the labor contingency is made presuming loss of these deposits. For the other cases, provision is based on the average value of payments made in cases judged in the last 12 months.

Time-clocks were introduced to control actual hours worked in 1992, and overtime is paid in the ordinary course of the employment contract. Therefore, labor claims brought after 1997 individually involve much smaller amounts.

On December 31, 2011, our provision for labor-claim related liabilities rated "probable" reached R$ 2,311,160 thousand.

There are no individually material cases based on the above-mentioned criterion.

Civil-liability contingency

These claims for moral and property damages mostly relate to protests for non-payment, returned checks, debtor details recorded in credit restriction databases, and repayment of amounts reduced by inflation rate adjustments resulting from economic plans. These actions are controlled individually through our computerized system and provisioned whenever loss is rated "probable", based on the opinions of legal advisors, the nature of actions, similarity with previous cases, complexity and positioning of the courts.

Most of these actions involve petty claims courts, or Special Civil Courts (JECs), in which claims are limited to 40 times the minimum monthly wage, and are not events that could significantly impact our financial result.

Note the existence of a substantial number of legal actions claiming reimbursement of amounts adjusted by inflation indices when balances held in savings accounts were reduced under economic plans as part of federal government economic policy for combating inflation in the past. Although the Organization complied with the legislation in force at the time, these cases are being provisioned in light of the actions notified so far and the corresponding perspective of loss analyzed from the point of view the current jurisprudence of the Higher Court of Justice (STJ).

Two points should be noted in relation to litigation concerning economic plans: a) there is no significant potential liability, since the right to new claims has been prescribed, and b) the Supreme Court suspended analysis of all appeals lodged until its final ruling.

On December 31, 2011, our provision for liabilities relating to civil-law actions rated "probable" reached R$ 3,338,400 thousand.

There are no individually material cases based on the above-mentioned criterion.

Note that repetitive or related civil liability cases based on similar facts or causes, which are considered material as a whole, are listed in item 4.6.

Tax and social-insurance/pension contingencies

The Bradesco Organization has brought legal actions challenging the constitutionality of certain taxes and social contributions, which are fully provisioned despite good chances of success in the medium and long term, in the opinion of our legal advisors.

On December 31, 2011, our provision for tax and social security contingencies totaled R$ 12,276,890 thousand.

Based on our assessment of materiality, the cases shown below involve tax and social security issues and the chances of losing were rated "remote or possible":

.

Below, we highlight cases no longer included in this item, compared with the 2011 Reference Form (base date 12/31/2010), and the reasons for their exclusion:

·                   Administrative proceedings No. 16327.001557/2010-03 - Notification of assessment in relation to social security contributions (INSS) charged on private pension fund contributions that the tax authorities classed as remuneration subject to this contribution and on values of transportation vouchers paid in cash.

Date brought: 12/10/2010.

Case excluded for not reaching the criterion used for materiality.

·                      Administrative proceedings 12267.000211/2008-66 - Originating from NFLD 37.107.894-6, issued to avoid lapse of deferred tax assets challenged in court - INSS on individual taxpayers (Apr/2000 - Sept/2006).

Date brought: 09/27/2007.

Case excluded for not reaching the criterion used for materiality.

We are not involved in any case covered by the conditions mentioned in item 4.4.

We are not involved in any case covered by the conditions mentioned in item 4.5.

Civil liability action in which customers who had amounts invested in savings accounts when government economic plans were introduced (“Bresser Plan”, “Summer Plan” and the “Collor Plan”) claim that they were adversely affected by altered indices used to adjust savings.

We are not involved in any case covered by the conditions mentioned in item 4.5.

a)      amounts involved: R$ 1,494,280,636.09

b)      amount provisioned (if applicable ): R$ 1,494,280,636.09

c)      practice of the issuer or its subsidiary that gave rise to this contingency: Like all the other financial institutions, the issuer complied with legislative programs designed to control inflation in 1987, 1989 and 1990, which were known as the "Bresser Plan", "Summer Plan" and "Collor Plan" respectively. These "Plans" modified indices used for inflation adjustment of amounts in savings accounts. Now, some 20 years later, account holders alleging losses due to these alterations are asking the courts to order financial institutions to use the previous indices.

Individually none of these cases involve significant amounts.

There are no significant contingencies other than those covered in previous items.

Not applicable as Bradesco is not classed as a foreign issuer.

VaR Internal Model – Trading Portfolio

Total value at risk at the end of 2011 showed an increase compared to 2010, as shown in the table below:

Stress Analysis – Trading Portfolio

To estimate any loss not covered by VaR, the organization conducts daily assessments of any impacts on positions in stress scenarios for 20-day horizons. Taking into account the effect of diversification across risk factors, the estimated medium possibility of loss in stress situations would be R$ 1,530 million in December 2011, while estimated maximum loss would be R$ 2,267 million.

Sensitivity analysis

The Trading portfolio is also monitored by daily sensitivity analysis, which measures the effect of varying market curves and prices on our positions. In addition, we run a quarterly sensitivity analysis of our financial exposure (Trading and Banking portfolios) in compliance with CVM Instruction No. 475/08. However, note that the impacts of the Banking portfolio's financial exposure (particularly the interest rate and price indices factors) do not necessarily represent potential accounting losses for the Organization. This is because some Banking portfolio loans are financed by sight deposits and/or savings, which are natural hedges against any interest-rate fluctuations; interest-rate fluctuations do not have a material impact on our earnings, since securities are intended to be held to maturity.

The sensitivity analysis shown below applies exclusively to the Trading portfolio and shows exposures that may have significant impacts on the Organization's results. Note that the results show impacts for each scenario in a static portfolio position. Given the dynamic nature of the market, these positions are continuously changing and do not necessarily reflect the position here stated. In addition, as mentioned previously, the Bank is continuously managing market risk, and constantly analyzing the market's dynamism to find ways of mitigating/minimizing associated risks in accordance with strategy determined by senior management. Therefore, in cases of signs of deterioration of a certain position, we take proactive initiatives to minimize possible negative impacts and maximize risk-return ratios for the Organization.

Sensitivity analyses were performed using scenarios prepared for the respective dates, in all cases using market information data for the periods and scenarios that would adversely affect our positions.

Scenario 1: Based on market information (BM&FBovespa, Anbima, etc.), shocks were applied for a 1 basis point interest rate hike and 1% price variation. For example: in the scenario applied to positions as of 12.31.2011, the dollar was quoted at R$ 1.88.  For the interest-rate scenario, the 1-year fixed rate applied to positions as of 12.31.2011 was 10.06% per annum.

Scenario 2: 25% shocks were determined based on the market. For example: in the scenario applied to positions as of 12.31.2011, the dollar was quoted at R$ 2.33.  For the interest-rate scenario, the 1-year fixed rate applied to positions as of 12.31.2011 was 12.56% per annum.  The scenarios for the other risk factors also accounts for 25% shocks in their yield curves or prices.

Scenario 3: 50% shocks were determined based on the market. For example: in the scenario applied to positions as of 12.31.2011, the dollar was quoted at R$ 2.80. For the interest-rate scenario, the 1-year fixed rate applied to positions as of 12.31.2011 was 15.07% per annum.  The scenarios for the other risk factors also accounts for 50% shocks in their yield curves or prices.

a)    risks for which hedging is sought

The Treasury Department is the only unit in the organization with a mandate to assume risks in the trading portfolio. In addition, Treasury is responsible for decisions to mitigate risk in the financial conglomerate's commercial portfolio, which involves volatility, currency, liquidity, share price and interest rate risk.

All Organization’s exposures to market risk are admitted up to the limits established by the board of directors, which are reviewed at least annually.

b)    asset protection strategy (hedging)

The Organization's Treasury has a hedging policy determining that its hedging transactions must necessarily cancel out or mitigate risks of mismatch in quantities, terms, currencies and indexes, and be within the limits of risk exposure approved by the board of directors.

c)    instruments used for asset protection (hedging)

Given the characteristics of its business and its international operations, the Organization uses a number of financial instruments for hedging, including trading in securities issued by governments or private companies, as well as exchange-traded or OTC derivatives.

d)    Parameters used for managing these risks

Proposed risk limits are validated by specific business committees and ratified by the Risk and Capital Allocation Integrated Management committee, then submitted for approval by the Board of Directors, depending on the characteristics of Trading and Banking portfolio transactions.

The Integrated Risk Control Department acts separately from business management to monitor compliance with limits set and produces management reports to control positions that are sent to business areas and Senior Management, in addition to weekly reports and periodic presentations to the Board of Directors.

The following Trading Portfolio limits are monitored:

• Risk; 
• Stress;
• Results; and
• Financial exposure.

The following Banking Portfolio limits are monitored:

• Interest Rate Risk; and
• S
• tock portfolio.

In addition to the above-mentioned limits, there are specific limits for each Treasury Department trader.

e)    whether issuer trades in financial instruments for purposes other than asset protection (hedging) and what these purposes are

As part of its proposal as a financial institution, the Organization meets customer demand for swaps, term and other transactions, as well as proprietary treasury trades within the limits of market risk exposure set by the board of directors.

f)     organizational structure for controlling risk management

The Organization aims to be aligned with international best practices in the market, local regulations and recommendations of the Basel Committee on Banking Supervision.  Therefore it applied to the Central Bank of Brazil, June 30, 2010, for authorization to use its own internal risk models for market risk measurement and capital allocation in compliance with the Bank's requirements and thus with those of the New Basel Capital Accord too.

The Integrated Risk Control Department's mission is to foster and facilitate control of the Organization's risk and capital allocation activities independently, consistently, and transparently on an integrated basis, and it has the responsibility to:

• Propose methods for measuring risks;
• Detect, calculate, and report risks;
• Control calculated risks in relation to limits set;
• Calculate capital allocation;
• Propose and decide policies and revisions, rules and procedures relating to market and liquidity risk management.

Macro-process for market risk management

⁽¹⁾   Planning, Budget and Control Department (“DPOC”);

⁽²⁾   Integrated Risk Control Department (“DCIR”);–

⁽³⁾   Internal Controls and Compliance Department (“DCIC”);

⁽⁴⁾   Economic Research and Studies Department (“DEPEC”); and

⁽⁵⁾   Market Relations Department (“DRM”).

Market risk is monitored by meetings of the Treasury's executive committees, and Market and Liquidity Risk management departments. In addition, monitoring is also carried out by the Integrated Risk Management and Capital Allocation Committee, which is also responsible for holding special meetings to review positions and situations in which risk exposure limits may be exceeded, thus prompting the Board to take measures and adopt strategies for validation as required.

The Integrated Risk Management and Capital Allocation Committee have the following responsibilities:

• ensure compliance with the Organization's risk management policies;
• ensure the efficacy of the risk management process;
• adopt exposure limits by type of risk, depending on risk appetite approved by the Board of Directors;
• validate and submit to the board of directors:

I. - policies for risk and capital management;

II. - proposals for risk appetite and exposure limits by type of risks; and

III. - the results of reviews of risk and capital management policies and structures at intervals stated in regulations, or more often;

• report to the board of directors on risk management, capital requirements and adequacy, any material alterations of strategies adopted, and the status of business continuity plans;
• be informed of internal and external audit reports pertaining to risk management and results relating to Independent Model Validation;
• regularly inform the board of directors of the Committee's activities;
• review and propose to the Board of Directors updates to the Risk Management Executive Committee's rules and regulations when necessary; and
• provide the board of directors with comprehensive and integrated overviews of risks and their impacts on capital.

Market and Liquidity Risk executive committee has the following responsibilities:

• ensure compliance with the Organization's Risk Management and Market Liquidity policies;
• ensure the efficacy of market and liquidity risk management processes in the ambit of the Organization;
• adopt and revise, in relation to  management of market and liquidity risks:

I. - definitions, criteria and tools; and
II. - measure(s) adopted for statistics, econometrics, and mathematical modeling methods;

• evaluate and submit policy structure, roles, responsibilities and procedures of the dependencies involved in market and liquidity risk management for validation by Bradesco's Integrated Risk Management and Capital Allocation Committee, as well as reviews conducted annually or more often;
• validate results from backtesting models and other matters deemed pertinent;
• create conditions for reviews by the Independent Models Validation unit and by internal and independent auditors; and
• delegate responsibilities to technical committees involved in market and liquidity risk management.

Finally, the Treasury Executive Committee's responsibilities are:

• reporting and monitoring performance, behavior and risks of different portfolios and benchmarks maintained by the Organization, including liquidity reserves;
• defining Treasury's strategies to optimize results, based on analyzing political-economic scenarios locally and internationally;
• validating proposed risk exposure tolerance limits for Treasury to be submitted for approval by the Integrated Risk Management and Capital Allocation Committee;
• validating proposed liquidity policy, to be subject to approval by the Integrated Risk Management and Capital Allocation Committee;
• holding special meetings to review positions and situations in which risk exposure and tolerance limits are exceeded; and
• discuss and decide in relation to new products traded on financial markets.

g)    adequacy of operational structure and internal controls for verifying the effectiveness of policy adopted

The Organization has its specific Internal Controls and Compliance Department (locally DCIC) which is segregated from those running trading business and corporate risk management, and runs a unit focusing on internal controls and compliance. This department also has a unit tasked with independently validating models and gauging the adherence and adequacy of models used for risk management. Additionally, all the Organization's departments and companies have persons responsible for introducing, appraising and deploying controls, and applicable adherence tests.

There is also the General Inspection Department, which is responsible for the Organization's internal auditing.

In relation to risk management policy, an annual review is conducted by the Board of Directors, and it has not been materially altered in the period.

As shown in item 5.1, there were no alterations in means used for mitigating risks, thus upholding the institution's conservative profile. The bank's risk levels have historically been related to the yield curve of both nominal and real interest rates.

Bradesco forwards daily reports to the Central Bank showing the market risk of its trading portfolio, with its exposures to foreign currency and commodities. In this case, the reported risk is calculated based on the standard model established by the Central Bank and is used to measure the regulatory capital the Organization must hold to support risks involved in its activities. Therefore, like other financial institutions, the Bradesco Organization operates in accordance with Central Bank rules, and its risks are subject to the Basel index, which determines an institution's maximum leverage depending on its reference equity.

Bradesco supplies weekly reports to its Senior Management, its Board of Directors and the Central Bank of Brazil showing interest rate risk for its Banking Portfolio, which include all the financial conglomerate's companies.

Banco Bradesco S.A. was founded in 1943 as a commercial bank under the name of Banco Brasileiro de Descontos S.A. In 1948, we embarked on a period of intensive growth to become the largest private-sector commercial bank in Brazil by the late 1960s. We expanded our activities all over Brazil in the 1970s, and gained new urban and rural markets.

In 1988, as authorized by the Central Bank of Brazil, Bradesco was reorganized as a "multiple bank" or "universal bank"; the housing finance company was absorbed in order to operate commercial and real estate portfolios, and its business name was altered to Bradesco S.A. – Banco Comercial e de Crédito Imobiliário and on 01.13.1989, it was again changed to Banco Bradesco S.A., as the current name of Banco Brasileiro de Descontos S.A.

In 1989, the company known as Financiadora Bradesco S.A. Crédito, Financiamento e Investimentos altered its business name and its business purpose, which led to the Central Bank of Brazil canceling its authorization to operate as a financial institution, and its Credit, Financing and Investment Portfolio was then constituted, and in 1992 Banco Bradesco de Investimento S.A. (BBI) was absorbed by Bradesco, when the Investment Portfolio was assembled.

We are one of Brazil's largest private-sector banks in terms of total assets. We provide a wide range of banking products and financial services in Brazil and internationally for individuals and business (small, mid-size and large companies). We have the most extensive private sector branch and service network in Brazil, allowing us to reach a diverse client base. Our products and services include banking transactions such as: making loans and accepting deposits, issuing credit cards, managing groups of consumers buying durables by installment (known locally as "consortiums"), insurance, certificated savings plans with prize draws, leasing, collection and payment processing, private pension plans, asset management, and broker and dealer services for financial securities.

2011

a)     event

Bradesco acquires CBSS shares

b)     main conditions of the deal

Date: 01.24.2011

details of the transaction: Bradesco acquired shares in Companhia Brasileira de Soluções e Serviços - CBSS held by Visa International Service Association corresponding to 5.01% of the share capital of CBSS, for the amount of R$85.8 million.

pending approval by regulators: none.

effects of the decision on the transaction: Bradesco raised its holding from 45% to 50.01%, thus strengthening its interest in the capital of companies operating in the card market.

c)     companies involved

Banco Bradesco S.A., Companhia Brasileira de Soluções e Serviços – CBSS, and Visa Internacional Service Association.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

a)     event

Banco Bradesco S.A. and Banco do Brasil S.A. signed a new binding memorandum of understanding to develop and integrate joint business by setting up a business holding company ("Elo Participações") to launch the Elo flag.

b)     main conditions of the deal

Date: 03.15.2011

details of the transaction: Elo Participações is 50.01% owned by Bradesco and 49.99% by Banco do Brasil and cover certain business related to electronic payments, which include:

Elo Serviços S.A., owner and manager of Elo flag credit cards, debit and prepaid cards;

Integration of Companhia Brasileira de Soluções e Serviços (“CBSS”), directly and indirectly to the business of Elo Participações;

Sale to CBSS of 100% (one hundred percent) of shares held by Bradesco and/or its affiliates in IBI Promotora de Vendas Ltda., of the customer base and business related to this sales channel for the amount of R$419,000,000.00 (four hundred nineteen million reais). This transaction is subject to: (i) the parties holding negotiations to sign definitive documents; and (ii) compliance with applicable legislation;

Sale to CBSS of 100% (one hundred percent) of the shares held by Bradesco and/or its affiliates in the company Fidelity Processadora e Serviços S.A. (“FPS”), which represent 49% (forty-nine percent) of the share capital of FPS, for the amount of R$557,900,000.00 (five hundred and fifty-seven million, nine hundred thousand reais), of which R$328,900,000.00 (three hundred and twenty-eight million, nine hundred thousand reais) as performance payment.

The transaction will be finalized by concluding definitive documents and complying with legal formalities and regulatory requirements.

pending approval by regulators: none. 

effect of the decision on the transaction: Elo Participações holds 50.01% of Bradesco and 49.99% of Banco do Brasil.

c)     companies involved

Banco Bradesco S.A., Banco do Brasil S.A. and Companhia Brasileira de Soluções e Serviços – CBSS.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

a)     event

Acquisition of shareholder control of Banco do Estado do Rio de Janeiro S.A. - BERJ

b)     main conditions of the deal

Date: 05.20.2011

details of the transaction: the transaction involved the purchase of 96.99% of BERJ's common shares and 95.21% of its preferred shares corresponding to 96.23% of total capital, for R$1.025 billion (BERJ Price).

By acquiring BERJ, Bradesco was enabled to provide payroll services for the state government of Rio de Janeiro, along with its vendor/supplier payments and state-tax collection services, among other services, from January 2012 through December 2014. Bradesco will pay R$748.7 million (Payroll Price) for the right to provide this service.

Payment of the above-mentioned amounts will follow this schedule:

• 20% of BERJ Price and 100% of Payroll Price within 5 days of meeting certain conditions, including Central Bank of Brazil approval for transfer of BERJ 's shareholder control and signing a purchase and sale agreement for the single lot of shares;
• 80% of BERJ price within 5 days of confirming the existence of BERJ's tax credit, and the possibility of its realization.

The above amounts are subject to adjusted at the Selic rate for the period through the date when the payment is made.

On concluding purchase and sale of the shares, Bradesco made a public offering to minority shareholders pursuant to Article 254 of Law 6404/76 and CVM Instruction 361/02.

The following are BERJ's key numbers based on the financial statements of 12.31.2010:

                                        R$ million

Other Information:

pending approval by regulators:

effects of the decision on the transaction: Through this acquisition, Bradesco expands its presence in the state of Rio de Janeiro and reaffirms its confidence in its development. This acquisition has strategic value for Bradesco and its shareholders, since it adds hundreds of thousands of new customers in a state that has great economic potential and in which significant investments being made, in particular to extract oil from the pre-salt layer, to host the Rio 2016 Olympics, and for the FIFA World Cup in 2014.

c)     companies involved

Banco Bradesco S.A. and Banco do Estado do Rio de Janeiro S.A. – BERJ.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

2010

a)     event

Bradesco acquires shareholder control of Ibi México and signs partnership agreement with C&A México

b)     main conditions of the deal

date of commitment to acquisition: 01.21.2010 

date of the transaction conclusion: 06.02.2010 

price: 2,104.0 million Mexican pesos, equivalent to approximately R$297.6 million.

details of the transaction: acquisition by Bradesco of entire share capital Ibi Services S. de R. L. México (Ibi México) and RFS Human Management S. de R.L.

pending approval by regulators: None.

effects of the decision on the transaction: partnership agreement signed with C&A México S. de R.L. (C&A México) for a period of twenty years, for exclusive rights to market products and services through C&A México chain stores.

c)     companies involved

Banco Bradesco S.A., Ibi Services S. de R. L. México (Ibi México), and RFS Human Management S. de R.L.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

a)     event

Bradesco signs memorandum of understanding with BB and Santander consolidating operations of their respective networks of external self-service terminals

b)     main conditions of the deal

Date: 02.11.2010

details of the transaction: signed memorandum of understanding for the purpose of facilitating consolidation of operations of the networks of external self-service terminals (ATMs outside branches).

pending approval by regulators: None.

effects of the decision on the transaction: the banks' customers may access approximately 11,000 external ATMs, therefore enjoying significantly more network availability and capillarity, with efficiency gains in relation to the current method of individual use of their ATM networks.

c)     companies involved

Banco Bradesco S.A., Banco do Brasil S.A. and Banco Santander (Brasil) S.A.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

a)     event

Bradesco acquires part of the shares of Cielo and CBSS owned by Santander Spain

b)     main conditions of the deal

date of commitment to acquisition: 04.23.2010

date of the transaction conclusion: 07.13.2010

details of the transaction: acquisition of part of the shares held by Santander Spain in the following companies:

·           Cielo S.A. (Cielo), corresponding to 2.09% of share capital, for the amount of R$431.7 million; and

·           Companhia Brasileira de Soluções e Serviços – CBSS, corresponding to 10.67% of share capital for the value of R$141.4 million.

pending approval by regulators: None. 

effects of the decision on the transaction: Bradesco's holding in Cielo rose from 26.56% to 28.65%, and Bradesco holding in CBSS rose from 34.33% to 45.00%.

c)     companies involved

Banco Bradesco S.A., Cielo S.A., Companhia Brasileira de Soluções e Serviços - CBSS and Grupo Santander Espanha.

d)     effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)     corporate structure before and after the transaction

Not applicable.

a)     event

Banco Bradesco, Banco do Brasil, and Caixa Econômica Federal sign Memorandum of Understanding to operate the Brazilian card flag Elo and undertake new business with prepaid cards

b)     main conditions of the deal

date of non-binding commitment between Bradesco and BB: 04.27.2010 

date of commitment between Bradesco, BB and CEF: 08.09.2010 

detail of transaction with Banco do Brasil on 04.27.2010: Bradesco and Banco do Brasil signed a memorandum of understanding to develop a business model in order to:

·           join part of their card operations;

·           launch a Brazilian credit, debit and prepaid card flag for account holders and non-account holders;

·           jointly format new business for private label cards (cards offered to non-account holder customers via retail partners);

·           set up a company to sell cards to certain groups of non-account holder customers;

·           transfer interests in CBSS S.A. held by both institutions and their subsidiaries, to a company to be created.

detail of transaction with Caixa Econômica Federal, 08.09.201: Bradesco, together with Banco do Brasil S.A., signed a memorandum of understanding with Caixa Econômica Federal (Caixa) in relation to:

·           Caixa's participation in the company to be set up, which will manage Brazilian flag Elo's credit, debit and prepaid cards for both account-holder customers of the respective banks and non-account holders;

·           assess the possibility of developing new business for prepaid cards by setting up a means-of-payment company or using existing companies aligned with this business.

A binding commitment between Banco Bradesco S.A. and Banco do Brasil S.A. was signed on 03.15.2011

detail of transaction with Banco do Brasil: moving forward from the memorandum of understanding signed on 04.27.2010, Bradesco signed a new binding memo with Banco do Brasil to develop and integrate joint business by setting up a business holding company ("Elo Participações") to launch the Elo flag.

Elo Participações will be 50.01% owned by Bradesco and 49.99% by Banco do Brasil and cover certain business related to electronic payments, which include:

·           Elo Serviços S.A., owner and manager of Elo flag credit cards, debit and prepaid cards;

·           Integration of Companhia Brasileira de Soluções e Serviços – CBSS, directly and indirectly to the business of Elo Participações;

·           Sale to CBSS of 100% of shares held by Bradesco and/or its affiliates in IBI Promotora de Vendas Ltda., of the customer base and business related to this sales channel for the amount of R$419 million. This transaction is subject to: (i) the parties holding negotiations to sign definitive documents; and (ii) compliance with applicable legislation;

·           Sale to CBSS of 100% of the shares held by Bradesco and/or its affiliates in the company Fidelity Processadora e Serviços S.A. - FPS, which represent 49% of the share capital of FPS, for the amount of R$ 557.9 million, of which R$328.9 million as performance payment.

Bradesco together with Banco do Brasil has reached the stage of final talks with Caixa Econômica Federal to integrate the latter to the launch of Elo flag cards.

pending approval by regulators: None. 

effects of the decision on the transaction: the new nationwide Elo flag for credit, debit and prepaid cards for both account holders and non-account holders.

c)      companies involved

Banco Bradesco S.A., Banco do Brasil S.A. and Caixa Econômica Federal.

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)      corporate structure before and after the transaction

Not applicable.

a)      event

Bradesco Seguros, ZNT Empreendimentos and Odontoprev signed a non-binding memorandum of understanding to set up a strategic alliance for the development and marketing of dental health products.

b)      main conditions of the deal

Date: 08.19.2010

details of the transaction: Odontoprev S.A. and its controllers Bradesco Seguros S.A. and ZNT Empreendimentos, Comércio e Participações Ltda., signed with BB Seguros Participações S.A., a memorandum of understanding to form a strategic alliance for the development and marketing of dental health products.

pending approval by regulators: None. 

effects of the decision on the transaction: setting up a new company with of 75% of total capital (49.99% of voting and 100% of preferred capital) from BB Seguros and 25% of total capital (50.01% of voting capital) from Odontoprev. BB Insurance will take part indirectly with up to 10% of the total capital of Odontoprev through a holding company to be formed between BB Seguros, Bradesco and ZNT.

As a result of this transaction, the availability of Banco do Brasil S.A.'s distribution channels on an exclusive basis will be assured for Odontoprev to market dental health products under the terms of the strategic partnership, for a period of 10 years, including dental plans for Banco do Brasil S.A. employees and their dependents.

c)      companies involved

Banco Bradesco S.A., Bradesco Seguros S.A., BB Seguros Participações S.A., ZNT Empreendimentos, Comércio e Participações Ltda. and OdontoPrev S.A.

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)      corporate structure before and after the transaction

Not applicable.

a)      event

Bradesco signs an agreement with CPM Braxis and other shareholders of the latter to transfer its controlling interest to Capgemini.

b)      main conditions of the deal

Date: 09.02.2010

details of the transaction: Bradesco, together with its subsidiary CPM Braxis S.A. and its other shareholders, signed an agreement with Capgemini SA through which Capgemini acquired 55% of CPM Braxis stock and became its controlling shareholder.

 pending approval by regulators: pending approval by competition agency CADE

effects of the decision on the transaction: with the conclusion of the transaction, Bradesco sold 35% of its interest in CPM Braxis for the amount of approximately R$104 million, and continued to hold 20% of its total capital.

c)      companies involved

Banco Bradesco S.A., CPM Braxis and Capgemini S.A.

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)      corporate structure before and after the transaction

Not applicable.

2009

a)      event

Acquisition of Banco ibi and partnership with C&A

b)      main conditions of the deal

date of commitment to acquisition by merging shares: 06.04.2009 

date of payment (takeover of stock): 10.29.2009 

price: R$1.4 billion

form of payment: delivery to Banco ibi S.A. shareholders of Bradesco shares.

details of the transaction: part of the deal was the Partnership Agreement with C&A Modas Ltda., for a period of twenty years to jointly market financial products and services exclusively through C&A's chain of retail outlets.

pending approval by regulators: None. 

effects of the decision on the transaction: enable Bradesco to expand and strengthen its transactions involving financial products and services, especially credit cards, building up customer relationships in a segment characterized by very high growth rates.

c)      companies involved

Organização Bradesco, Banco ibi S.A. - Banco Múltiplo and C&A Modas Ltda.

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There were no material effects on Bradesco's share ownership structure, as shown in item “e” below.

e)      corporate structure before and after the transaction

a)      event

Partial sale of the Organização Bradesco holding in the share capital of Companhia Brasileira de Meios de Pagamento (VisaNet Brasil)

b)      main conditions of the deal

date of initial offer: 07.03.2009 

total value (including sale of supplementary lot): R$2.4 billion

details of the transaction: sale of shares as part of the Public Offering of Common Shares issued by VisaNet Brazil.

pending approval by regulators: None. 

c)      companies involved

Organização Bradesco and VisaNet Brasil

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)      corporate structure before and after the transaction

Not applicable.

a)      event

 Association between Bradesco Dental and OdontoPrev S.A.

b)      main conditions of the deal

date of association: 10.18.2009 

agreement reached: Organização Bradesco (Bradesco Saúde) gained shares representing 43.50% of OdontoPrev's total capital and OdontoPrev shareholders acquired the remaining 56.50% of OdontoPrev's total capital.

pending approval by regulators: None. 

effects of the decision on the transaction: integration of activities developed by OdontoPrev and Bradesco Dental in the dental plan business, providing economies of scale and synergy.

c)      companies involved

Organização Bradesco S.A. and OdontoPrev S.A.

d)      effects arising from the transaction for share ownership structure, especially for the holding of the controlling block of shareholders with more than 5% of share capital and the issuer's management

There was no effect on Bradesco's share ownership structure.

e)      corporate structure before and after the transaction

Not applicable.

There is not and there has not been any event of this nature related to the Company.

There is no further information that we believe to be significant.

Our company was founded in 1943 as a commercial bank under the name “Banco Brasileiro de Descontos S.A.” In 1948, we started a period of rapid growth that led to our becoming the largest commercial bank in Brazil's private (non-state-controlled) sector by the late 1960s. We expanded our activities all over Brazil in the 1970s, and gained new urban and rural markets. In 1988, we incorporated our housing finance, investment banking and financing subsidiaries to become a multiple bank and changed our name to "Banco Bradesco S.A."

We are currently one of Brazil's largest private-sector banks in terms of total assets. We offer a wide range of banking and financial products and services in Brazil and abroad to individuals, large, midsized and small companies and major local and international corporations and institutions. We have the most extensive private sector branch and service network in Brazil, allowing us to reach a diverse client base. Our products and services encompass banking operations such as loans and advances and deposit taking, credit card issuance, purchasing consortiums, insurance, leasing, payment collection and processing, pension plans, asset management and brokerage services.

We operate and manage our business through two operational segments: (i) banking and (ii) insurance, pension plans and capitalization bonds. Our segments are managed on the basis of the types of products and services offered and their related customer bases.

Our banking segment's extensive distribution network offers a wide range of banking products and services, including aceptance of deposits, loans and advances, debit and credit cards, and capital market services Our insurance, pension plans and capitalization bonds segment offers products and services such as life, health, accident, automobile and property insurance; individual and corporate pension plans, as well as certificated savings bonds, through an extensive distribution network.

The Organization was originally registered with the “BM&FBovespa” (Sao Paulo Stock Exchange) and subsequently with the “NYSE” (New York Stock Exchange).

a)      products and services marketed

We operate through two principal operating segments: (i) the banking segment and (ii) the insurance, pension plans and capitalization bonds segment. The following diagram shows the main elements of the business segments:

Banking

We have a diverse client base that includes individuals and small, midsized and large companies in Brazil. Historically, we have cultivated a stronger presence among the broadest segment of the Brazilian market, middle- and low-income individuals.

We have a segmented customer base and offers the following range of banking products and services in order to meet the needs of each segment:

·                accepting deposits, including checking accounts, savings accounts and time deposits;

·                loans and advances (personal and corporate, housing finance, microcredit, onlending under BNDES programs, rural credit, leasing, etc.);

·                credit cards, debit cards and pre-paid cards;

·                management of receipts and payments;

·                asset management;

·                services related to capital markets and investment banking activities;

·                intermediation and trading services;

·                custody, depositary and controllership services;

·                international banking services; and

·                purchasing consortiums.

Insurance, pension plans and capitalization bonds

We offer insurance products through a number of different entities, which we refer to collectively as Grupo Bradesco Seguros. Grupo Bradesco is the largest insurer group in Brazil by total revenues and technical provisions, according to data published by SUSEP and ANS. The group provides a wide range of insurance products for both individuals and corporate clients. Products include health, life, personal accident, automobile and other assets.

b)     the segment's revenue and its share of the issuer's net revenues

The following segment information was compiled from reports forwarded to Management to assess performance and take decisions on the allocation of funds for investment and other purposes. Management uses different types of data, including financial data, related to accounting practices adopted in Brazil, and non-financial data measured on different bases.

c)     lucro ou prejuízo resultante do segmento e sua participação no lucro líquido do emissor

a)     Characteristics of the product process

We present below some characteristics of the main products and services of Banco Bradesco.

Deposit-taking

Activities for the collection of deposits

We offer a variety of deposit products and services to our customers through our branches, including:

Non-interest bearing checking accounts, such as:

·           Easy Account (Conta Fácil) – customers have a checking account and a savings account under the same bank account number, using the same card for both accounts;

·           Click Account (Click Conta) – no-fee checking account for minors (from 11 to 17 years old); with exclusive website and debit card, automatic pocket money service and free online courses, among other benefits;

·           Academic Account (Conta Universitária) – low fee checking account for college students, with subsidized credit conditions, exclusive website and free online courses, among other benefits; and

·           Cell Phone Bonus Account (Conta Bônus Celular) – monthly checking account fees are awarded as bonus for the customers’ prepaid cell phone.

Investment deposit accounts;  

·           Traditional savings accounts, which currently earn the Brazilian reference rate, or taxa referencial, known as the “TR,” plus 6.2% annual interest;

·           Time deposits, which are represented by Bank Deposit Certificates (certificados de depósito bancário - or “CDBs”), and earn interest at a fixed or floating rate; and

·           Deposits exclusively from financial institutions, which are represented by Interbank Deposit Certificates (certificados de depósito interbancário - or “CDIs”), and earn the interbank deposit rate.

As of December 31, 2011, we had 25.1 million checking account holders, 23.7 million of which were individual account holders and 1.4 million corporate account holders.  As of the same date, we had 43.4 million savings accounts. In the same period, our deposits (excluding deposits from financial institutions) totaled R$216.3 billion and we had a 14.2% share of the Brazilian savings deposit market, according to the Central Bank.

We offer our customers certain special services, such as:

·           “Identified deposits,” which allow our customers to identify deposits made in favor of a third party by using a personal identification number; and

·           Real time "banking transfers" for checking accounts, savings or investment accounts for: or between checking accounts, savings accounts or investment accounts, including those at other banks.

Loans and advances to customers

Our loans and advances to customers, mostly consumer credit, corporate and agricultural-sector loans, totaled R$263.5 billion as of December 31, 2011.

Loans and advances to consumers

Our significant volume of individual loans enables us to reduce the impact of single individual loans on the performance of our portfolio and helps build customer loyalty. They consist primarily of:

·         short-term loans, extended through our branches to checking account holders and, within certain limits, through our ATM network. These short-term loans are on average repaid in four months with an average interest rate of 7.1% per month as of December 31, 2011;

·         vehicle financings are on average repaid in sixteen months with an average interest rate of 2.1% per month as of December 31, 2011; and

·         overdraft loans on checking accounts (which we call “Cheque Especial”), which are on average repaid in one month, at interest rates varying from 8.2% to 8.9% per month as of December 31, 2011.

We also provide revolving credit facilities and traditional term loans. As of December 31, 2011, we had outstanding advances, vehicle financings, consumer loans and revolving credit totaling R$58.0 billion, or 22.0% of our portfolio of loans and advances as of that date. On the basis of loans outstanding on that date, we had a 12.1% share of the Brazilian consumer loan market, according to information published by the Central Bank.

Banco Bradesco Financiamentos offers direct-to-consumer credit and leasing for the acquisition of vehicles and payroll-deductible loans to the public and private sectors in Brazil.

Supported by BF Promotora de Vendas Ltda., and using the “Bradesco Financiamentos” brand, the Bank operates through its extensive network of correspondents in Brazil, consisting of retailers and dealers selling light vehicles, trucks and motorcycles, to offer financing and/or leasing for vehicles.

With support from BP Promotora de Vendas Ltda., and the “Bradesco Promotora” brand, we offer payroll-deductible loans to social security retirees and pensioners, public-sector employees, military personnel and private-sector companies sponsoring plans, and other aggregated products (insurance, capitalization bonds, cards, purchasing consortiums, and others). With correspondents, we also work in partnership with “Bradesco Varejo” branches to prospect business for this segment.

Real estate financing   

As of December 31, 2011, we had 63,156 outstanding real estate loans. We financed 30.6% of the financial sector lending for civil construction in Brazil as of November, 2011 according to data published by the Central Bank. As of December 31, 2011, the aggregate outstanding amount of our real estate loans amounted to R$15.9 billion, representing 6.0% of our portfolio of loans and advances.

Real estate financing is made through the Housing Finance System - SFH (Sistema Financeiro Habitacional), by the Housing Mortgage Portfolio - CHF (Carteira Hipotecária Habitacional) or by the Commercial Mortgage Portfolio - CHC - (Carteira Hipotecária Comercial). Loans from SFH or CHH feature variable-installment repayments and annual interest rates ranging from 7.8% to 11.5% plus TR, or 13.0% from CHC. Loans from SFH with pre-fixed installment repayment are made at annual interest rates of 13.2% for properties valued at no more than R$150,000.

Residential SFH and CHH loans are for repayment within thirty years and commercial loans within ten years.

 Our individual loans made for construction purposes are repaid within 30 years, with 24 months to finish construction, a 2-month grace period and the remainder for repaying the loan. The annual interest rate on these loans is TR plus 10.5% for the SFH loans, or a fixed 13.2% for homes valued at R$150,000 or less.

We also extend corporate financing for builders under the SFH. These loans are for construction purposes and typically specify 36 months for completion of construction work and repayments starting within 36 months after official registration of the building. These loans are based on the variation of Brazil's reference rate (TR) and interest rates of 10% to 12% per annum during construction under official Housing Finance System (SFH) programs, or TR plus 14% per annum under Hypothecated Loan Portfolio (CHH) programs.

Central Bank regulations require us to provide real estate financing in the amount of at least 65% of the balance of our savings accounts. In addition to real estate financing, mortgage notes, charged-off real estate financing, and other financings can be used to satisfy this requirement. We generally do not finance more than 80% of the purchase price or the market value of a property, whichever is lower.

Microcredit

We extend microcredit to low-income individuals and small companies, in accordance with Central Bank regulations requiring banks to use 2% of their cash deposits to provide microcredit loans. We started providing microcredit loans in August 2003. As of December 31, 2011, we had 69,491 microcredit loans outstanding, totaling R$62.8 million.

In accordance with Central Bank regulations, most microcredit loans are charged at a maximum effective interest rate of 2% per month. However, microcredit loans for certain types of business or specific production have a maximum effective interest rate of 4%. The CMN requires that the maximum amount loaned to a borrower be limited to (i) R$2,000 for individuals in general, (ii) R$5,000 for individuals developing certain professional, commercial or industrial activities or for micro companies, and (iii) R$15,000 for microcredit loans in certain segments. In addition, microcredit loans must be not for less than 120 days, and origination fee must be 2% to 3% of the loan value.

BNDES onlending

The Brazilian government has a program to provide government-funded long-term loans with below-market interest rates to sectors of the economy that it has targeted for development. We borrow funds under this program from either (i) BNDES, the federal government’s development bank, or (ii) Agência Especial de Financiamento Industrial (Finame), or “Finame,” the equipment financing subsidiary of BNDES. We then on-lend these funds to borrowers in targeted sectors of the economy. We determine the spread on the loans based on the borrowers’ credit. Although we bear the risk for these BNDES and Finame onlending transactions, they are always secured.

According to BNDES, we disbursed R$15.5 billion, 65.5% of which was loaned to  micro-, small- and medium-sized companies in 2011. Our BNDES onlending portfolio totaled R$35.4 billion as of December 31, 2011, and accounted for 13.4% of our portfolio of loans and advances at that date.

Other local commercial loans

We provide traditional loans for the ongoing needs of our corporate customers. We had R$85.8 billion of outstanding other local commercial loans, accounting for 32.5% of our portfolio of loans and advances as of December 31, 2011. We offer a range of loans to our Brazilian corporate customers, including:

·                         short-term loans of twenty nine days or less;

·                         working capital loans to cover our customers’ cash needs;

·                         guaranteed checking accounts and corporate overdraft loans;

·                         discounting trade receivables, promissory notes, checks, credit card and supplier receivables, and a number of other receivables;

·                         financing for purchase and sale of goods and services;

·                         corporate real estate financing;

·                         investment lines for acquisition of assets and machinery; and

·                         guarantees.

These lending products generally bear an interest rate of 1.9% to 8.4% per month.

Rural Loans

We extend loans to the agricultural sector by financing demand deposits, BNDES onlendings and our own funds, in accordance with Central Bank regulations. As of December 31, 2011, we had R$11.0 billion in outstanding rural loans, representing 4.2% of our portfolio of loans and advances.

In accordance with Central Bank regulations, loans arising from compulsory deposits are paid a fixed rate. The annual fixed rate was 6.75% as of December 31, 2011. Repayment of these loans generally coincides with agricultural harvest and principal is due when a crop is sold. Under BNDES onlending programs for investment in agriculture, we offer loans for up to 5 years with semiannual or annual repayments. As security for such loans, we generally obtain a mortgage on the land where the agricultural activities being financed are conducted.

Since July 2011, Central Bank regulations require us to use at least 28% of our checking account deposits to provide loans to the agricultural sector. If we do not reach 28%, we must deposit the unused amount in a non-interest-bearing account with the Central Bank.

Leasing

According to ABEL, as of December 31, 2011, our leasing companies were among the sector leaders, with an 18.5% market share. According to this source, the aggregate discounted present value of the leasing portfolios in Brazil as of December 31, 2011 was R$62.4 billion.

As of December 31, 2011, we had 423,800 outstanding leasing agreements totaling R$11.6 billion, representing 4.4% of our portfolio of loans and advances.

The Brazilian leasing market is dominated by large banks and both domestic- and foreign-owned companies affiliated with vehicle manufacturers. Brazilian lease contracts generally relate to motor vehicles, computers, industrial machinery and other equipment.

Most of our leases are financial (as opposed to operational). Our leasing operations primarily involve the leasing of trucks, cranes, aircraft and heavy machinery. As of December 31, 2011, 75.1% of our outstanding leases were vehicle leases, compared with 67.1% in the Brazilian leasing market as a whole.

We conduct our leasing operations through our primary leasing subsidiary, Bradesco Leasing and also through Bradesco Financiamentos.

We obtain funding for our leasing operations primarily by issuing debentures and other securities in the domestic market.

As of December 31, 2011, Bradesco Leasing had R$63.1 billion of debentures outstanding in the domestic market. These debentures will mature in 2028 and bear monthly interests at the CDI rate.

Credit cards

In 1968, Bradesco was the first bank to issue credit cards in Brazil, and as of December 31, 2011, we were one of Brazil's largest card issuers with a base of 91.3 million credit and private-label cards. We offer Visa, American Express, Elo, MasterCard credit and Private Label cards, which are accepted in over 200 countries.

Bradesco launched a Brazilian brand of credit, debit and pre-paid cards known as Elo for accountholders and non-accountholders.

We also started to sell Bradesco-flagged basic/standard Visa credit cards in compliance with CMN Resolution 3919/10.

In April 2011, Bradesco signed an agreement with Bank of America Merrill Lynch to jointly issue corporate cards to Bank of America Merrill Lynch customers living in Brazil, who are mostly employees of multinational corporations domiciled in Brazil or representation offices in the United States. For companies with employees working in Brazil, this card will avoid currency exchange charges, enable them to manage expenses and ensure direct communication with corporate accounts. Through this partnership, Bradesco is expanding its presence in the corporate credit card business, thus enabling it to offer customized products for each segment.

We earn revenues from our credit card operations through:

·                      fees on purchases carried out in commercial establishments;

·                      issuance fees and annual fees;

·                      interest on credit card balances;

·                      interest and fees on cash withdrawals through ATMs;

·                      interest on cash advances to cover future payments owed to establishments that accept credit cards; and

·                      several fees charged cardholders and affiliated commercial establishments.

We offer our customers the most complete line of credit cards and related services, including:

·                      cards issued for use restricted to Brazil;

·                      credit cards accepted nationwide and internationally;

·                      cards for high-spend customers such as "Gold", "Platinum" and "Infinite/Black" under Visa, American Express and MasterCard flags. Highlights are loyalty programs including the “Membership Rewards Program;”

·                      cards that combine credit and debit features in a single card, which may be used for traditional banking transactions and shopping;

·                      to enhance security, we are issuing chip-embedded credit cards for our entire customer base, enabling cardholders to use passwords instead of signatures;

·                      corporate credit cards accepted nationwide and internationally;

·                      co-branded credit cards, which we offer through partnerships with traditional companies, such as airlines, retail stores, and others;

·                      “affinity” credit cards, which we offer through civil associations, such as sport clubs and non-governmental organizations;

·                      “CredMais” credit cards for employees of our payroll processing clients, which have more attractive revolving credit fees, and “CredMais INSS” credit cards for INSS pensioners and other beneficiaries with lower financing interest rates;

·                       Private Label credit cards, which exclusively target retail clients to leverage our business and build loyalty which may or may not have a brand for use with our retailers;

·                      “CPB” and “EBTA,” virtual cards for corporates to manage and control airlines travel expenses;

·                      “Cartões Transporte Bradesco” - Bradesco’s card for transportation companies, shippers, risk management companies and truck drivers, with both prepaid and debit card functionalities;

·                      “Blue Credit Cards” a modernly designed credit card that offers special benefits for American Express clients with upscale lifestyles;

·                      “Flex Car Visa Vale Card” is a prepaid card that offers the client more practical payment options for vehicle related expenses, such as fuel or parking and enables companies to set maximum credit available to each employee;

·                      Payment of invoice in up to 12 fixed installments, with specific charges per type of card;

·                      Bradesco Unauthorized Purchase Protection Insurance (“Seguro Cartão Super Protegido Premiável Bradesco”) settles or amortizes the amount due on the participant's credit card, excluding cash withdrawals, resulting from the card’s loss, robbery or theft. Protection covers a 7-consecutive-day period (168 hours) prior to the notification of the event, up to the credit card limit, with a ceiling of R$50,000;

·                      “Contactless Card” which enable customers to simply place the card next a scanner to make a payment;

·                      “Bradesco Corporate Checking Account Card” does checking account transactions and is ideal for small everyday expenses, with advanced technology making company business more convenient, faster and more secure;

·                      “Gold Cards” with differentiated services in line with Bradesco’s customer segmentation strategy, offering competitive products that provide profitability for the Bank and benefits for clients;

·                      “MoneyCard – Visa Travel Money and Global Travel Card” are prepaid international cards designed for foreign currency transactions, which target international travel; and

·                      American Express Business, which is the first American Express card to target small and medium enterprises.

We are authorized to accredit merchants with the Visa, American Express and Mastercard systems through our branches, and to transfer banking domiciles.

In 1993, we launched the “SOS Mata Atlântica” card, which allocates a portion of its revenues to environmental causes. In 2008, we launched the Amazonas Sustentável Credit Card, the first credit card made of recycled plastic, and part of its revenues is transferred to Fundação Amazonas Sustentável.

As of December 31, 2011, we had more than 95 partners with whom we offered co-branded, affinity and Private Label/hybrid credit cards. These relationships have allowed us to integrate our relationships with our customers and offer our credit card customers banking products, such as financing and insurance.

The following table shows credit cards we issued in Brazil for the years indicated:

Debit cards

We first issued debit cards in 1981 under the name “Bradesco Instantâneo.” 

In 1999, we started converting all of our Bradesco Instantâneo debit cards into new cards called “Bradesco Visa Electron.”  Bradesco debit cardholders may use them to purchase goods and services at establishments or make withdrawals through our self-service network in Brazil or the “Plus” network worldwide. Purchase amounts are debited to the cardholder's Bradesco account, thus eliminating the inconvenience and bureaucracy of writing checks.

Prepaid cards

In January 2011, Bradesco acquired part of Alelo’s shares owned by Visa International, thus increasing Bradesco’s ownership interest in Alelo from 45.00 % to 50.01%.

Management of receipts and payments

In order to meet the cash management needs of our clients in both public and private sectors, we offer many electronic solutions for Receipt and Payment Management, supported by a vast network of branches, banking correspondents and electronic channels, all of which aim to improve speed and security for client data and transactions.

These solutions include: (i) collection and payment services and (ii) online resource management enabling our clients to pay suppliers, salaries, and taxes and other levies to governmental or public entities.

These solutions, which can also be customized, facilitate our clients’ day-to-day tasks and help to generate more business for the Organization.

We also earn revenues from fees and investments related to collection and payment processing services.

Global cash management

The global cash management concept provides solutions for multinationals in Brazil and/or domestic companies operating abroad.

Bradesco’s Global Cash Management provides payments, receipts and treasury management services for companies to centralize cash regionally or globally through partnerships with banks worldwide.

Solutions for collection and other receipts

In 2011, we processed 1.2 billion receipts through our collection system, checks custody service, identified deposits and credit orders via our teleprocessing system (credit order by teleprocessing or OCT), which was 18.5% more than in the same period of 2010.

Public authority solutions

Public administration also requires agility and technology in its everyday activities. We have a business area specifically to serve this market, which offers specialized services to entities and bodies of the Executive, Legislative and Judiciary branches at federal, state and municipal levels, in addition to independent governmental agencies, public foundations, state-owned and mixed companies, the armed forces (army, navy and air force) and the auxiliary forces (federal and state police forces) and notary officers and registrars, identifying business opportunities and structuring customized solutions.

Our exclusive website  developed for these customers (www.bradescopoderpublico.com.br) poses corporate solutions for federal, state and municipal governments for payments, receipts, human resources and treasury services, meeting the needs and expectations of the Executive, Legislative and Judiciary branches. The portal also features exclusive facilities for public employees and the military showing all of our products and services for these clients.

The relationship works through exclusive service platforms located nationwide, with specialized relationship managers to provide services to these clients, creating a closer relationship to conquer new business and establishing a consolidated presence with Public Authorities.

In 2011, Bradesco provided payroll bank account services for nearly 637,000 public sector employees across Brazil. We were successful in 58 out of 100 bidding processes held to provide payroll banking services.

Asset Management

We manage third-party assets through:

·                         mutual funds;

·                         individual and corporate investment portfolios;

·                         pension funds, including assets guaranteeing the technical reserves of Bradesco Vida e Previdência;

·                         insurance companies, including assets guaranteeing the technical reserves of Bradesco Seguros; and

·                         Receivable funds (FIDCs – Fundos de Investimento em Direitos Creditórios), real estate and private equity funds (FIPs).

As of December 31, 2011, we had R$335.4 billion in assets under management, of which R$226.1 billion were managed by Bradesco Asset Management and R$109.2 billion related to the fiduciary administration, custody and controllership services provided separately by the brokerage BEM Distribuidora de Títulos e Valores Mobiliários Ltda., also known as “BEM DTVM.”

In the same period we offered 1,319 funds and 240 managed portfolios to 3.2 million investors. We also offer a range of fixed income, equity, money market and other funds. Currently we do not offer investments in highly leveraged funds. 

The following tables show our portfolio of assets under management by number of investors, and number of investment funds and managed portfolios for each period.

Total assets in our investment funds grew 13.4% in 2011, mainly as a result of larger third-party investments in our fixed income investment funds, which have lower management fees than equity funds.

Our products are distributed through our branch network, our telephone banking services and our internet site ShopInvest (www.shopinvest.com.br).

Services related to capital markets and investment banking activities

As the organization’s investment bank, Bradesco BBI originates and executes mergers and acquisitions, and originates, structures, syndicates and distributes fixed-income and equity capital market transactions in Brazil and abroad.

In 2011, Bradesco BBI advised customers on 183 transactions across a range of investment banking products, totaling R$111.8 billion.

Equities

Bradesco BBI coordinates and places public offerings of shares in the local and international capital markets and intermediates public tender offers. Bradesco BBI acted as Coordinator and Joint Bookrunner for nine CVM-registered public offerings in 2011, totaling R$9.6 billion.

Bradesco was one of the main players in the R$371 million IPO for Abril Educação S.A., the BR Properties S.A. R$690 million follow-on; the Kroton Educacional S.A. R$396 million follow-on; the Brazil Pharma S.A. R$414 million IPO; the Qualicorp S.A. R$1,085 million IPO; the T4F Entretenimento S.A. R$503 million IPO; the Gerdau S.A. R$4,985 million follow-on; the BR Malls Participações S.A. R$731 million follow-on; the International Meal Company Holdings S.A. R$454 million IPO; and Universo Online’s going private transaction worth R$338 million.

Fixed income

In fixed income, market leader Bradesco BBI ended 2011 in 1st place in the ANBIMA's Consolidated Fixed Income ranking by value. In 2011, it coordinated 107 domestic-market offerings totaling more than R$19 billion.

In the international market, Bradesco BBI is constantly expanding its international distribution. It acted as Joint Bookrunner for 15 bond issues worth around US$ 10 billion in the period and was one of the top three institutions in the last quarter of 2011, according to the ANBIMA ranking.

Structured operations

Bradesco BBI offers various funding solutions to clients through diverse financial instruments, including securitization and acquisition finance.

ANBIMA rankings published in December 2011, placed BBI first by number of deals involving securitization with issues of senior and subordinated shares in receivables funds (FIDCs) and real-estate receivables certificates (or “CRIs”). Bradesco BBI structured 23 CRIs worth a total of approximately R$6.4 billion.

Mergers and acquisitions

Brandesco BBI acts as advisor to important customers for mergers and acquisitions, asset sales, joint ventures, corporate restructuring and privatizations. It is one of the leading investment banks in Brazil in mergers and acquisitions. In 2011, Bradesco BBI was ranked third among banks advising on mergers and acquisitions in Brazil, and announced 27 deals in the period, according to the Merger Market ranking.

Some of the standouts among these deals were the following: GFV Participações for acquisition of additional holdings and Marisol S.A.'s public offer of shares for its delisting transaction, which may reach R$ 205 million; SP Torres (Providence Private Equity) for its R$ 432 million purchase of 1,200 Vivo telecommunication towers; Petropar, for the acquisition of all Fiberweb Holdings Limited nonwoven business in the disposable products segment for R$ 286 million; Kroton for its acquisition of 100% of Unopar for R$ 1.3 billion; JSL for its acquisition of 100% of Rodoviário Schio for R$ 405 million; Nadir Figueiredo for its acquisition of part of Saint-Gobain's glassmaking operation in Brazil; Telemar Norte Leste's Special Independent Committee for reorganizing Grupo OI ownership in a R$ 22 billion transaction; Grupo Fleury's R$ 1.2 billion acquisition of 100% of the medical diagnostic unit of the D'Or network; Scopus for its acquisition of 49% of voting and 32.5% of total share capital of NCR Manaus for R$ 79.6 million, and Banco Bradesco's procurement of at least 30,000 ATMs through 2016; Grupo Silvio Santos Participações for the sale of its stores (Lojas do Baú) to Magazine Luiza; DLJ South American Partners private equity fund for the sale of 100% of Brazil Trade Shows to Informa Exhibitions; IGB Eletrônica for the process of restructuring the company's liabilities and incorporating Companhia Brasileira de Tecnologia Digital (CBTD), which had 60% of its capital transferred to Jabil, Agência de Fomento do Estado do Amazonas (AFEAM) [State of Amazonas Development Agency], Petros and Funcef, and the private equity fund Advent International's acquisition of 50% of TCP Terminais.

Project finance

Bradesco BBI has a sound record of acting as an advisor and arranging structured finance for several project finance and corporate finance deals and, in all cases pursues the best solutions for all different sectors of the economy, while maintaining excellent relationships with various development agencies such as BNDES, BNB, the IDB and the IFC.

In 2011, Bradesco BBI was involved in several mandates providing advisory and structured finance services for projects in power generation and transmission, industrial projects, port complexes, and mining and logistics projects, including: (i) structuring a bridge loan and bank guarantee financing by BNDES for the Maranhao IV and V gas-fired thermoelectric plants sponsored by MPX, [which included a R$300 million loan by Bradesco], and (ii) a banking syndicate for a BNDES bridge loan to Logum Logistics in the amount of R$1.8 billion to build a pipeline to store and deliver ethanol with an estimated annual through capacity of 21 billion liters, which included a R$550 million loan by Bradesco.

Intermediation and trading services

Our subsidiaries Bradesco S.A. CTVM and Ágora S.A. CTVM (or “Bradesco Corretora” and “Agora Corretora,” respectively) trade stocks, options, stock lending, public offerings and forwards. They also offer a wide range of products such as Brazilian government securities (under the Tesouro Direto program), BM&F trading, investor clubs and investment funds, which are tailored to the needs of high net-worth individuals, major corporations and institutional investors.

In 2011, Bradesco Corretora traded more than R$68.5 billion in the BM&FBovespa equities market and the exchange ranked 15th in Brazil in terms of total trading volume. Ágora Corretora traded over R$81.2 billion in the BM&FBovespa’s equities market and the exchange rated it 13th in Brazil in terms of total trading volume.

In addition, in the same period, Bradesco Corretora traded 12,807,041 futures, swaps and options totaling R$1,140.6 billion on the BM&FBovespa. According to the BM&FBovespa, in 2011, Bradesco Corretora was ranked 16th in the Brazilian market, in terms of the number of options, futures and swaps contracts executed.

With more than 45 years of tradition and efficiency in capital markets, Bradesco Corretora was the first brokerage firm to provide its clients with DMA-Direct Market Access, an innovative computer order routing service enabling investors to buy or sell assets directly in BM&FBovespa’s market.

BM&FBovespa, through its Operational Qualification Program, awarded the 5 Qualification Seals (Agro Broker, Carrying Broker, Execution Broker, Retail Broker and Web Broker) to Bradesco Corretora in 2009, indicating excellence in futures transactions. In 2007, Ágora was recognized with four of the five (excepting only the Agro Broker seals).

Bradesco Corretora and Ágora Corretora offer its clients the possibility to trade securities on the Internet through its Home Broker service. In 2011, “Home Broker” trading totaled R$11.0 billion, or 2.3% of all Internet transactions on BM&FBovespa, and Bradesco Corretora was the 16th largest Internet trader in the Brazilian market. In the same period, Ágora Corretora’s “Home Broker” trading totaled R$38.5 billion, or 8.0% of all Internet transaction on BM&FBovespa, ranked 4th in the Brazilian market.

In addition to Home Broker, Ágora Corretora’s customers use Ágora Trade Pro as a trading tool for advanced investors and Ágora Mobile for orders by cell phone. Ágora Corretora provides clients with the assistance of about 40 qualified trading professionals to execute orders in equities and fixed-income markets.

Bradesco Corretora and Ágora Corretora also deliver full investment analysis services covering over 100 companies in key sectors of the Brazilian market. Its team of analysts consists of industry specialists (senior analysts and assistants) who provide customers with reports and guidance based on an extensive database of projections and comparative multiples. In addition to analysis from our team of economists, Bradesco Corretora has a separate economic team catering to specific demand from its customers, focused on the stock market.

Through Bradesco Corretora’s “Share Rooms Project,” our customers have access to professionals able to advise on investing on the BM&FBovespa. Our constantly-expanding network of share rooms currently consists of 16 share rooms located throughout Brazil. This means that Bradesco Corretora provides direct customer service and closer relations with customers, training and certifying employees for a range of operations. This channel is very profitable and enjoys a high-level of take-up from investors, making for closer relations with our network of branches as loyal customers concentrate their funds with us.

Individual customers may invest in Brazilian federal government bonds over the Internet through the “Tesouro Direto” program by registering on our Bradesco Corretora or Ágora Corretora websites.

In addition, Ágora Corretora offers products, services and exclusive assistance through 31 independent agents’ offices all over Brazil catering for some 4,000 active customers.

Bradesco Corretora also offers its services as a representative of non-resident investors for transactions in the financial and capital markets, in accordance with CMN Resolution No. 2,689/00.

Custody, depositary and controllership services

In 2011, we were one of the main providers of capital market services and retained leadership in the domestic asset custody market, according to the ANBIMA ranking. Our modern infrastructure and specialized team offer a broad range of services such as: asset registration (shares, BDR - Brazilian Depositary Receipts, investment fund shares, Certificates of Real Estate Receivables or CRIs, and debentures); qualified custody for securities; custody of shares underlying Depositary Receipts (DRs); controllership services for investment funds (“CVM Instruction No. 409” Funds and Structured Funds) and managed portfolios; trustee and management services for investment funds; offshore funds; custody and representation for foreign investors; agent bank; depositary (escrow account - trustee) and clearing agent.

We submit our processes to the Quality Management System ISO 9001:2008 and GoodPriv@cy certifications. Bradesco Custódia alone has 10 quality related and 3 protection and data privacy certifications.

As of December 31, 2011, Bradesco Custódia offered:

·                Controller and custody services for investment funds and managed portfolios and fiduciary asset management involving:

·                R$795.8 billion in assets under custody for clients using custody services, as measured by methodology used for the ANBIMA ranking;

·                R$928.9 billion in equity investment funds and portfolios using our controller services, as measured by methodology used for the ANBIMA ranking;

·                21 registered DR programs with a market value of R$104.7 billion; and

·                R$172.2 billion total assets under management in investment funds through BEM DTVM Ltda.

·                Asset registration:

·                Bradesco’s share registration system comprised 246 companies, with a total of 4.7 million shareholders;

·                our debenture registration system contained 190 companies with a total market value of R$193.1 billion;

·                our fund share registration system contained 232 investment funds with a market value of R$36.5 billion; and

·               we managed 13 registered BDR programs, with a market value of R$96.5 million.

International banking services

As a private commercial bank, we offer a range of international services, such as foreign exchange transactions, foreign trade finance, lines of credit and banking. As of December 31, 2011, our international banking services included:

·                New York City, a branch and Bradesco Securities Inc., our subsidiary brokerage firm, or “Bradesco Securities United States,” and our subsidiary Bradesco North America LLC, or “Bradesco North America;”

·                London, Bradesco Securities U.K., our subsidiary, or “Bradesco Securities U.K.;”

·                Cayman Islands, two Bradesco branches and our subsidiary, Cidade Capital Markets Ltd., or “Cidade Capital Markets;”      

·                Argentina, Banco Bradesco Argentina S.A., our subsidiary, or “Bradesco Argentina;”

·                 Luxembourg, Banco Bradesco Europa S.A. (current name of Banco Bradesco Luxemburgo S.A.) our subsidiary, or “Bradesco Europe;”

·                 Japan, Bradesco Services Co. Ltd., our subsidiary, or “Bradesco Services Japan;”

·                 in Hong Kong, our subsidiary Bradesco Trade Services Ltd; and

·                 in Mexico, our subsidiary Ibi Services, Sociedad de Responsabilidad Limitada, or “Ibi Mexico.”

Our Bradesco Nassau branch in the Bahamas closed on January 11, 2011.

Our international transactions are coordinated by our foreign exchange department in Brazil with support from 26 operational units specializing in foreign exchange businesses located at major exporting and importing areas nationwide.

Foreign branches and subsidiaries

Our foreign branches and subsidiaries are principally engaged in trade finance for Brazilian companies. Bradesco Europe also provides additional services to the private banking segment. With the exception of Bradesco Services Japan and Bradesco Trade Services, our branches abroad are allowed to receive deposits in foreign currency from corporate and individual customers and extend financing to Brazilian and non-Brazilian customers. Total assets of the foreign branches, excluding transactions between related parties, were R$99.4 billion, as of December 31, 2011, denominated in currencies other than the real.

Funding for import and export finance is obtained from the international financial community by means of credit lines granted by correspondent banks abroad. In addition to this traditional source of correspondent banks, our funding from public and private issues of debt securities on international capital markets amounted to US$11.1 billion during 2011.

Bradesco Argentina - To expand our operations in Latin America, in December 1999, we established our subsidiary in Argentina, Bradesco Argentina, the general purpose of which is to extend financing, largely to Brazilian companies established locally and, to a lesser extent, to Argentinean companies doing business with Brazil. In order to start its operations, we capitalized Bradesco Argentina with R$54.0 million from March 1998 to February 1999, and a further R$27.2 million in May 2007. In October 2011, we made another capital injection in the amount of R$70.1 million. As of December 31, 2011, Bradesco Argentina recorded R$139.8 million of total assets.

Bradesco Europe (Bradesco Luxembourg’s current business name). In April 2002, we acquired full control of Banque Banespa International S.A. in Luxembourg and changed its name to Banco Bradesco Luxembourg S.A. In September 2003, Mercantil Luxembourg was merged into Banco Bradesco Luxembourg and the surviving entity was named Banco Bradesco Luxembourg. In January 2011, there was a capital injection of US$200 million. As of December 31, 2011, its total assets were R$3.6 billion.

Bradesco Services Japan. In October 2001, we incorporated Bradesco Services Japan to provide support and specialized services to the Brazilian community in Japan, including remittances to Brazil and advice regarding investments within Brazil. As of December 31, 2011, its assets totaled over R$2.8 million.

Bradesco Trade Services. A non-financial institution and a subsidiary of our branch in the Cayman Islands, which we incorporated in Hong Kong in January 2007, in partnership with the local Standard Chartered Bank.

Bradesco Securities (U.S. and U.K.) - Bradesco Securities, our wholly owned subsidiary, is a broker/dealer in the United States and England:

·                The focus of Bradesco Securities U.S. is on facilitating the purchase and sale of shares, primarily in the form of ADRs. It is also authorized to deal Bonds, Commercial Paper and deposit certificates, among other securities, and may provide investment advisory services. Currently, we have more than 30 ADR programs for Brazilian companies traded on the New York Stock Exchange. As of December 31, 2011, Bradesco Securities U.S. had assets of R$53.8 million and

·                Bradesco Securities U.K.’s focus is intermediating equity and fixed income trades of Brazilian companies for global institutional investors. As of December 31, 2011, Bradesco Securities U.K. had R$13.8 million in assets.

Cidade Capital Markets - In February 2002, through BCN, Bradesco acquired Cidade Capital Markets in Grand Cayman, as part of the acquisition of its parent company in Brazil, Banco Cidade. As of December 31, 2011, Cidade Capital Markets had R$72.5 million in assets.

Bradesco North America LLC was incorporated in August 2011 and will be used as a holding company focused on Bradesco’s investments in non-bank business in the United States, with a capital increase of US$5.0 million in November 2011.

Banking operations in the United States

In January 2004, the United States Federal Reserve Bank authorized us to operate as a financial holding company in the United States. As a result, we may do business in the United States directly or through a subsidiary, and, among other lines, may sell insurance and certificates of deposit, provide underwriting services, act as advisors for private placements, provide portfolio management and merchant banking services and manage mutual fund portfolios.

Import and export finance

Our Brazilian foreign-trade related business basically consists of export and import finance.

We provide foreign currency payments directly to foreign exporters on behalf of Brazilian importers, attached to receipt of local currency payment by the importers. In export finance, exporters obtain advances in reais on closing an export forex contract for future receipt of foreign currency on the contract due date. Export finance arrangements prior to shipment of goods are known locally as Advances on Exchange Contracts or “ACCs,” and the sums advanced are used to manufacture goods or provide services for export. If advances are paid after goods or services have been delivered, they are referred to as Advances on Export Contracts, or “ACEs.”

Other types of export finance include export prepayment, onlending from BNDES-EXIM funds, export credit notes and bills (referred to locally as “NCEs” and “CCEs”), and the PROEX rate equalization program.

Our foreign trade portfolio is funded primarily by credit lines from correspondent banks.  We maintain relations with various American, European, Asian and Latin American financial institutions for this purpose, using our network of approximately 1,000 correspondent banks abroad, 92 of which extended lines of credit as of December 31, 2011.

As of December 31, 2011, our international unit had a balance of R$27.5 billion in export financing and R$7.8 billion in import financing and international finance. In volume terms, Bradesco's export finance contracts totaled US$ 53.1 billion in 2011, which was 16.4% up on the previous year. In 2011, the volume of our foreign exchange contracts for imports reached US$36.2 billion, a 4.3% rise on 2010. In 2011, based on Central Bank data, we reached a 20.4% market share of trade finance for Brazilian exports and 17.6% for imports.

Foreign exchange products

In addition to import and export finance, our customers have access to a range of services and foreign exchange products such as:

·    purchasing and selling travelers checks and foreign currency paper money;

·    cross border money transfers;

·    advance payment for exports;

·    accounts abroad in foreign currency;

·    domestic currency accounts for foreign domiciled customers;

·    cash holding in other countries;

·    collecting import and export receivables;

·    cashing checks denominated in foreign currency;

·    foreign loans to customers (Decree-Law No. 4,131/62);

·    service agreements – receiving funds from individuals abroad via money orders;

·    prepaid cards with foreign currency (individual); and

·    structured foreign currency transactions through our foreign units.

Purchasing consortiums

In Brazil, persons or entities that wish to acquire certain goods may set up a group known as a “consortium,” in which members pool their resources to facilitate the purchase of certain consumer goods. The purpose of a consortium is to acquire goods, and Brazilian law forbids the formation of consortiums for investment purposes.

Our purchasing consortium company (Bradesco Consórcios) manages plans for groups of purchasers buying real estate, automobiles, and trucks/tractors. In January 2003, our subsidiary Bradesco Consórcios initiated the sale of consortium memberships, known as “quotas,” to our customers. Since May 2004, Bradesco Consórcios has been the leader in the real estate segment and, since December 2004, it has also been the leader in the vehicle segment. In October 2008, Bradesco Consórcios became leader in the truck/tractor segment. As of December 31, 2011, Bradesco Consórcios registered total sales of over 625,763 active quotas in the three segments, with total revenues of over R$26.1 billion and net income of R$339.4 million.

Insurance, pension plans and capitalization bonds

Life and personal accident insurance

We offer life, personal accident and random events insurance through our subsidiary Bradesco Vida e Previdência. As of December 31, 2011 Bradesco Seguros had 22.4 million life insurance policyholders.

Health insurance

The health insurance policies cover medical/hospital expenses. We offer health insurance policies through Bradesco Saúde and its subsidiaries for small, medium or large companies wishing to provide benefits for their staff.

On December 31, 2011, Bradesco Saúde and its subsidiary Mediservice Administradora de Planos de Saúde S.A had more than 3.4 million beneficiaries covered by company plans and individual/family plans. Approximately 41,000 companies in Brazil pay into plans provided by Bradesco Saúde and its subsidiaries, including 45 of the top 100.

Bradesco Saúde currently has one of the largest networks of providers of health services in Brazil. As of December 31, 2011, it included 10,835 laboratories, 13,006 specialized clinics, 17,157 physicians, 3,315 hospitals located throughout the country.

Automobiles, property/casualty and liability insurance

We provide automobile, property/casualty and liability products through our subsidiary Bradesco Auto/RE. Our automobile insurance covers losses arising from vehicle theft and damage, passenger and third-party injury. Retail property/casualty insurance is for individuals, particularly those with residential and/or equipment related risks and small- and medium-sized companies whose assets are covered by multi-risk business insurance.

Of the mass property/casualty lines for individuals, our residential note (“Bilhete Residencial”) is a relatively affordable and highly profitable product. For corporate customers, Bradesco Auto/RE offers Bradesco Seguro Empresarial (business insurance), which is adapted to meet our customers’ and business needs. For corporate property/casualty and liability insurance, Bradesco Auto/RE has an exclusive highly specialized team that provides large business groups with services and products tailor-made to the specific needs of each policyholder. Top sellers in this segment are insurance policies for transportation, engineering and operational and oil risks.

As of December 31, 2011, Bradesco Auto/RE had 1.6 million insured automobiles and 2.1 million property/casualty policies and notes, making it one of Brazil’s main insurers. 

Pension plans

We have managed individual and corporate pension plans since 1981 through our wholly owned subsidiary Bradesco Vida e Previdência, which is now the leading pension plan manager in Brazil, as measured by pension plan contributions, investment portfolio and technical provisions, based on information published by Fenaprevi and SUSEP.

Bradesco Vida e Previdência offers and manages a range of individual and group pension plans. Our largest individual plans in terms of contributions known as VGBL and PGBL are exempted from withholding taxes on income generated by the fund portfolio.

As of December 31, 2011, Bradesco Vida e Previdência accounted for 33.2% of the pension plan and VGBL market in terms of contributions, according to Fenaprevi. Also according to the same source, managed pension funds accounted for 34.0% of VGBL, 26.1% of PGBL and 38.5% of traditional pension plans in Brazil. As of December 31, 2011, Bradesco Vida e Previdência accounted for 33.5% of all supplementary pension plan assets under management, 33.1% of VGBL, 23.6% of PGBL and 49.2% of traditional private pension plans, according to Fenaprevi.

Brazilian law currently permits the existence of both “open” and “closed” private pension entities. “Open” private pension entities are those available to all individuals and legal entities wishing to join a benefit plan by making regular contributions. “Closed” private pension entities are those available to discrete groups of people such as employees of a specific company or a group of companies in the same sector, professionals in the same field, or members of a union. Private pension entities grant benefits on the basis of periodic contributions from their members, or their employers, or both.

 We manage pension and VGBL plans covering more than 2.2 million participants, 65.7% of whom have individual plans, and the remainder individuals covered by company plans. The Company’s plans account for approximately 34.3% of our technical reserves.

Under VGBL, PGBL and FAPI plans, participants are allowed to make contributions either in installments or in lump-sum payments. Participants in pension plans may deduct the amounts contributed to PGBL up to 12% of the participant’s taxable income when making their annual tax declaration. Under current legislation, redemptions and benefits are subject to withholding tax. VGBL plan participants may not deduct their contributions when declaring income tax. At the time of redemption, and/or when benefits are paid out, tax will be levied on these benefits, pursuant to current legislation.

VGBL and PGBL plans, and individual retirement fund plans (referred to as “FAPI”) may be acquired by companies in Brazil for the benefit of their employees. In 2011, Bradesco Vida e Previdência managed R$52.8 billion in VGBL and R$15.5 billion in PGBL plans. Bradesco Vida e Previdência also managed R$21.5 billion in private pension plans.

Bradesco Vida e Previdência also offers pension plans for corporate customers that are in most cases negotiated and adapted to specific needs of the corporate customer.

Bradesco Vida e Previdência earns revenues primarily from:

·           Pension and PGBL plan contributions, life insurance and personal accidents premiums and VGBL premiums; and

·           revenues from management fees charged participants in accordance with mathematical provisions.

Certificated savings plans

Bradesco Capitalização offers its clients certificated savings plans with the option of a lump-sum or monthly contributions. Plans vary in value (from R$8 to R$50,000.00), form of payment, contribution period, and periodicity of draws for cash prizes of up to R$2.0 million (gross premiums). Clients’ contributions earn interest at a rate of TR plus 0.5% per month over the value of the mathematical provision. Certificated savings plans may be redeemed after a 12-month grace period. As of December 31, 2011, we had around 7.2 million “traditional” capitalization bonds and around 13.0 million incentive capitalization bonds. Given that the purpose of the incentive capitalization bonds is to add value to the products of a partner company or even to provide an incentive for its customer to avoid delinquency, the plans are for short terms and grace periods with low unit sales value. As of December 31, 2011, Bradesco Capitalização had approximately 20.2 million capitalization bonds and 3.1 million customers.

Bradesco Capitalização is the first and only Brazilian capitalization bonds company to be awarded ISO certification. In 2009, it was certified ISO 9001:2008 for the scope of management of plans. This certification awarded by Fundação Vanzolini attests to the quality of its internal processes and confirms the principle seen in the origin of Bradesco’s plans: good products and services and continuous improvement.

Bradesco Capitalização S.A. currently has a ‘brAAA/Stable’ rating from Standard & Poor’s and remains the only company in the segment to earn this rating. The robust level of financial and property protection Bradesco Capitalização assures its customers contributed to this result.

b)     Characteristics of the distribution process

Distribution channels

Our branch network is complemented by other distribution channels such as points of service, banking correspondents, ATMs, telephone banking services, and Internet and mobile banking. In introducing new distribution systems, we have focused on enhancing our security as well as increasing efficiency.

We ended 2011 with 4,634 branches, 4,429 points of banking services and 34,839 banking correspondents (Bradesco Expresso) and 3,913 points of service outside our own ATM network. The table below shows our customer service structure:

The table below shows the distribution of sales of these products through our branches and externally:

The table below shows the distribution of sales of these products through our branches and externally:

Other distribution channels

Our customers have easy access to their account details, to make financial transactions or acquire products and services through self-service digital channels (Fone Fácil, Internet and Bradesco Celular).

People with disabilities and reduced mobility have access to internet banking services for the visually impaired; personalized service for hearing impaired persons using digital language at Fone Fácil; Bradesco Celular for the visually impaired; visual mouse for motor disabled people; and ATM access for customers with visual and physical disabilities. 

Self-service network

As of December 31, 2011, our self-service network had 34,516 ATMs strategically distributed across Brazil, providing quick and convenient access to products and services. In addition to Bradesco’s ATMs, customers may use the pooled network of 12,455 Banco24Horas machines shared among Bradesco, Banco do Brasil and Banco Santander, which provides transactions such as cash withdrawals, statements, balance status queries, loans, payments and transfers.

Internet

“Portal Bradesco” consists of 87 websites, of which 60 host institutional content and 27 for transactions. Corporate or individual customers may access a range of banking products and services, and make transactions using Chave de Segurança Bradesco (Bradesco’s security code number) in card or electronic form, or mobile-phone integrated.

Users of our institutional websites, whether customers or not, may access information about the Organization’s products and services, reports on our social and environmental initiatives, and specific publications for investors, among other items. Highlights include specific websites for capitalization bonds, purchaser consortiums, insurance, investor relations, social and environmental responsibility and our Retail, Prime, Private, Corporate and Business segments.

Our transactional websites enable individual and corporate customers to complete easy, convenient and secure banking transactions. The sites hosted 3.0 billion transactions in 2011.

In 2011, Bradesco’s new version of Internet Banking enhanced the user experience with more than 50 innovative features such as the quick access “A” key, the Smart Payment functionality that automatically recognizes bar codes for each type of payment, and search windows on all pages.

Bradesco Celular

Customers may use mobile phones, conveniently and securely, to obtain the balance of their account, get statements, make payments, buy prepaid mobile phone credits, transfer money, apply for loans, obtain share quotations and track buy and sell orders, among other transactions. Our website www.bradescocelular.com.br caries detailed information about the channel’s products and services.

Through our text message authorized direct-debit service, pre-registered customers are sent interactive messages and may schedule or pay banking invoices/payment slips registered for automatic direct debit, using text messages to authorize payments.

Bradesco Celular enables customers to reload credits for prepaid cell phones from the phone itself, even if it has no credit.

Using Infocelular, registered clients with mobile phones may be sent SMS messages relating to various types of banking transactions on their account quickly and securely, sorting by period and amount.

Customers choosing a package of services known as “Bradesco Mobile Bonus Account” get access to various financial services and the cost of the package earns bonus points for prepaid mobile phones. When bonus points are available on a registered mobile phone number, the network operator itself sends a text message showing the credit.

This channel was used to complete 99.1 million transactions during 2011.

Mail services

On December 2011, we ceased our partnership with Empresa Brasileira de Correios e Telégrafos, or ECT, (the government owned postal company) and will not continue with the Postal Bank in 2012.

However, customers who used the services of the Postal Bank remain Bradesco clients, and will be supported by its extensive network of branches and service centers. The clients have complete and quality service wherever they are.

Banking units in retail chains

We have also entered into partnership agreements with retail chains, supermarkets, drugstores, grocery stores, etc., to provide correspondent banking services (mostly to pay bills, withdraw cash from checking and savings accounts, and receive pension payments). These offices are staffed by employees of our business partners, but all credit decisions are made by our employees.

c)     Characteristics of the market segments, specially:

i) Participation in each market:

The following table shows our market share of banking, insurance and service network.

ii) Competitive conditions in markets

We face significant competition in all of our principal areas of operation, since the Brazilian financial and banking services market are highly competitive and have been through an intensive consolidation process in the past few years.

As of December 31, 2011, publicly owned financial institutions held 42.7% of the national financial system’s assets, followed by private sector locally owned financial institutions (taking into consideration financial conglomerates) with a 38.8% share and foreign-controlled financial institutions, with a 18.5% share.

Public-sector financial institutions play an important role in the banking sector in Brazil. Essentially, they operate within the same legal and regulatory framework as private-sector financial institutions, except that certain banking transactions involving public entities must be made exclusively through public-sector financial institutions (including, but not limited to, depositing federal government funds or judicial deposits).

As of December 31, 2011, according to the Central Bank, there were 178 financial conglomerates providing a wide full range of services including: (i) 139 multiple banks; (ii) 20 commercial banks; (iii) 14 investment banks; (iv) 4 development banks; and (v) 1 savings bank (namely Caixa Econômica Federal).

Credit cards

The Brazilian credit card market is highly competitive, with approximately 173.3 million credit cards issued as of December 31, 2011, according to ABECS. Our primary competitors are Banco do Brasil, Banco Itaú Unibanco, and Santander Brasil. Management believes that the primary competitive factors in this area are interest rates, annual fees, card distribution network and benefits offered.

Leasing

In general, the Brazilian leasing market is dominated by companies affiliated with vehicle and equipment producers and large banks. We currently enjoy certain competitive advantages, as we have a larger service network than any of our private sector competitors.

Asset Management

Brazil’s asset management industry ended 2011 with R$1.9 trillion under management, thus showing nominal growth of 13.3% on 2010, according to ANBIMA. The variation was mainly due to:

·           significant net inflow of R$80 billion in fixed-income funds largely due to migration from hedge funds, from which investors had redeemed R$47 billion by year-end;

·           growth over the years of contributions to open pension funds, which ended 2011 with a net funding inflow of R$25 billion; and

·           consolidation of the structured investment fund market, including receivables funds, or “FIDCs” (R$8 billion), private equity funds (R$17 billion), and real estate funds (R$4 billion).

BRAM is one of the major industry players in Brazil's fund management industry with an 11.0% market share according to Anbima's December 2011 Global Fund Management ranking. Our primary competitors are Banco do Brasil and Banco Itaú Unibanco.

BRAM's strategy in relation to the competition is to strengthen its asset management leadership in fixed-income and equity, leveraging its experience and success with a fundamentalist approach built up by a strong group of analysts and a team of independent macroeconomists.

In 2011, BRAM advanced its internationalization goal by launching a fund for small- and medium-cap Brazilian stocks. This new fund is part of Bradesco Global Funds, which was launched by Bradesco in September 2009 and currently has four different strategies. These funds are domiciled in Luxembourg and target exclusively foreign investors.

In addition to its own platform, BRAM has strong partnerships with The Bank of Tokyo-Mitsubishi UFJ (Japan) and Banchile (Chile).

Insurance, pension plans and capitalization bonds

Insurance sector

In December 2011, Grupo Bradesco Seguros, the leading insurance company in the Brazilian market with a 25.6% market share of insurance premiums, pension plans and capitalization bonds faces increased competition from a number of Brazilian and multinational corporations in all types of insurance business.

As of December 31, 2011, our principal competitors were Banco do Brasil, Itaú Unibanco Seguros S.A., Sul América Cia. Nacional de Seguros, Porto Seguros Cia.de Seguros Gerais, Caixa Seguros, Santander Seguros and HSBC Seguros, which accounted for a combined total of approximately 55.8% of all premiums generated in the market, as reported by SUSEP. Although nationwide companies underwrite the majority most insurance business, we also face competition from local and regional companies, particularly in the health insurance segment, where they are able to operate at lower cost, or specialize in providing coverage for specific risk groups.

Competition in the Brazilian insurance industry changed in the past few years as foreign companies started to form joint ventures with Brazilian insurance companies with more experience in the local market. For example, the Dutch Group ING acquired an interest in one of the Sul América Group companies. Hartford has been operating in Brazil for years through a joint venture with the Icatu Group. AXA, Allianz, ACE, Generalli, Tokio Marine, Zurich acquired associations with the Minas Brasil and Santander groups. Other international insurers offer products in Brazil through their own local facilities.

We believe that the principal competitive factors in this area are price, financial stability, name recognition and services. At the branch level, we believe competition is primarily based on the level of services, including the handling of claims, level of automation and development of long-term relationships with individual customers. We believe that our ability to distribute insurance products through our branch network gives us a competitive advantage over most other insurance companies. Because most of our insurance products are offered through our retail banking branches, we benefit from certain cost savings and marketing synergies compared with our competitors. This cost advantage could become less significant over time, however, as other large private banks begin using their own branch networks to offer insurance products through exclusive agents.

 Pension plan sector

The monetary stabilization brought by the Real Plan stimulated the pension plan sector and the Brazilian market attracted new international players, such as Principal, which created Brasilprev in association with Banco do Brasil; Hartford, through a joint venture with the Icatu Group; ING, through a partnership with Sul América; MetLife; Nationwide and others.

In addition to monetary stability, factors contributing to heightened competition were favorable tax treatment and the prospects of more far-reaching reform of Brazil’s social security system.

Bradesco Vida e Previdência is currently the pension plan market leader with 33.5% of total assets under management in the sector, according to Fenaprevi.

We believe that the Bradesco brand name, together with our extensive branch network, strategy, our record of being in the forefront and our product innovation, are our competitive advantages.

Capitalization bonds sector

The certificated bonds plans market has been competitive since 1994, when exchange rates became more stable and inflation came under control. As of December 31, 2011, Bradesco Capitalização was second in the industry ranking with 21.6% of revenues from certificated bonds plans and 23.1% in terms of technical provisions, according to SUSEP.

Our principal competitors in the capitalization bonds sector are: Brasilcap Capitalização, Itaú Unibanco Capitalização, Caixa Capitalização, Sul América Captalização, Santander Capitalização, Aplub Capitalização and Icatu Seguros.

The principal competitive factors in this industry are offering low-cost products with more frequent prize draws, security, financial stability and brand recognition.

d)     Seasonality

Due to the specific characteristics of some products and services of the issuer, such as consumer finance segment, particularly credit card, in general, they are impacted by the effect of seasonality at certain periods or circumstances, such as final year. Other factors such as number of weekdays in the month, holidays, vacation periods, tax payments or receive of 13th bonus, can influence products and services such as loans, use of credit cards and/or demand for investments. It is noteworthy that despite this influence, these factors have no significant impact on the income of the issuer.

e)     Main raw materials, stating:

i) description of relationships with suppliers, including whether they are subject to governmental control or regulation, with agencies and applicable legislation:

Bradesco hires suppliers and establish business relationships with partners that operate with ethical standards compatible with the Organization, through a strict selection process and not negotiate with those who, verifiably, disrespect the provision of its Code of Ethical Conduct, and also guided its business relationship by the Sectorial Code of Ethical Conduct for the Purchasing Professional.

The Bank also has a program relationship with strategic suppliers to discuss about revaluation of the supply chain of the total acquisition cost, optimization of products, innovation and sustainability. There are regular meetings with executives of the Bank and suppliers, which established objectives and monitoring the results of actions taken.

ii) Any dependence on a small number of suppliers:

Not applicable. Bradesco has no dependence on suppliers to perform its activities.

iii) Possible volatility affecting its prices:

The prices volatility, as resources for loans, interest rates charged on products, among others, rely on macroeconomic conditions and market rates.

If there is expected growth rate of inflation, the Central Bank may increase the base interest rate, increasing, consequently, interest rates for loans. Another factor that can enhance loans is the increase in delinquency rate for customers. Moreover, variations in tax rates on loans also make these operations more expensive.

Bradesco does not have any customers that account for more than 10% of the institution’s total net revenues.

a)     need of governmental for the exercise of activities and historical relation with the public administration in order to obtain such autorizations.

The basic institutional framework of the Brazilian Financial System was established in 1964 by Law No. 4,595/64, known as the “Banking Reform Law.” The Banking Reform Law dealt with monetary, banking and credit policies and institutions, and created the Brazilian Monetary Council (CMN).

Principal regulatory agencies

CMN

CMN, currently the highest authority responsible for Brazilian monetary and financial policy, is responsible for overall supervision of monetary, credit, budgetary, fiscal and public debt policies. CMN has the following functions:

·         regulating loans and advances by Brazilian financial institutions;

·         regulating Brazilian currency issue;

·         supervising Brazil’s reserves of gold and foreign exchange;

·         determining savings, foreign exchange and investment policies in Brazil; and

·         regulating capital markets in Brazil.

In December 2006, CMN asked the CVM to devise a new “Risk-Bases Supervision System” (“SBR”) in order to: (i) identify risks to which the market is exposed; (ii) rank these risks by their potential for harm; (iii) establish mechanisms for mitigating these risks and the losses they might cause; and (iv) control and monitor the occurrence of risk events. Among other effects, this system enables fast-track reviewing for the process of issuing securities.

Central Bank

The Central Bank is responsible for:

·         implementing currency and credit policies established by the CMN;

·         regulating and supervising public and private sector Brazilian financial institutions;

·         controlling and monitoring the flow of foreign currency to and from Brazil; and

·         overseeing the Brazilian financial markets.

The Central Bank’s chairperson is appointed by the president of Brazil for an indefinite term of office, subject to approval by the Brazilian Senate.

The Central Bank supervises financial institutions by:

·         setting minimum capital requirements, compulsory reserve requirements and operational limits;

·         authorizing corporate documents, capital increases, acquisition of interest in new companies and the establishment or transfer of principal places of business or branches (in Brazil or abroad);

·         authorizing changes in shareholder control of financial institutions;

·         requiring the submission of annual and semiannual audited financial statements, quarterly revised financial statements and monthly unaudited financial statements; and

·         requiring full disclosure of loans and advances and foreign exchange transactions, import and export transactions and other directly related economic activities.

CVM

The CVM is responsible for regulating the Brazilian securities markets in accordance with securities and capital-market policies established by CMN.

The CVM is responsible for the supervision and regulation of equity funds. In addition, since November 2004, the CVM has had authority to regulate and supervise fixed-income asset funds.

Banking regulations 
Principal limitations and restrictions on activities of financial institutions

Under applicable laws and regulations, a financial institution operating in Brazil:

·              may not operate without the prior approval of the Central Bank and in the case of foreign banks, authorization by presidential decree;

·              may not invest in the equity of any other company beyond regulatory limits;

·              may not lend more than 25.0% of its reference equity to any single person or group;

·              may not own real estate, except for its own use; and

·              may not provide loans or guarantees to: any person who is part of the controlling block of the institution, or who directly or indirectly holds more than 10.0% of its share capital;

o     any individual that controls the institution or holds, directly or indirectly, more than 10.0% of its share capital;

o     any entity that controls the institution or with which it is under common control, or any officer, director or member of the Fiscal Council and Audit Committee of such entity, or any immediate family member of such individuals;

o     any entity that, directly or indirectly, holds more than 10.0% of its shares (with certain exceptions);

o     any entity that it controls or of which it directly or indirectly holds more than 10.0% of the share capital;

o     any entity whose management consists of the same or substantially the same members as its own executive committee; or

o     its executive officers and directors (including their immediate families) or any company controlled by its executive officers and directors or their immediate families or in which any of them, directly or indirectly, holds more than 10.0% of share capital.

The restrictions with respect to related party transactions do not apply to transactions entered into by financial institutions in the interbank market.

Capital adequacy and leverage

Brazilian financial institutions are subject to a capital measurement and standards based on a weighted risk-asset ratio. The parameters of this methodology resemble the international framework for minimum capital measurements adopted for the Basel Accord. The Basel Accord requires banks to have a capital to risk-weighted assets ratio of at least 8.0%. At least half of total capital must consist of Tier I capital. Tier I, or core, capital corresponds to shareholders’ equity less certain intangibles. Tier II capital includes asset revaluation reserves, and contingency reserves and subordinated debt, subject to certain restrictions. Tier II capital must not exceed Tier I capital.

CMN requirements differ from the Basel Accord in some respects. Among other differences, the CMN:

·         requires minimum capital of 11.0% of risk-weighted assets;

·         does not permit contingency reserves to be considered as capital;

·         requires fixed assets in excess of limits imposed by the Central Bank to be deducted from capital;

·         requires additional capital in relation to off-balance-sheet interest rate and foreign currency swap transactions and for certain loans and advances utilizing third party funds;

·         when determining shareholders’ equity, financial institutions may deduct costs, including taxes, incurred in connection with swap transactions used to hedge short positions associated with investments outside Brazil; and

·         assigns different risk weightings to certain assets and credit conversion values, including a risk weighting of 300.0% on deferred tax asset for income and social contribution taxes but not for those arising from other temporary differences which have a weighting of 100.0%.

In October 2009, the Central Bank reduced minimum capital requirements from 11% to 5.5% on loans to micro and small companies that are backed by one of the two guarantee funds created by the government in 2009 with a R$4.0 billion budget.

Financial institutions are also required to maintain their reference shareholders’ equity at a certain level. A financial institution’s reference shareholders’ equity is the sum of its Tier I and Tier II capital and is used to determine its operational limits. For purposes of CMN adjustments, financial institutions may deduct costs, including taxes, incurred in connection with swap transactions to hedge short positions associated with investments abroad. In July 2008, the Central Bank issued certain rules to include the operational risk of financial institutions amongst the factors to be considered in the calculation of reference shareholders’ equity. In December 2009, the Central Bank established a single indicator for calculating the portion of capital to be maintained by financial institutions to cover, when needed, the operational risk for a non-financial company belonging to the conglomerate. In June 2010, the Central Bank issued rules amending the formula used to calculate required reference shareholders’ equity, which in practice led to higher levels of net equity being required of financial institutions and this will be in force as of 2012. The Central Bank says the purposes of this change include bolstering the robustness of financial institutions in terms of their ability to weather a global crisis. In February 2011, the Central Bank issued guidelines and a timetable for implementing the recommendations of the Basel Committee on Banking Supervision concerning capital structure and liquidity requirements (Basel III), including an initial timetable to implement recommendations regarding liquidity requirements.

Prudential rules in Brazil are generally more conservative than international ones, so adapting to Basel III will be less complicated for Brazilian banks than for institutions in other countries. Under draft rules that the Central Bank submitted to public consultation in February 2012, Brazil will follow the agreed international schedule to gradually adopt capital definitions and requirements over the coming years, starting January 1, 2013 and concluding January 1, 2019. Under international recommendations, and in line with current practices, the minimum capital level will be stated as a percentage of risk weighted assets. The draft rule proposes three independent requirements to be met by financial institutions: (i) Principal Capital, consisting mainly of stocks, shares and retained earnings; (ii) Tier I Capital, consisting of principal capital plus other instruments capable of absorbing losses when the institution is a going concern; and (iii) Reference Equity, consisting of Tier I Capital and other instruments to absorb losses in the case of an institution in liquidation.

In addition, the standard being discussed is also likely to include Additional Principal Capital, which will act as the prudential buffer or “cushion”" referred to in Basel III. By the end of the transitional period, in 2019, Additional Principal Capital will have to be 2.5 - 5% of risk weighted assets. The amount will be determined by the Central Bank depending on economic conditions. Under normal market conditions, financial institutions are expected to hold surplus capital in relation to minimum requirements in an amount exceeding Additional Principal Capital as defined. Failure to comply with Additional Principal Capital rules will lead to restrictions affecting distribution of bonuses, profit sharing and compensation incentives associated with performance of managers of institutions.

Financial institutions, excepting credit cooperatives, must keep consolidated accounting records (for calculating their capital requirements) of their investments in companies whenever they hold, directly or indirectly, individually or together with partners, a controlling interest in the investee companies. If their interest does not result in control of a company, financial institutions may choose to recognize the interest as equity in the earnings of unconsolidated companies instead of consolidating.

Under certain conditions and within certain limits, financial institutions may include subordinated debt when determining their capital requirements in order to calculate their operational limits, provided that this subordinated debt complies fulfills the following requirements:

·        it must be previously approved by the Central Bank;

·        it must not be secured by any type of guarantee;

·        its payment must be subordinated to the payment of other liabilities of the issuer in the event of dissolution;

·        it cannot be redeemed by act of the holder;

·        it must have a clause allowing postponement of the payment of interest or redemption if this would cause the issuer to fail to comply with minimum levels of reference shareholders’ equity or other operational requirements;

·        it must be nominative if issued in Brazil, and if issued abroad may be in any other form permitted by local legislation;

·        if issued abroad, it must contain a clause for elected jurisdiction;

·        it must have a minimum term of five years before redemption or amortization;

·        it must be paid in cash; and

·        its payment cannot be secured by any type of insurance any instrument that requires or permits payments between the issuer and the borrowing institution or that affects the subordinated status of the debt.

Brazilian financial institutions may elect to calculate their capital requirements on either a consolidated or an unconsolidated basis.

In June 2011, the CMN determined that financial institutions and other Central Bank authorized institutions required to calculate “reference equity” requirements must implement a capital management structure compatible with the nature of their operations, complexity of products and services offered, and the scale of their risk exposure.

Additionally, in September 2011, the CMN issued a rule which determines that the Central Bank may undertake a discretionary assessment of the circumstances in each case and require a series of preventive prudential measures to be taken if it finds situations that compromise or may compromise the proper functioning of the financial system or its institutions, or other Central Bank authorized institutions.

Risk Weighting