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Acquisition of BEG

Acquisition of BEG. December 2001. 11 th largest GDP in Brazil with one of the highest growth potentials; 5.0 million inhabitants (Approximately 50% economically active); GDP has grown at equal or higher rates than the national GDP;

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Acquisition of BEG

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  1. Acquisition of BEG December 2001

  2. 11th largest GDP in Brazil with one of the highest growth potentials; 5.0 million inhabitants(Approximately 50% economically active); GDP has grown at equal or higher rates than the national GDP; The Goiás’ GDP structure shows the prevalence of the services sector with 53.5%, followed by the industrial sector with 30.9% and 15.6% in the agricultural sector. Strategic Vision Goiás

  3. Leadership also in the state of Goiás (after RJ, MG and PR); 471 thousand customers, with approximately 135 thousand public officers; 290 thousand individual customers and 151 thousand savings accounts; Almost 30 thousand company customers (approximately half are public companies); 192 thousand debt cards, 53 thousand credit cards, 32 thousand capitalization plans; Experience in valuation and consolidation of public banks. Strategic Vision Motivators

  4. 168 119 87 57 28 BEG Benefits for Itaú • With the BEG acquisition, Itaú takes the leadership in number of branches in the state of Goiás and in the city of Goiânia Market Share of the Largest Banks in Goiás After the Privatization: 28.7% Number of Branches (in Goiás)

  5. Number of Branches (Goiás) 149 19 Number of Branches (Other States) 3 2,090 Number of Employees * 1,710 45,547 Demand Deposits 302 41 Savings Deposits 89 84 Mutual Funds 312 103 Time and Legal Deposits 252 6 Total of Resources 955 234 Credit Operations (Total) 261 102 Banking Service Fees / Net Income from Financial Operations 52.4% 60.9% Efficiency Ratio 73.6% 54.9% Strategic Vision Operating Statistics (BEG vs. Itaú) – September 2001 BEG ITAÚ Goiás (R$ Million) Consolidated * * BEG – Financial Consolidated, Itaú – Consolidated. Sep/01

  6. Summary of the Transaction • Transaction: Acquisition of Banco do Estado de Goiás S.A. - BEG by Banco Itaú S.A. • Transaction Value: R$ 665,000,000.00. • Interest Acquired: 84.46% of the shares sold by the State of Goiás. • Minority Interest: i) public offer to minoritaries (6.15%) at 80% of the price of the auction; ii) an interest of 9.38% can be acquired by the employees at a 50% discount and with an option to sell to Itaú at 80% of the price of the auction; • Form of Payment: Banco Itaú may pay until 90% of the value of the acquisition in several types of bonds and privatization certificates. • Forecasted Synergies: Similar to Bemge, Banerj and Banestado. • Due Diligence: Extensive Due Diligence was performed.

  7. Effects of the Acquisition R$ Million Amount paid considering bonds by their face value Amount paid considering Economic Value Recorded Value of the Investment Net Income by Reversal of the Provisions for Bonds belonging to the Group 665 546 628 116 512 Preliminary studies indicate an eventual booking of provisions for restructuring of R$ 55 million, which represents 33% of Personnel Expenses + Other Administrative Expenses of 2001.

  8. Summary • Banco Itaú’s acquisition of BEG has strong strategic and financial justification with an adequate management of the risk inherent to the transaction: • Leadership in the State of Goiás; • Acquisition of 471 thousand new customers; • Attractive Internal Rate of Return on the Investment; • Positive impact on Banco Itaú’s earnings; • We estimate R$ 60 million of net income in 2003 and, in 2004, after the end of the integration of BEG to Itaú, R$ 80 million; • Acquisition without dilution for the shareholders.

  9. Acquisition of BEG December 2001

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