Rank. Country. Score/100

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2 2 Country Chile Brazil Peru Mexico Colombia Guatemala Panama Costa Rica Uruguay El Salvador Trinidad & Tobago Argentina Jamaica Honduras Paraguay Dominican Republican Nicaragua Ecuador Venezuela Rank Score/

3 Emerson de Pieri All rights of this study are reserved. No reproduction without authorization is permitted This is only a part of the full research. The use of partial information can generate distorcions To contact the Coordinator use the emerson.pieri@haliwellbank.com Inquiries can be made in Portuguese, English and Spanish

4 Latin America saw another modest gain (6.2%) in its HNWI population in 2010 and HNWI wealth rose 9.2%. The Latin American HNW segment has proved relatively resilient and stable in recent years (the number of HNWIs shrank just 0.7% in 2008) and HNWI wealth was up 18.1% from In Latin America, the general population of HNWIs is still small, numbering under 0.5 million. However, the prevalence of Ultra-HNWIs multiplies the aggregate level of HNWI wealth, which grew to US$7.3 trillion in Latin American HNWIs investment allocations were little changed in 2010, but significant shifts are expected in 2012 when home region allocations are expected to drop, while investments in North America rise. HNWIs from Latin America still remained conservative, holding 47% of their aggregate portfolios in either cash/deposits or fixed-income, despite surging equities prices. Among HNWIs from Latin America, hedge funds clearly dominated alternative investment holdings and accounted for 35% of all such holdings in In Brazil, real GDP expanded 7.5% in 2010, and real GDP in Mexico expanded 5.0%. Brazil, after experiencing one of the world s highest gains in market capitalization in 2009 (125.9%), witnessed only 15.6% growth in Regionally, Latin America had the highest percentage of Ultra-HNWIs at 2.4% (or 11k Ultra-HNWIS) compared with the global average of 0.9 Source: CapGemini & Merrill Lynch Wealth Management Study 11 4

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6 Significant upside for the Republic: Moody s Baa2 (positive outlook) Fitch BBB (positive outlook) S&P BBB- (positive outlook) 12.5 million new jobs in the formal sector since January new jobs in the current year (Jan- Sep 2011) 6

7 7 th Largest GDP in the World (Trillion) Country Nominal PPP 1 USA China Japan Germany France UK Brazil Italy Russia

8 4 th in Internet Users Million China 390 USA 245 Japan 100 Brazil 77 8

9 5 th Largest Holder in International Reserves US$ Billion China 3,197.5 Japan 1,137.8 Russia Saudi Arabia Brazil

10 6 th in Vehicle Production Million China 18.3 Japan 9.6 USA 7.8 Germany 5.9 South Korea 4.3 Brazil

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

12 Inflation Rate 11 % Russia 9.2 India 8.1 Brazil 6.5 Turkey 5.8 South Africa 5.2 China 5.0 Israel 4.4 Keeping inflation under control How much international inflation should Brazil accommodate? Risks of second V hand effects in a buoyant economy Macro- prudential measures complement traditional monetary policy to ensure sound credit growth and reduce demand V supply gap How distortive can macro prudential regulations be? (e.g. Sending financial markets off-shore) Supply side and labor market measures can increase economic efficiency and lower the tax burden Emerson de Pieri emerson.pieri@haliwellbank.com

13 Pré-sal US$ 240 billion, of which US$ 60 billion funds external to Petrobras Electricity Hydropower & Transmission: $ 50 bi; Nuclear: $ 15 bi Roads Federal Government $ 20 bi + private sector (3500+ km for co concessions) Railroads Valec/Cargo ($ 10 bi + private sector) + High speed train Ports Dredging/Building $ 10 bi + private sector (terminals) Airports 3 on the block + GIG Homebuilding Minha Casa Minha Vida $ 150 bi (popular) + private sector Sanitation $ 10 billion (Sabesp, Copasa, Cedae) Broadband $ 15 billion (popular broad band) + $ 30 bi (4G etc.) World Cup 2014 sport venues $ 30 bi 13

14 Traditional steel producer World # 6 in textiles/apparel and 2nd in leather Leading car, auto parts, machinery, airplane and rig builder 14

15 Oil Petrobras succeeded in the largest stock issuance in the world after discovery of pré-sal; new players help diversify investor choices in the sector Mining and Petrochemicals Vale becomes the largest company in the country, and a major global player; Braskem is the world 8th largest in the field Financial Sector Brazilian banks have strong capitalization, and sophisticated risk controls 2 among global top 20 in market cap Education Strong demand and gains from scale have made the sector a target to private and public equity, with strong results from consolidation Health Cash flow rich companies are consolidating the sector, boosting quality by using modern technology and management techniques Industry New global brands and diversification have opened new opportunities to the sector Transportation Lleaders in rail transportation in South America and strong listed toll-road companies worth US$ 20 billion 15

16 The largest Latin American Stock Exchange A large mid-cap market, with 45% of listed companies in the range of US$ 500 million - US$ 5 billion market cap Close to 20% of companies with market cap above US$ 5 billion Daily liquidity around US$ 5 billion 16

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18 Foreign Direct Investments US$ 20.3 billion from Jan to Sep 10 US$ 50.4 billion from Jan to Sep 11 Investment in Companies US$ 20.1 billion from Jan to Sep 10 US$ 40.2 billion from Jan to Sep 11 US$ 76.8 billion was the total Foreign flow from Sep 10 to Sep 11 18

19 US$ 481 billion in assets More than 2,500 funds 812 funds are DEBT with total assets US$ 320 billion 1,688 funds are EQUITY or DERIVATIVES with total assets US$ 125 billion 19

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21 We used our client s base, 16 bankers and 6 partners (asset management and law firms) We also used public information released by The Boston Consulting Group, CapGemini, Folha de São Paulo, Estado de Sao Paulo and The Economist We studied the Brazilian Market of millionaires during October 10 until October 11 21

22 350 questionnaires was distributed to all officers with direct access to the millionaires or their representatives. Each questionnaire with 45 direct questions. We received back 317 questionnaires fully answered. 22

23 Latin Bankers Association NPG Research Central Bank of Brazil Internal Revenue Service of Brazil Merrill Lynch UHNI study 09, 10, 11 Capgemini - Merril Lynch, World Wealth Report 2010 and 2011 Euromoney Latin Finance The Boston Consulting Group 23

24 Total investments in financial institutions on and off-shore Total investments in stocks on and off-shore Local real state being part of a wealth or generating revenue Local and international ownership (companies, trusts, foundations or similar) and participations 24

25 US$ billion

26 Around 137,000 is the estimated number of millionaires in Brazil

27 Rank Name Assets 8 Eike Batista 55 Jorge Paulo Lemann 68 Joseph Safra 158 Marcel Herrman Telles 173 Dorothea Steinbruch 185 Carlos Sicupira 193 A. Ermirio de Moraes 247 Aloysio Faria 323 Abilio Diniz 347 Alfredo Villela 347 Ana Lucia Veillela 376 Antonio Seabra 376 Andre Esteves 440 Fernando Moreira Salles 440 Joao Moreira Salles 440 Pedro Moreila Salles 440 Walther Moreira Salles 459 Rubens Ometto Mello 488 Moise Safra 564 Elie Horn

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

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30 Roraima 28 Amapá 476 Amazonas 399 Pará 182 Acre 35 Rondonia 32 Tocantins 70 30

31 Mato Grosso Brasília Goiás Mato Grosso do Sul

32 Maranhão 504 Piauí 224 Ceará Rio Grande do Norte 427 Paraíba 252 Pernambuco Bahia Alagoas 658 Sergipe

33 Minas Gerais Espírito Santo São Paulo Rio de Janeiro

34 Paraná Santa Catarina Rio Grande do Sul

35 Fortunes up to US$ 30 millions Alagoas Amazonas Bahia Brasília Ceará Espírito Santo Goiás Minas Gerais Pará Paraíba Paraná Pernambuco Rio de Janeiro Rio Grande do Norte Rio Grande do Sul Santa Catarina São Paulo Sergipe Tocantins 35

36 Fortunes up to US$ 50 millions Paraná Rio Grande do Sul Santa Catarina Minas Gerais São Paulo Rio de Janeiro Espírito Santo Bahia Pernambuco Maranhão Piauí Brasília Goiás 36

37 Fortunes with more than US$ 50 millions Ceará Espírito Santo Mato Grosso do Sul Minas Gerais Pará Perbambuco Rio de Janeiro Rio Grande do Sul Santa Catarina São Paulo 37

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

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

40 Characteristics Product/ Service Needs Competitors Marketing Approach Predominantly European Capital preservation Swiss Banks Referrals Land-rich Estate planning JP Morgan Referrals Nationalist Discretionary Managed Account Goldman Sachs Social Clubs Conservative Personalized Services Jewish Banks Highlight Investment Bank strengths for large business owners Not as wealthy as in the past Confidentiality Coutts Banks special products/services Getting Smaller Fixed income Citibank Professionalism, not aggressiveness Based more in Sao Paulo & Rio Loans against assets Crédit Suisse, UBS Introduce to management American & Canadian considered brokerage house, not up market like Swiss banks Fixed income Citibank Professionalism, not aggressiveness 40

41 Characteristics Product/ Service Needs Competitors Marketing Approach Ethnic diversity: Jewish, Lebanese, Syrian, Armenian, Japanese, Korean, Chinese Product diversity Swiss Banks Referrals Geographic diversity throughout Brazil but large presence in SP, Rio Southern States Service/Attention Citibank, Chase, Lloyds TSB Cold Calls New money made this century; getting wealthier Confidentiality Jewish Banks and German Banks Social Clubs Highly entrepreneurial Estate Planning Morgan Stanley Pictet Social/ethnic clubs Assets predominantly invested locally Non-purpose loans Local Banks x Products/Services Good referrers but opportunistic Brazil products Espirito Santo, Santander Cost conscious, chase yield Leverage Santander, BES, Safra More speculative, travel more to NY and Miami than to Europe Active Account Management Lloyds Bank, Coutts 41

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43 Rank Entity Previous 1 Citigroup 2 Santander 3 JPMorgan 4 HSBC 5 Banco Itaú 6 Credit Suisse 7 Merrill Lynch 8 Julius Baer 9 UBS 10 BBVA 11 Banco do Brasil 12 Bradesco 13 BNP Paribas 14 Goldman Sachs 15 Pictet 16 Lloyds TSB 17 Morgan Stanley 18 Haliwell Bank 19 RBC 20 State Capital

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45 Yes Do you have tax planning? No Yes 43% 57% No No answer 20% 6% 74% 45

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

47 (in percentage) Swiss American European 9% 8% 3% 37% Canadian 21% Brazilian Others 22% 47

48 Yes No 22% 78% 48

49 Yes No Not sure 10% 1% 89% 49

50 Yes No Not sure 10% 2% 88% 50

51 Equal Somewhat different Not sure 9% 30% 61% 51

52 Yes No Not sure 10% 23% 67% 52

53 Yes No Somewhat Yes 16% 45% 39% 53

54 Yes No 11% 89% 54

55 Yes No 3% 97% 55

56 Yes No 31% 69% 56

57 Trust Foundations Mix Donation 6% 3% Insurance 31% 40% 20% 57

58 UBS Crédit Suisse Citibank Merril Lynch Deutsche JP Morgan Others 19% 6% 2% 1% 27% 20% 25% 58

59 UBS Crédit Suisse Citibank HSBC Deutsche Bank Lloyds TSB 19% 1% 6% 10% Pictet Others 10% 22% 12% 20% 59

60 Control No Control Mix 18% 40% 42% 60

61 More than 20 years Between 10 and 20 Between 5 to 10 Less than 5 years 24% 20% 19% 37% 61

62 Yes No Partial 15% 20% 65% 62

63 Yes No Partial 34% 52% 14% 63

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

65 28% 21% 16% 15% 10% 5% 3% 2% Cayman Switzerland Jersey Uruguay Bahamas Panama USA Others Rank Previous

66 Yes No 13% Partial 20% 67% 66

67 No trust in regulators Weird legal system No clear rules 17% 3% Others 24% 56% 67

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69 Structured Products International Insurance 668 US$ MM

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

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

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74 Family Offices & Boutiques 74

75 Piguet Sarasin Vontobel Credit Agricole Calyon ABN Amro Espirito Santo Merrill Lynch Lloyds TSB Societe Generale Hapoalim Barclays ING LGT Morgan Stanley Dexia RBC Banque Heritage Citibank JP Chase HSBC UBS Credit Suisse Julius Baer Goldman Sachs Deutsche Bank Israel Discount Lehman Santander Pictet Wells Fargo BCP Millenium Coutts EFG Bank Commerzbank ANZ Bank Emerson de Pieri 75

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

78 Emerson de Pieri 78

79 Private banking is my passion and I believe in my country (Brazil) as the best place to do business in this area. Excellence in Private Banking must be the Standard not the goal. Emerson de Pieri Emerson.pieri@haliwellbank.com