2. About this
AnnuAl RepoRt
to see beyond,
one must be Able
to view
To see beyond, it is not enough to look. One must be able to view.
To see beyond the next step, one must often retreat and attentively look around
to view the right opportunity to move on.
To see beyond, it is not enough to look. One must have keen eyesight and
eagerness to discover, and boldness to explore all possibilities.
The Arrastão Project students have once more been our source of inspiration to prepare this report. The young
participants in the photography workshops of Arrastão have been gradually developing a keener perception of the
world and their work has been teaching us to see beyond. Our own perception is also sharpened with each project
that they undertake. They show us new possibilities and teach us not to feel satisfied with just looking. They prompt us
to step back, look again, reconsider and view from different angles, so that we can glimpse through a new perspective
and see it as a unique scene. They entice us to see the manifold possibilities in a new image, from a new angle...
In 2009, we faced challenges that led us to the same reflection on our business. The economic situation also prompted
us to step back, challenged us to enhance our processes and controls and is enabling us to see the various possibilities
to improve the scene and to assure the progress of BIM’s business in the long term.
Those considerations led us to propose a new task to the youths of the Arrastão Project. Sponsored by the Indusval
Multistock Sustainability Institute, during their summer vacation, those students and their teachers were invited to
attend creativity workshops. The purpose was to take pictures of São Paulo City − its nature, architecture and people
− to be printed in black and white receiving a colored interference by utilizing drawing, painting, recycling, graffiti and
DIY techniques, they currently use in Arrastão Project’s Fashion and Design, Communication and Youth Education
groups. In addition to promoting greater involvement of all Project groups, this challenge was intended to show
that creativity and intelligence allow us to see beyond. We just have to be able to view from new angles, to identify
opportunities, and to transform the reality shown in the pictures.
This project, involving 33 young students and seven teachers, was made possible by the designers from TheMediaGroup,
our partner in the development of this report. These professionals volunteered their time and expertise to develop the
idea and to structure and lead the creativity workshops, with a view to sharpening their perception more and more
and making those youths to see the opportunities that life offers us.
We thank all youths, educators and volunteers that took part in this project for their effort and inspiration. They
confirmed our belief that one must be able to view to move beyond.
3. CoRpoRAte
pRoFile
Banco Indusval Multistock (BIM) is a commercial bank based in São Paulo, with 42 years’
experience in the financial market. It focuses on credit products both in Brazilian and foreign
currencies, oriented to medium-sized companies with annual revenues chiefly between
R$20 million and R$500 million.
BIM has 333 employees who provide prompt and quality services. The Bank holds a credit
portfolio composed of over 660 companies and offers a wide range of products designed to meet
the specific needs of this market niche. Among other distinct features, the Bank develops financing
structures suitable for medium-sized companies, including the involvement of international bodies
such as the IFC (International Finance Corporation) and IDB (InterAmerican Development Bank).
In order to offer competitive services and customized products, BIM has 11 branches strategically
located in areas with a larger number of medium-sized companies in Brazil, plus one branch
located abroad and the subsidiary Indusval Corretora de Valores, which acts as an intermediary in
operations on the Securities, Commodities and Futures Exchange (BM&FBOVESPA).
BIM closed 2009 with R$2.7 billion total assets, a R$1.7 billion credit portfolio, R$432.7 million
shareholders’ equity and a 22.53% Basel Index. A publicly-traded financial institution, the Bank has
been listed on Level 1 of Corporate Governance at the São Paulo Stock Exchange since July 2007,
and has voluntarily adhered to the additional practices included in the rules for companies listed
on the Novo Mercado segment.
4. mAin
indiCAtoRs
Consolidated – R$ million 2005 2006 2007c 2008 2009
Results
Financial Intermediation Result 57.7 69.2 129.2 200.1 94.3
Operating Result 23.0 30.5 61.0 110.9 1.1
Net Profit 19.5 23.6 45.4 71.8 12.8
balance sheet
Credit Portfolio 384.6 644.0 1,255.2 1,723.0 1,635.9
Credit Portfolio incl. Guarantees and Letters of Credit 417.0 691.0 1,329.0 1,793.7 1,698.7
Cash and short-term interbank Investments 105.1 161.1 264.0 110.9 357.2
Marketable Securities and Derivatives 234.2 261.2 649.1 331.5 725.0
Total Assets 772.4 1,120.6 2,211.2 2,225.4 2,730.5
Total Deposits 331.9 526.4 810.4 824.9 1.273.2
Foreign Currency Borrowings 72.4 164.1 229.7 487.4 377.4
Local Currency Borrowings 0.0 0.0 0.0 128.2 0.0
Local Onlending 0.0 0.0 0.0 159.6 142.6
Shareholders’ Equity 136.3 149.7 406.7 448.5 432.7
performance
Return on Average Equity 14.9% 16.5% 16.3% 16.8% 2.9%
Return on Average Assets 2.6% 2.5% 2.7% 3.2% 0.5%
Net Interest Margin (NIM) (a) 11.1% 9.8% 9.3% 9.5% 7.9%
NPL / Total Credit Portfolio(b) 2.5% 1.2% 1.4% 2.7% 5.9%
Basel Index 30.4% 22.5% 33.2% 24.0% 22.5%
Efficiency Ratio(d) 59.0% 56.3% 63.0% 46.4% 52.3%
operating indicators
Number of Employees 198 255 331 329 333
Number of Branches 1 5 11 11 12
Capital market
Total Number of Shares 31,296,247 31,296,247 43,000,001 43,000,001 42,475,101
Common Shares (IDVL3) 16,948,594 16,948,594 27,000,000 27,000,000 27,000,000
Preferred Shares (IDVL4) 14,347,653 14,347,653 16,000,001 16,000,001 15,475,101
Treasury Shares 1,591,879 1,591,779 0 510,500 427,000
Outstanding Shares (e) 29,704,368 29,704,468 43,000,001 42,489,501 42,048,101
Shares in Free Float (f) - - 22,620,381 21,753,273 21,145,842
Free Float (%) (g) - - 52.6% 50.6% 49.8%
Net Earnings per share (R$) 0.63 0.76 1.05 1.71 0.30
Book Value per Share (R$) 4.59 5.04 9.46 10.56 10.29
Shareholder Remuneration (R$ `000) (h) 11.446 10.167 15.858 25.470 27.009
Remuneration per Share (R$) 0.36573 0.32486 0.36879 0.59943 0.64234
Market Value (R$ `000) n/a n/a 838.500 169.533 348.579
(a) NIM = Net Interest Margin = (Gross Result from Financial Intermediation – Prov. for Doubt. Debtors)/average interest earning assets.
(b) NPL (Non-Performing Loans) – Total outstanding of contracts with one of the installments overdue for more than 60 days.
(c) Excluding the non-recurring IPO expenses of R$9.7 million (net of taxes) net profit in the period would total R$55.1 million, leading to a 19.8%
ROAE, 3.3% ROAA, 9.3% NIM and 54.6% Efficiency Ratio.
(d) Ratio between Operating Expenses and Operating Income. A fall in this index shows improved performance.
(e) All the shares in the Company’s capital stock minus treasury shares.
(f) Outstanding Shares minus those held by Controlling Group and Management.
(g) Free Float over total shares.
(h) Interest on Equity + dividends, when applicable.
5. CRedits
Content, text and translation:
Investor Relations Department
Global RI Consultoria de Relações com Investidores
Graphic design:
TheMediaGroup
Pictures:
Cover and Inner Pictures: all the pictures came from the “Ver Além” project,
developed by the Projeto Arrastão young participants, as described on the back
cover of this Annual Report.
Management (page 5):
Daniel Rosa, professional photographer
Printing:
Gráfica Braspor
Publication Date: April 15, 2010.
6.
7. 2009 2 Message from the President
Adjustment to the new economic reality, with focus on
annual enhancement of internal controls and risk management
report 8 Corporate Governance
Agility, transparency and ethics permeate the decision-making process
to see beyond,
14 Strategic Management
one must be An ongoing search for efficiency, quality and safety
able to view 22 Economic Environment
Recovery of economic activity in 2010
28 Markets
Predominance of medium-sized companies in regions
with greater economic activity
30 Products and Services
Closeness to customers brings a better understanding of
their needs
42 Economic and Financial Performance
Results in line with the situation and aiming at
business perpetuity
52 Capital Markets
A commitment to the highest Governance standards and
respect for shareholders
60 People Management
Commitment and competence reflected in its main asset
64 Intangible Assets
Experience and knowledge under a powerful brand
66 Sustainability
Commitment to improvement in each of
the pillars of sustainability
70 Annual Social Report
72 Financial Statements
111 Corporate Information
8. message from
the president
adjustment
to the new
economic reality,
with focus on
enhancement
of internal
controls and risk
management
manoel felix cintra neto
President of the Executive Board
In 2009, we faced great challenges but that helped us to
learn many lessons, to become stronger and more resilient.
The economic crisis that was triggered in the USA, in late
2008 spread worldwide and quickly deteriorated both the
international and the domestic economic situation. As a
result, we had to forgo short-term profitability to ensure the
sustainability of our operations in the long run. Our 16-years’
experience in middle market and in particular our Executive
Officers’ and Board of Directors’ vision of the future were
both essential for this process. This learning experience and
the maintenance of the decision to privilege longetivity in
detriment of immediate return was only possible due to the
Bank’s corporate governance structure.
Aware of the need to adapt to the new situation, we decided
to introduce conservative measures to preserve our assets
and liquidity from further deterioration. We strengthened our
operation guarantee system, diversified our customer base
and funding sources and adopted stricter lending and risk
management policies.
9. 03
The adverse economic situation impacted in particular While we slowed down business growth, we started focusing
our target business segment of medium-sized companies, on strengthening the Bank. As an athlete crouching to
more directly affected by flagging economic activity and concentrate his strength before a leap, we stepped back and
lower credit supply. Consequently, delinquency rates rose, prepared for the economic recovery. In spite of the challenging
and we decided to increase our provisions for loan losses environment, we invested in new technological platforms
above the usual requirements. We were fully aware that this which will provide greater security and more efficient controls,
decision would impact our 2009 results; nevertheless, this enhanced our risk management system and automated internal
measure is entirely consistent with the economic situation, controls to make our operations swifter, safer and more
our conservative management and, above all, our goal to efficient. We also increased our cash liquidity and extended
ensure business perpetuity. Thus, credit operations stood the maturity profile of our liabilities through funding operations
at about R$1.7 billion throughout the year. There was an with longer maturities, thus ensuring soundness and stability.
ensuing drop in income from financial intermediation, which Furthermore, we established a strategic partnership at Indusval
fell to R$407.5 million and, as a consequence, our net profit Corretora, which will allow that subsidiary to increase its
amounted to R$12.8 million. operations consistently.
With those measures, we are prepared to seize new
market opportunities based on the ethics, responsibility and
transparency principles which have always served as guidelines
for our business. We believe that the economic recovery and
lower delinquency/default rates will naturally lead to a growth
in our credit portfolio composed of medium-sized companies
and to improving operating results.
10. 04
That is the reason why we chose “To see beyond, one must 01
be able to view” as the theme for our 2009 Annual Report. Manoel Felix Cintra Neto
In a year marked by instability, we seek to “see beyond” the President of the Executive Board
short-term results and draft the outline of a new BIM − with 02
a better structure and a quicker decision-making process, as Luiz Masagão Ribeiro
well as more modern and stricter in terms of credit extension Superintendent Officer
and risk control. We challenge our readers to sharpen their 03
perception and not focus on the 2009 financial results only, Carlos Ciampolini
but to view the possibilities going forward. Executive Officer
04
We were only able to overcome the difficulties and challenges Ziro Murata Junior
experienced in 2009 and maintain business sustainability CFO and Investor Relations Officer
with the support of our shareholders, customers, partners 05
and especially our employees, who proved resilience, Gilberto L. dos Santos Lima Filho
commitment and competence throughout the year and Treasury Officer – SPB
whom we sincerely thank. 06
Roberto Carlos de C. Almeida
Commercial Officer
07
Gilmar Melo de Azevedo
Commercial Officer
08
Katia Aparecida Rocha Moroni
International Department Officer
09
Eliezer Lizardo Ribeiro da Silva
Credit Officer
12. “the best use of capital is not to make
money, but to make money in order to
improve life.”
Henry Ford
Seen by (photo) Gisele Eduardo dos Santos, 17 years old and Vamires Santana dos Santos, 16 years old
Viewed by (colored interference) Paula Gonzalez, 26 years old
13.
14. corporate
governance
agility,
transparency and
ethics permeate
the decision-
making process
BIM believes that an appropriate corporate governance model Even though BIM shares are listed on BM&FBOVESPA’s Level
helps make its business sustainable, increases its credibility and 1 of Corporate Governance, the Bank adopts additional
adds value to the Bank and all its stakeholders. The Bank greatly practices, such as the use of the Arbitrage Chamber for issues
values the disclosure of transparent information, business related to the capital markets; 100% tag along rights, which
ethics, responsible corporate management, as well as fair and is a guarantee that minority shareholders may choose to sell
open communication. Moreover, the Bank constantly seeks to their shares at the same price per share as the controlling
improve its decision-making process and risk management, as shareholder if the Bank’s control is sold; over 20% of
well as its operational strategies and internal controls. independent members in its Board of Directors; and over 25%
of free float. Moreover, BIM offers the same remuneration for
Banco Indusval Multistock has a Code of Ethics aligned with common and preferred shares. The only reason why Indusval
its internal culture and beliefs. It includes guidelines and Multistock is not listed on BM&FBOVESPA’s highest corporate
practices to be followed by all employees while performing governance segment – the Novo Mercado – is that its capital
their duties. The ethical issues in the Code include professional stock does not consist of common shares in its entirety.
confidentiality, personal responsibility, and conflicts of interest,
among other aspects. This Code was revised in 2009 to BIM’s corporate management is based on the synergy among
ensure even stricter ethical principles in conducting the Bank’s its Board of Directors, Executive Board and the Committees
activities. Throughout the year, all employees were trained assisting them.
so that they would incorporate into their day-to-day routine
the principles in Indusval Multistock companies’ Code of Ethics
and be fully committed to its guidelines.
15. 09
GoVERNANCE StRuCtuRE Members of the Board of Directors
Term running until the 2011 Annual General Meeting
Board of Directors
Luiz Masagão Ribeiro – Chairman
The Board of Directors is the top governing body. It is Manoel Felix Cintra Neto – Vice Chairman
responsible for outlining strategic guidelines and general Antonio Geraldo da Rocha – Director
policies, besides guiding and supervising the Executive Board’s Carlos Ciampolini – Director
activities. It also ensures that all financial information posted is Maria Cecília C. Ciampolini – Director
accurate, chooses independent auditors and oversees internal Júlio dos Santos Oliveira Júnior – External Director
audit. The Board is composed of renowned executives with Mário Fukumitsu – External Director
vast professional experience in different strategic fields for the Adroaldo Moura da Silva – Independent Director
Bank’s management, so that decisions are based on different Wladimir Antônio Puggina – Independent Director
points of view.
Fiscal Board
At year-end 2009, the Board of Directors consisted of nine
members, two of whom − over 20% − were independent. The Fiscal Board was not established in 2009. The Bank’s Bylaws
Board members meet four times a year as a rule. Special provide for the establishment of the Fiscal Board by decision
meetings are held whenever required. Each Director has joint of the Annual General Meeting or upon shareholders’ request.
two-year term, and re-election is permitted. When established, it must be composed of a minimum of three
and a maximum of five members who are elected by the Annual
General Meeting and can be ousted by the same body.
16. 10
Executive Board Cash Committee
The Cash Committee controls the Bank’s liquidity and meets on
At the close of 2009, BIM’s Executive Board consisted of nine a weekly basis. It also analyzes cash flow projections for Treasury
members with a joint two-year term. Re-election by the Board activities, and discusses new funding alternatives, transactions
of Directors is permitted. All officers of the Executive Board are and operating limits. It is composed of five members: the Bank’s
highly experienced in the financial market, so as to ensure efficient President, the Chief Executive Officer, the Treasury Officers
management of operations. (Proprietary Position and Cash Management) and the Officer
in charge of the activities of the brokerage house and the
The Executive Board is responsible for managing the Bank, international area.
enforcing the guidelines and policies outlined by the Board
of Directors, and overseeing all business activities and Credit Committee
overall operations. Vital for the Bank’s everyday activities, the Credit Committee
outlines credit risk management policies and approves
Committees credit limits extended to customers. It is composed of
seven members as follows: President, CEO, Commercial
Banco Indusval Multistock’s management includes six committees: (2), Treasury, International and Credit Officers. The Credit
Committee meets regularly on a weekly basis, but it can
Remuneration and Benefit Committee meet at any time − also electronically − to assess changes or
The Remuneration and Benefit Committee consists of at least exceptions related to formal details and guarantee coverage in
three members, independent or not, elected annually by the pre-approved credit limits.
Board of Directors. It meets twice a year, at the end of each
semester. Special meetings are held whenever needed. It Compliance and Internal Audit Committee
exists to support the Board of Directors in issues related to This Committee meets on a monthly basis and consists
officer remuneration. of six members: Chief Executive Officer; the Brokerage
House Officer; the Risk, Compliance and Information Safety
Among other duties, it regularly revises the remuneration Superintendent; the Accounting and Control Superintendent;
and benefits offered to the Executive Board to attract, retain, and the coordinators for the internal control and audit areas.
motivate and remunerate those executives appropriately. This Committee’s duties include, among others, establishing
It also recommends changes in remuneration and benefit operating policies and rules; outlining strategies to promote
amounts to the Board of Directors and manages incentive the practice of internal controls, risk mitigation and compliance
plans, such as the Stock Options Programs and Pension Plans. with legal requirements; systematically monitoring the Bank’s
activities to assess the effectiveness of the internal control
systems in fulfilling legal requirements; and analyzing any
suspected cases of money laundering. It also helps the Board
of Directors monitor the accounting practices adopted in
preparing the financial statements.
17. 11
Information technology and Safety Committee ombudsman
It is responsible for the information technology and
information safety policies. It is also responsible for discussing Responding directly to the Board of Directors, the Ombudsman
and planning activities and investments to ensure sustainable serves as a direct communication channel between the Bank
and safe operation development and establishing rules for and its customers and ensures strict compliance with legal and
information use to ensure its protection and guaranteeing regulatory requirements concerning consumer rights. It can be
managers’, employees’, and service providers’ compliance accessed by Internet at www.indusval.com.br > “Ombudsman”,
with policies and procedures, among other duties. This or by phone at 0800-704-0418 (option 2).
Committee also outlines the procedures for the Business
Continuity Plan (BCP). It meets on a monthly basis and consists
of nine members: the Chief Executive Officer; the Brokerage
the internal
House Officer; the Risk, Compliance and Information Safety
Superintendent; the IT Superintendent; the Administrative
committees support
Superintendent; the IT Systems Development Manager, the
IT Project Manager, the IT Infrastructure Manager and the
and assist corporate
Controlling Department Manager.
Legal Committee
This Committee consists of the Chief Executive Officer, the Legal management, aiming
at enhancing
Superintendent, the Loan Recovery Manager and the external
Legal Advisor, and meets on a monthly basis to analyze and
internal controls,
discuss legal and regulatory rules for the Bank’s operations and
any legal issues related to its institutional aspects. It is responsible
risk management
for analyzing and recommending legal structures that ensure
products and operations are formally perfect. In addition, it sets
and strategies
collection and loan recovery policies and strategies.
18. “the sustainable leader must be
connected to changes, sensitive to
the environment, able to interpret
the market signals and anticipate
them, thus finding opportunities and
outlining his own business strategy.”
Cledorvino Belini
Seen by (photo) Roseane Rodrigues Carvalho, 17 years old and thamella Ferreira dos Santos, 16 years old
Viewed by (colored interference) thais Crisitina Bispo de Lima, 16 years old
19.
20. strategic
management
an ongoing
search for
efficiency,
quality and
safety
Above all, Banco Indusval Multistock’s management seeks to Banco Indusval Multistock also sought for other financing
ensure the sustainability of the Bank’s operations. Consequently, sources, extended its funding operation terms and worked
BIM, in view of the 2009 turbulence, introduced measures in the management of the maturity matching of its assets and
to preserve its liquidity and risk management and continued liabilities to allow Management to plan the next steps and
developing the areas that will serve as the basis for the expansion reassure investors about the Bank’s solid condition.
of activities going forward. During the year, financial, material
and human resources were used with a view to improving risk After a period of uncertainty, medium-sized companies,
control models and internal processes, as well as expanding those which were most severely affected by the credit
and upgrading our technological infrastructure. Thus, the Bank crunch, clearly show that they will play a prominent role
reviewed its internal processes and controls and invested in in the economic rebound, with lower delinquency/default
IT systems and infrastructure whereas it maintained its credit ratios. Business, however, is expected to recover slowly,
operations at stable levels. mainly for exporting companies, which had to change their
focus to the Brazilian market or seek new untapped markets.
The decision to maintain credit portfolio volumes stable may
seem a regression at first sight. Nevertheless, the Bank’s Since BIM focuses on the middle market, its strategy is to diversify
Management considered it a strategic retreat in order to adapt its credit portfolio in industries with great potential for expansion
to the macroeconomic scene and the industry situation and and low current exposure. However, it pursues a conservative
prepare for renewed growth later, based on the belief that approach toward new operations. As a result, professionals with
Brazilian economic activity would recover at some point. solid relationships with customers from the industries in which
the Bank plans to have a stronger presence have been hired to
implement this strategy. The Bank is also considering increasing
its product portfolio to enhance its customer service and seek
new market niches.
21. 15
ADMINIStRAtIVE MANAGEMENt Based on this idea of intelligent processes, there was a major
improvement in 2009 in the access to information, systems and
The administrative management initiatives in 2009 focused on processes to make business management − including credit
improving internal processes and controls as a result of a review risk, market and operating management − nimbler and more
of work flows that had started in the previous year. Several accurate. Our Intranet became, therefore, a real Business Portal
stages in administrative routines were redesigned, duties were with organized applications to be used by managers.
reassigned and methods were reorganized to enhance internal
controls. In addition, training was given to speed up the adoption Throughout the year, a new and innovative Operations and
of new methods. Payments System (OPS) was also designed and introduced for
the treasury and financial departments. It reduces failure risk and
This improvement was based on the expansion of the provides more information about operations and financial flows,
workflow system, considered the pillar of administrative thus bringing efficiency to the decision-making process. All those
management since it aligns administrative routines and enhanced processes provide better structured and more strategic
processes with control systems. This program allows business management. Thus, the Bank became nimbler and safer
mapping these processes, automating tasks and optimizing the since the business departments now work in greater harmony
organization of work stages. As a result, security is improved, with the support and control teams.
and the leaner, nimbler structure brings efficiency, productivity
and quality gains. This tool allowed for the development of
specific “intelligent processes” for the credit area, thus helping
improve internal controls and speeding up credit analysis.
22. 16
Another major improvement was that the Supplies department Technological restructuring will allow Indusval Corretora to
now manages material resources. In addition to being in charge of increase its operations, tap into new markets and receive
purchases and maintenance, it now manages all the changes in the the Execution Broker Qualification Seal, which attests to the
Bank’s physical structure. During the course of the year, it focused qualification of its professionals, processes and systems. In
mainly on sustainability, both in economic terms, resulting in cost addition, these upgraded systems are compatible with the new
reduction, and environmental terms, with lower consumption communications network being introduced by BM&FBOVESPA
and recycling. In 2009, BIM also built the new facilities for Indusval to supplement the existing technology.
Corretora and consolidated its ten branches, located in areas with
a larger number of medium-sized businesses, in addition to its IT management is essential for the Bank to find new systems
headquarters and a branch outside Brazil. which can enhance its management quality and make it possible
to implement these new methods in different strategic areas.
Besides its ombudsman, the Bank has two other areas to Jointly with other departments, the IT department introduced
support external relationships: commercial customer service, and consolidated important systems in 2009, which provided
responsible for solving problems with contracts, money orders stricter control over operations, speedier processes and a
and collection, among others, and providing support for the safer information flow. The highlights of these systems include
commercial operations in the São Paulo headquarters and the the Operations and Payments System (OPS), the Guarantee
whole branch network; and Customer Service, whose teams Management System (GMS) and the Verisign Identity Protection
are trained to respond to customers’ requests and contribute to (VIP) project.
improving BIM’s processes and services. Customer service can be
accessed by Internet at www.indusval.com.br > “Contact us”, or The Operations and Payments System records and processes
by phone at 0800-704-0418 (option 1). operations from the issue to the settlement of an order. In turn,
the Guarantee Management System was developed internally so
It Infrastructure that the Bank can verify the formal details, availability and valuation
and Management of the assets given as guarantee in credit operations more efficiently.
In addition to these major advances, the IT and Information Safety
In order to lay the groundwork for growth in coming years and departments worked hard on the VIP project, which increased our
continuously improve its safety and management systems, the Bank computer network safety and reduced operating risks with better
made significant investments in its IT structure. After a thorough random individual passwords. The Bank also invested in state-of-
evaluation of suppliers and products, the Bank established new the-art email and information recording safety systems that make
partnerships in very favorable terms, which allowed for upgrading, information access and data transmission faster.
expanding and standardizing the IT infrastructure, including
information and telecommunication systems. The technological advance included data virtualization. All the
systems are based on cutting-edge remote connectivity platforms;
The new technological solutions, which required investments therefore, it is possible to access information from different hardware
of about R$1.7 million in the year, resulted in greater voice installed in different places in a safer manner. A global trend,
and data transmission capacity at lower costs and substantially virtualization offers total flexibility and perfectly safe connections
better quality, safety and performance. Consequently, the Bank since users (employees) can access all data from any terminal with
was able to offer new services, highlighting Indusval Corretora, virtual authentication. As a result, no data are transferred to the
which is now able to operate 24 hours, seven days a week. In computer in use so that no one else can have access to confidential
the first quarter of 2010, it will be able to transmit operation information. The system also allows for the reduction in costs and
orders automatically with new high-frequency resources. consumption, in addition to preventing data loss in case of a failure.
23. 17
Accounting and Control The Bank has tools to identify and map all the risks to which it
is exposed, assess them accurately, adopt mitigating measures
The Accounting and Control Department made great progress in and manage any changes and situations that may affect its
2009. The investments in professional training and development business and results. It pursues conservative policies in terms
of new methods and processes resulted in major improvements of risk exposure, in compliance with the guidelines and limits
regarding the preparation of financial statements, as well as established by Senior Management. Risk management is a
maintenance and organization of the Bank’s managerial data. concern involving all activities and is not only restricted to one
department or process. It is based on a holistic view aiming at
As a result, Accounting and Controls now produces even more the Bank’s perpetuity. As a result, all employees are trained,
reliable historical data and can collect the information made attend lectures and have all the means to identify any possible
available for BIM’s departments, the market, shareholders, risks. Both training programs and systems are continuously
business partners and rating agencies more quickly. monitored for flaws, in a constant search for perfection.
New accounting rules – Throughout the year, the Accordingly, the Bank in 2009 improved risk controls, hired
professionals from Accounting and Controls also worked hard experienced professionals, reviewed training programs,
to put into practice the accounting principles required for developed new tools to make information safer and adopted
the Bank to start introducing the IFRS (International Financial specialized systems that make its structure increasingly nimbler
Reporting Standard), pursuant to Law No. 11,638. The and safer.
IFRS principles include a number of international accounting
concepts published and reviewed by the IASB (International
Accounting Standards Board). They have been followed in the
European Union since 2005 and will be introduced in Brazil
as of 2010. To that end, the Bank has certified professionals
and trained managers to adopt these principles in preparing its
financial statements.
RISK MANAGEMENt
Efficient risk management is essential for the sustainable growth
of any financial institution and even more relevant after the
global financial crisis. Banco Indusval Multistock considers risk
management a strategic matter, since it involves issues such as
business continuity even under adverse operational conditions,
compliance, money laundering prevention, information safety
and financial system safety, all essential for business continuity.
24. 18
operational Risk Throughout the year, BIM’s Compliance Agents remained alert
to prevent and minimize likely losses due to flawed, defective
Operational risks are the probability of losses resulting from or inadequate internal processes and systems, as well as
internal processes; inadequate or faulty people or systems, inappropriate people or external events, pursuant to Resolution
problems with contracts or due to external events. BIM has No. 3,380 of the National Monetary Council. In addition, BCP
policies and control mechanisms to promote accurate operating was also tested to ensure that operations would continue in
risk assessment and monitors those risks continuously, which cases of minimal or total contingency.
ensures that they are mitigated on a permanent basis and in
emergency situations. Moreover, an innovative technology in Latin America, the VIP
(Verisign Identity Protection) project, was introduced in 2009
BIM adopts an Operational Risk Management System (ORMS), to improve passwords to access the Bank’s computer network,
which follows the main current standards, such as the Committee which is significantly safer. Employees must now type, in
of Sponsoring Organizations of the Treadway Commission addition to the usual network password, a random code shown
(COSO) and Control Objectives of Information and Related in display cards or smartphones to access their computers. In
Technology (COBIT), which include business and technology 2010, the VIP technology will be extended to Internet Banking
aspects. Since BIM considers operating risk management a key and Home Broker customers.
factor in the value-adding process, it fosters a risk prevention
culture among its staff by providing tools, disseminating policies Credit Risk
and introducing corporate methods.
Managing this risk, connected to the possibility of customer
In an ongoing effort to employ the best practices in the market, insolvency, requires different assessment and control tools. BIM
BIM follows the guidelines of the New Basel Capital Accord, uses methods, systems and processes to rate each borrower
known as Basel II, in compliance with the schedule set by the and evaluate the structure of the guarantees involved in each
Central Bank of Brazil (BACEN). In 2010, a more sophisticated operation in a thorough manner. Customer risk ratings, based
operating risk management tool will be introduced, the on Resolution No. 2,682 of the National Monetary Council, are
Alternative Standardized Approach (ASA), which improves the based on a mathematical model. The Credit Committee can
Allocation of Capital for Operating Risk. only make them more restrictive.
To ensure information integrity and business continuity, BIM’s Customer economic and financial performance, as well as
Business Continuity Plan (BCP) includes fully-equipped facilities guarantees, is regularly monitored. Special systems track
based in a different address, with workstations, as well as volumes, liquidity and potential shortages on a daily basis,
telephone and other systems, so that operations can continue in in the case of guarantees in the form of receivables. These
spite of any type of contingencies in the Bank’s headquarters. In systems have been reviewed since 2009 to improve and
addition, all servers are hosted at a telephone company, and data accelerate the process of pricing, valuation and availability
are replicated by other servers hosted at BIM’s headquarters. mainly of guarantees other than receivables so that they can
The Bank also has redundant links (double connections), an be formally accepted of refused.
additional resource to ensure business continuity in the event
of contingencies.
25. 19
The approved credit lines are revised every six months. As a Market Risk
result, customer performance is continuously monitored, also
by the Credit Committee. Market Risk is related to the possibility of losses due to
fluctuations in economic and financial variables, such as interest,
The international crisis affected the global economic activity and forex rates, and stock and commodity prices.
especially medium-sized companies. However, the Bank gained
considerable knowledge from it, mainly in terms of credit analysis The aspects connected to the market and liquidity are managed
methods, stricter controls and formal details of operations. In with the use of software, and risks are carefully monitored and
2010, a new credit risk calculation model will be introduced. It will assessed in compliance with the regulatory bodies’ rules and
be an additional tool to determine appropriate capital allocation, recommendations. The main model adopted by the Bank is the
in compliance with the Basel II Capital Accord. calculation of VaR (Value at Risk), a statistical measure for the
probability of a maximum loss of the value of the Bank’s portfolio
Liquidity Risk in normal market conditions, within a given time frame. BIM
also uses other tools, such as: 1) VaR Stress, which calculates
The Liquidity Risk results from mismatches in the cash flows of a the risk of potential losses under worst-case market scenarios;
financial institution, which, as a result, may not be able to settle its 2) Gap Analysis, a graphic representation by risk factor of cash
obligations with its cash and cash equivalents, albeit temporarily. flows shown in market values recorded on maturity dates, and
To avoid this risk, BIM continuously monitors and analyzes used to determine risk exposure at a certain point in time; 3)
its liquidity, in accordance with the established guidelines and Results Analysis, monitoring of the Bank’s results compared to a
adequate reserve requirement levels. This procedure is based benchmark; and 4) Capital Allocation, to ensure that the Bank is
on statistical, economic and financial projection models for the able to withstand the impact of unexpected losses, which allows
assets and liabilities that have an impact on cash flow and on business continuity in adverse situations and serves as a basis to
both local and foreign currency reserves. measure operation yields vis-a-vis risks.
The Bank adopts a conservative liquidity risk management policy Our Market Risk monitoring system is able to perform
and seeks to maintain a minimum cash reserve − monitored calculations for Basel II, as well as the portion of currency
on a daily basis − corresponding to 20% of its total deposits. exchange, interest, commodity and stock portfolios and the risk
Throughout 2009, cash reserves remained over 50% of total involved in them. At the close of 2009, the Bank’s overall VaR
deposits due to the turbulence in the economy. Our liquidity stood at R$1.06 million, as calculated by the parameter model,
risk management practices improved considerably, which with a confidence interval of 95.0%.
proved particularly important during the crisis.
26. “out of confusion, find simplicity.
from discord, find harmony. in the
middle of difficulty lies opportunity.”
Albert Einstein
Seen by (photo) Lílian Rosa dos Santos, 17 years old and André Guilherme, 16 years old
Viewed by (colored interference) Paula Gonzalez, 26 years old
27.
28. economic
environment
recovery in
economic
activity in 2010
Expectations for the economy in 2009 were impacted by the It was a bad year for the economy; however, the Brazilian
unfolding of the economic crisis that had been triggered in 2008. economy proved stronger and more resilient. On a quarterly
The year began with great uncertainty, which eventually made the basis, a downturn was observed in the first three quarters of 2009.
economic downturn even more severe. Even though a recovery In the fourth quarter, however, that trend reversed, in which
started in the last two quarters of 2009, economic activity did economic activity rose by a surprising 4.3%. Those data heighten
not return to the pre-crisis levels. Thus, Brazil’s Gross Domestic the expectation of a rebound in economic activity throughout
Product (GDP) fell by 0.2% in 2009, the sharpest drop since 1992, 2010, mainly in the services and industry sectors, which increased
when it had decreased by 0.5%. That poor performance was by 4.6% and 4.0% respectively in the last quarter of 2009. On the
mainly impacted by a 5.5% decline in industrial activity and of 5.2% other hand, agriculture has not yet recovered, and a 4.6% drop
in agriculture. That impact would have been even worse had it not was recorded in the period.
been for higher public spending, which rose by 3.7%, and higher
employment rates as of the second quarter of the year, which led
to a 4.1% increase in family consumption.
economic indicators
2008 2009 change
GDP variation – measured by IBGE 5.1% (0.2%) (5.3) p.p.
IPCA – inflation rate measured by IBGE 5.90% 4.26% (1.64) p.p.
Exchange Rate (US$/R$) 33.1% (25.3) (58.4) p.p.
Selic – interest basic rate 12.5% 9.9% (2.6) p.p.
29. 23
gdp evolution – quarter on quarter percentage change
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Source: Brazilian Institute for Geography and Statistics (IBGE)
The 25.3% appreciation of the real over the US dollar made US$ 24.6 billion at the close of 2009, 1.4% less than in 2008.
Brazilian exports less competitive, which, coupled with the According to the Ministry of Development, Industry and Foreign
credit crunch and the downturn in the major economies Trade, Brazilian exports totaled US$153.0 billion, down 22.7%
worldwide, affected the Brazilian trade balance. For the first year-over-year. That was the sharpest drop since those data
time since 2002, the trade flow was lower in relation to the started being recorded in 1950.
previous year. Nevertheless, the trade balance was positive by
30. 24
Although the appreciation of the real benefits imports, the As a result, companies manufacturing goods for exports, mainly
decrease in economic activity and investments led to a drop agricultural and mineral commodities, experienced some of
in Brazilian imports which, in line with the trend observed in their most difficult challenges in the last few years. In addition to
many countries, fell by 25.3% in relation to 2008 and totaled declining prices and an unfavorable exchange rate, the demand
US$127.6 billion. and credit supply fell, which severely affected the ability of
companies in these two industries to settle their obligations.
Throughout the year, the Brazilian Federal Government
introduced tax incentives and increased liquidity aimed at CREDIt IN BRAZIL
expanding credit supply and boosting consumption and
production. The basic interest rate was repeatedly reduced and The demand for credit from individuals was distinct from that
closed 2009 at 8.75%, the lowest historic level ever. White of corporations in Brazil in 2009. That is largely explained
goods, construction materials and vehicles were granted an by the Brazilian Federal Government’s measures to boost
excise tax (IPI) exemption or reduction. Even though these consumption, such as tax incentives, which led to a stable
measures had a positive effect on the economy as a whole, demand for credit from individuals, mainly for mortgages and
they focused on domestic consumption. With the unfavorable car financing.
exchange rate, exporters and agricultural producers received no
incentives to counteract the impact of the crisis.
corporate loans by contract amount . R$ billion
Up to R$ 100,000
From R$ 100,000 to R$ 10 million
Over R$ 10 million
788
757 770
726 737 748
686 696 693 694 699 697 696 706
639 665
608
582 591
552 567
508 508 517 539 46.2%
44.1%
402
339
39.6% 37.7%
16.3% 16.1%
Dec Dec Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
05 06 07 08 09
Source: Central Bank of Brazil (BACEN)
31. 25
Lower industrial production led to a decrease in corporate The increased difficulty for large companies to raise funds
credit, which fell by 4.4% in 2009, according to the Serasa abroad and in the stock market during economic crises
Experian Indicator, which measures this type of demand in explains such move. They, as a result, resort to Brazilian
Brazil. That drop came to 6.7% in the first half of 2009 alone, banks, mainly development banks, and have an edge
since that was when the impact of the crisis was most strongly over other companies due to their lower credit risk.
felt in Brazil. The same survey also shows that the sharpest drop Consequently, medium-sized companies were faced with
was recorded in the industrial sector, with a 5.4% decline in a flagging demand, less liquid receivables and tighter credit
relation to 2008. standards; therefore, many of them had problems settling
their obligations in 2009.
The negative effect of the appreciation of the real against the
US dollar was particularly strong in the Brazilian regions where Delinquency/Default
exports-oriented agribusiness accounts for a large share of
economic activity. In the South Region, economic activity Middle-market companies have fewer funding options
decreased by 6.9% in 2009 whereas it dropped by 4.8% in the and depend on credit to finance their activities. They are,
Center-West Region. consequently, quite vulnerable to fluctuations in economic
activity and credit crunches because their paying capacity is
When corporation size is considered, the survey shows quickly affected during economic downturn periods, leading to
that demand for credit decreased by 4.5% among very higher default rates.
small and small businesses and by 4.8% among medium-
sized companies, BIM’s target market. On the other hand, BACEN’s data shows that corporate default rates leveled off
demand for bank credit from large corporations rose by in October and started falling, albeit slightly, as of November.
5.2% in 2009. The industries that recovered more quickly were trade, services
and manufacturing of goods for the domestic market. Domestic
The Central Bank of Brazil (BACEN)’s data shows a similar consumption was mainly driven by stable wages, consumer
situation. BACEN does not disclose credit volumes by credit supply and the anti-crisis measures introduced by the
borrower size, but only by single contract amounts. Large Brazilian Federal Government, which increased the share of
companies usually borrow higher amounts per contract state-run banks in the granting of credit, also in special terms,
and, in contrast, small businesses borrow lower volumes. and created tax incentives for certain industries, mainly durable
As a consequence, contracts between R$100 thousand goods manufacturing.
and R$10 million, which is the medium range disclosed
by BACEN, are correlated to middle market operations.
Thus, BACEN’s data are in line with those contained in the
Serasa Experian report, showing that the demand for credit
increased among large corporations and decreased among
medium-sized companies.
32. “one must wish to move forward,
but, to that end, he must view
new horizons, remain true to his
principles and be full of energy,
confidence, daring and creativity.”
Viviane Duarte
Seen by (photo) Erick Henrique Angelo, 16 years old and Felipe trindade, 16 years old
Viewed by (colored interference) Roberta Silva de Souza, 17 years old
33.
34. markets
predominance
of medium-sized
companies in
regions with
greater economic
activity
Banco Indusval Multistock focuses its activities on granting credit sized companies depend on bank loans mainly to meet their
to medium-sized companies (middle market), mainly those cash flow requirements. As they have more pressing needs,
which post annual sales chiefly between R$20 million and R$500 middle market companies have a high demand for products
million, employ over 200 people on average, and require bank such as working capital, discount of trade notes and receivables,
financing to fund their activities. About 60% of the Brazilian as well as services for payment and receipts.
middle market companies are located in the Southeastern
Region, 20% in the Southern Region and the remainder in the A large number of these companies have been exporting part of
Northern, Northeastern and Mid-Western Regions. their production over the last few years in view of the economic
stability, falling interest rates and exports incentives. As a
These companies typically resort to several banks for the result, there has been a growing demand for foreign exchange
funds that they need for their activities since they only have products, especially for trade finance, among them.
access to lower credit lines and shorter maturities than large
corporations. Although comparatively less heavily leveraged
than their counterparts in other countries, Brazilian medium-
35. 29
business focus
Banco Indusval Multistock has a wide range of products and
services especially designed for this market niche. It offers, in
on medium-sized
addition, products for larger companies that can also meet their
growing businesses’ needs. Of the customers in its loan portfolio,
companies, which
55.6% are in the manufacturing industry, 22.8% in the service
segment, 11.6% in commerce and only 9.8% are individuals.
have specific needs
93.5% of BIM’s credit operations were oriented to the middle
market in 2009, and 67.0% of its funds were allocated to loan
and require credit
operations and discounts of receivables.
products mainly
With an agile structure and prompt customer service provided
by skilled professionals, the Bank is able to offer customized
geared to their
products and services adapted to each company’s particular
features and catering to its specific needs. Consequently, BIM
business turnover
stands out for its efficient and quick credit approval process.
The largest share of operations (39.0%) is currently geared
to customers’ very short term needs (up to 90 days) and
73.8% of all contracts mature in no more than 360 days.
36. products and
services
closeness to
customers
brings a better
understanding of
their needs
CREDIt oPERAtIoNS in local and foreign currency, also comprise the Bank’s credit risk
exposure although to a lesser extent. Banco Indusval Multistock’s
credit portfolio totaled approximately R$1.7 billion at the close of
credit operations . in R$ million
2009, having remained stable throughout the year in spite of the
Guarantees and Letters of Credit deductions, write-offs and renegotiations carried out during that
Trade Finance period. It consists of about 660 customers.
Loans and Financing in Local Currency
The Bank adopts conservative policies for credit granting and
CAGR 1,793.7
the risks posed by these operations. At year-end 2009, 86.5%
42.1% 1,698.7
of the credit portfolio was among the highest ratings (AA-C) and
1,329.0 83.0% of the operations involving medium-sized companies
were supported by real guarantees.
691.0 The global economic downturn and the severe credit crunch led
to higher default rates, mainly among medium-sized companies.
417.0
According to BACEN data, the corporate default rate started falling
slightly only as of November and closed 2009 at 2.0 percentage
points above that recorded at year-end 2008. The following chart
2005 2006 2007 2008 2009 shows the 60 and 90-day default rate curves for Banco Indusval
Multistock’s credit portfolio versus the default rates estimated
for small and medium-sized companies (SMEs) in loans overdue
BIM’s credit portfolio includes mainly loans and financing in local over 90 days. Those estimates were based on BACEN’s data for
currency − basically, financing for routine operational activities of corporate default rates, weighted by the volume of credit granted
medium-sized companies in the domestic market − and in foreign to large companies and the historical default rates of small and
currency for trade finance. Guarantees or Letters of Credit, both medium-sized companies.
37. 31
delinquency rate . %
NPL 60 days – BIM
NPL 90 days – BIM
Delinquency Rate SME – 90 days
8%
7%
6%
5%
4%
3%
2%
1%
0%
Dec Dec Mar Jun Sep Dec Mar Jun Sep Dec
2006 2007 2008 2009
Source: BIM
In compliance with its policy to revise all credit lines every supplementary provisions, in addition to those determined by the
180 days, the Bank reviewed its whole customer base during regulatory body. Provisions increased from R$70.3 million as at
the year and re-rated each customer’s risk in view of the new December 31, 2008 to R$133.4 million at the close of 2009, an
macroeconomic situation. That procedure had an impact on 89.8% rise. That amount corresponds to 8.2% of the total credit
Allowance for Loan Losses and resulted in the creation of portfolio, above the 4.1% recorded in the previous year.
38. 32
credit portfolio breakdown at the end of 2009
by segment 4.4% Other
Retail 2.1%
93.5% Middle Market
by economic activity Individuals 10%
Services 22%
56% Industry
Commerce 12%
by industry
2.8% Financial Services
Oil Byproducts and Biofuels 16.7% Other
2.8%
20.8% Food, beverage
Chemical and Pharmaceutical 3.0% and tobacco
Education 3.4% 13.9% Agribusiness
Textile and Leather 3.6%
9.7% Civil Construction
Individuals 3.8%
Financial Institutions 4.4% 5.1% Metallurgy
Transport and Logistics 4.9%
5.0% Automotive
2.6% North
by region Mid-West 13.1% 2.9% Northeast
19.2% South
62.3% Southeast
39. 33
credit portfolio breakdown at the end of 2009
by customer concentration
Other 26.8% 18.9% 10 largest
61to160 23.8% 30.6% 11to 60
by type of operation 5% Other
Guarantees 4%
Trade Finance 17%
67% Loans and
BNDES Onleding 7% Discounts
by maturity
Over 360 days 26.1% 39.1% Up to 90 days
From 181 to 360 days 15%
19.8% From 91
to 180 days
Vehicles 2% 17% Aval on
by collateral Property 9% Promissory Notes
Monitored Pledge 12%
6% Pledge
Securities and
Times Deposits
4%
51% Receivables
by risk rating D – H 11%
30% A
C 30%
29% B
40. 34
Loans and Financing in Guarantees: the Bank rapidly grants Letters of Guarantee for
Local Currency its customers to support them in their operations.
As at December 31, 2009, loans and financing in local currency BNDES (Brazilian Social and Economic Development
amounted to R$1.3 billion, equivalent to 82.1% of the credit Bank) onlending financing lines:
portfolio, a 7.6% drop compared with the previous year. FiNamE – Financing for the production and sale of new
Considering the credit recovery process, which includes equipment and machinery.
renegotiations, discounts and write-offs, the slight change in the BNDES Exim – Financing for the production and exports of
portfolio reflects our teams’ effort, which generated enough goods and services, as well as for selling them abroad.
operations to maintain volumes practically stable, mainly in the Special Credit Program (PEC) – This working capital
second half. The Credit Portfolio in local currency recorded financing program was designed to boost companies’
a Compound Annual Growth Rate (CAGR) of about 43.6% competitiveness in the segments of manufacturing, trading and
between 2005 and 2009, with a sharp rise since 2007. services, except those related to civil construction.
Main Products: Other services: Checking Accounts, Collection and
Internet Banking.
Working Capital:
Loans – Loan Agreements, with funds available for use by
corporate customers in their operational activities.
Discount of receivables − Funds released quickly through
discounts of trade notes, credit instruments and receivables.
Overdraft accounts − Funds promptly made available
through lines and contracts previously approved and signed.
Compror – For inventory purchases.
Credit to Production Chains: these credit operations are
designed to benefit our customers’ production chains through
agreements with large companies maintaining sustainable
relationships with their suppliers and to offer funding support by
confirming our customers’ receivables. Besides providing access
to a type of credit on which these companies would individually
be subject to volume and maturity restrictions, these operations
offer great potential to develop prospective relationship with
new small and medium-sized customers.
41. 35
Foreign trade Funding for Foreign
Financing operations trade Financing
BIM’s Trade Finance Portfolio, according to its accounting The Bank has partnerships with multilateral bodies and
records in reais, amounted to R$293.3 million at the close of Correspondent Banks to expand its credit lines and loan portfolio.
2009 and recorded a CAGR of 43.5% p.a. between 2005 and The first partnership, established with the International Finance
2009. The CAGR in US Dollar terms is 44.8%, with a US$174 Corporation (IFC) in 2006, has allowed the Bank to offer foreign
million portfolio in 2009, which exceeded the amount of US$30 trade finance to small and medium-sized companies within the
million at the close of 2005. Global Trade Finance Program (GTFP), and greatly benefited
the relationship with correspondent banks.
Despite weak international markets, export financing
accounted for the largest share of the Trade Finance portfolio The Bank’s responsible and transparent operations with IFC
in 2009 and accounted for 90% of overall operations. The led BIM to form a new partnership with the Interamerican
Bank has a highly skilled, experienced team able to provide Development Bank (IDB) in 2007, within the Trade Finance
prompt and customized advisory services and monitor all Facilitation Program (TFFP). Geared to Latin American and
international operations. Caribbean companies, TFFP promotes their growth as a means
to boost foreign trade. This partnership proved particularly
Main Products and Services: important during the period of turbulence in international
markets, when IFC and IDB maintained their credit lines.
aCC/aCE – Pre- (ACC) and Post-shipment (ACE)
Exports Financing. The Bank expanded its international relations and established
import Financing − These financing lines for raw materials, partnerships with over 40 correspondent banks in Europe;
products and equipment purchased abroad allow access to Asia, and North, Central and South Americas, all crucial for
alternatives, in terms of variety, quality and prices, to those found foreign trade finance. Credit lines granted by international
in the domestic market. correspondent banks are currently the main funding source for
international Guarantees − In the form of Import or BIM’s exports and imports financing portfolio.
Stand-by Letters of Credit.
Spot Fx − Purchase and sale of different foreign currencies. Structured operations
international Collection Operations − Both in imports
and exports. The Bank has been developing structured operations since
Fund remittance abroad − Investments or cash reserves 2004, based on the combination of two factors. First, new
for individuals and legal entities. market opportunities were identified. Besides, the Bank’s
customer base included companies with high enough credit
rating and the right profile to attract investors. Tapping into
its market expertise, the Bank started structuring financing
operations for medium-sized customers, both in local and
foreign currency, thus allowing them to raise larger amounts
of funds at lower rates.
42. 36
Before the crisis worsened in late 2008, there was a steady agribusiness Credit Rights Certificates (aCRC): securities
demand for operations backed by corporate debts, an issued to finance agribusiness. Issuers are exempt from the Tax
alternative that lost its appeal for investors when they began on Financial Transactions (IOF). In view of that specific purpose,
resorting to safer government bonds for capital protection. In guarantees must be based on agribusiness receivables.
view of the liquidity crunch late in the year, investors started
showing interest mainly in assets backed by exports receivables. Export Prepayment Operations (EPO): foreign
Although still incipient, this is a promising activity that can start currency funding instruments for longer-term export financing,
growing in 2010, mainly among banks with BIM’s profile: with more significant guarantees, including pledge of goods and
structured, nimble and able to find good business opportunities. export receivables among others.
BIM’s branch on the Cayman Islands was opened in 2009. It Export Credit Note (ECN): local currency funding
will conduct the structured operations in foreign currency, instruments to finance exports. Issuers are IOF-exempt, but
thus providing a direct channel between the Bank and foreign must prove that the export operation was duly performed.
investors. Another distinct feature that attracts prospective
investors is that BIM takes a share of the risk involved in all its BIM also structures operations in specific niches, such as advisory
structured operations. This shows that it firmly believes that the services for customers seeking strategic or financial investors for
business is safely structured. As it is responsible for structuring their companies through operations of shareholding nature; and
operations and controlling credit guarantees, BIM continuously debt instrument issues structured with receivables from the real
monitors the liquidity of the guarantees and the economic and estate industry (Real Estate Credit Note – RECN), which has
financial performance of the borrowers. It regularly produces been expanding significantly in Brazil.
and distributes monitoring reports to deal holders.
The Bank is presently prepared to structure the following
an agile bank
financial operations among others:
structured to
Bank Credit Note (BCN): credit securities issued to
a financial institution and easily traded on the secondary
understand and meet
market. They can be backed by different types of guarantees,
such as: pledge of goods, sale of property and assignment of
the customers’ needs
receivables among others.
43. 37
treasury and Funding operations loan volume . in R$ million
The Treasury’s main role is to control the Bank’s liquidity and Foreign currency
execute its funding and fund allocation strategy, devised by Local currency
the Cash Committee, which sets the guidelines for funding,
performance and operating limits, always in compliance with
the market risk and liquidity management policies. As a result, it 1.793,2
is also responsible for mitigating the risks of mismatching interest 1.600,0
rates, currencies and maturities. It also offers appropriate
solutions to meet customers’ needs for hedging operations to
protect against fluctuations in forex and interest rates, among 1.040,1
other financial assets.
690,5
In accordance with its liquidity management policy, the Bank maintains 404,3
at least 20% of total deposits as free cash to ensure greater safety
for itself and its investors. That percentage remained above 50%
throughout 2009 and stood at about 55% at year-end, in line with
BIM’s conservative policy and in view of the economic turbulence. 2005 2006 2007 2008 2009
At the close of 2009, total funding recorded a 12.1% increase in
comparison to the close of the previous year and amounted to R$1.8
billion, 79.0% of which in local currency.
Funding in local currency corresponds mainly to Deposits,
accounting for 71.0% of the Bank’s total funding. Worth of note funding . in %
are Time Deposits, involving the issue of Bank Certificates of
Deposits (CDBs), which accounted for 37.1% of total funding
as at December 31, 2009. On the same date, Time Deposits
with Special Guarantee (DPGEs) comprised 28.2% of total Foreign Currency
funding. Introduced in April 2009 by the National Monetary Borrowings 21.1% 8.0% Local
Council, DPGEs were essential to maintain medium-sized banks’ Onlending
liquidity since an increased risk perception among investors due 37.1% Time
Interbank Deposits 2.8% deposits
the international crisis led to a “fly to quality” migration of funds,
mainly to government bonds and larger financial groups. Since 28.2% Time Deposits
Demand deposits 2.2% with Special
DPGEs are guaranteed by the Credit Guarantor Fund up to Guarantee
(DPGE)
0.6% Agribusiness
Credit Bills
44. 38
R$20 million, they allowed small and medium-sized banks to raise BRoKERAGE HouSE
funds, especially from institutional investors, at a cost compatible
with their operations, for terms of two, three or even five years, In 2009, Banco Indusval Multistock started restructuring and
with pre-determined maturities. In addition to ensuring stable modernizing its subsidiary, the brokerage firm Indusval S.A.
liquidity levels, this alternative allowed the Bank to extend funding Corretora de Títulos e Valores Mobiliários (Indusval Corretora),
maturities − as yet only possible in external funding − and which operates in all markets of the Securities, Commodities and
better plan its cash liquidity due to the need to maintain financial Futures Exchange (BM&FBOVESPA). The mark in this process
investments until their final maturities. was the strategic partnership established on June 1st, 2009
between BIM and Serendipity Holding Financeira Ltda., which
Foreign sources accounted for 21.0% of total funding in now holds 48.84% of Indusval Corretora’s total capital stock.
2009. Trade Finance comprised 14.9% of this amount. The Serendipity is controlled by Luis Fernando Monteiro de Gouvêa,
remaining 6.1% corresponds to the balance of the October the majority shareholder of Comercial Asset Management, and
2008 syndicated loan, jointly with IFC (International Finance by Alexandre Atherino, a former partner and, up to 2008, the
Corporation), and is allocated directly to financing working Planning and Strategy Officer of Fator Corretora.
capital in local currency. The exposure of this loan to forex and
interest rate fluctuations is covered through hedging operations. The Bank’s goal with this partnership is to increase the profitability
of Indusval Corretora’s activity in a sustainable manner in the
Another funding source that complements BIM’s product long term, based on the new partner’s sound, business-oriented
portfolio is onlending of BNDES funds to corporate customers. management. The ongoing restructuring process has already
It accounted for 8% of total funding at the close of 2009. produced its first results, such as a wider range of products and
services and a higher BM&FBOVESPA ranking. The Brokerage Firm
ranked 52nd on BM&F’s general ranking at the close of 2008 and
moved up to 44th at the close of 2009.
The new strategic management is seeking to increase Indusval
Corretora’s customer base among institutional and qualified
individual investors, and target the small investor market. With
that in mind, the Firm is hiring new teams with market expertise;
in addition, it is introducing business management tools and
operating platforms for trading in the Stock and Derivatives
markets geared to institutional and qualified individual investors,
as well as a new homebroker system, which will be accessed
through the Brokerage House’s new website. The new site, still
in the design phase, will offer resources that allow performing
transactions through the Internet, and bring more information
and tools to help users make investment decisions.
45. 39
Based on the Bank’s tradition and the power of the Indusval Fixed income Products – Indusval Corretora is prepared to
brand, Indusval Corretora’s goal is to become a source of deal with large volumes of government bonds and was one of
liquidity for institutional customers. In this regard, it introduced the largest intermediaries in transactions with National Treasury
fixed income investments with government bonds, targeted bonds pegged to inflation indices during the second half of 2009.
mainly at Financial Institutions’ Treasuries, in 2009. This type of
investment grew sharply due to higher risk aversion during the Indusval Multistock Corretora de Valores’ competitive
economic crisis, which shows the new strategic management’s advantages include its experience and focus on business, unique
remarkable skills and great sense of opportunity. By the end of customer service and, above all, prompt operations and strict
2010, the Brokerage Firm, with a reorganized and upgraded risk controls, in accordance with the standards established by
infrastructure, will be dealing mainly with: BM&FBOVESPA’s Operating Qualification Program (PQO).
As a result, Indusval Corretora was awarded in early 2010 the
Bm&F market products: focused on market intelligence, Execution Broker Seal, which attests to its ability to operate
it will offer structured operations that add value to institutional promptly and efficiently with large volumes in the BM&F market.
clients and deal with large volumes in an agile and safe manner.
The challenges that the capital and derivatives market was
BOVESPa market products: faced with due to the economic crisis led to a drop in income
Strategic reports – Its strategic research team will produce from financial intermediation during the first months of the
reports, including an economic and flow overview, with year, but Indusval Corretora’s restructuring and upgrading
analyses by the Brokerage Firm’s experts, to be sent to Indusval process resulted in an increase in business that reversed
Corretora’s customers. this situation. At the close of 2009, the Brokerage House’s
asset management – Equity investment funds. operations brought in income from financial intermediation
arbitrage operations – Applying the Firm’s expertise to of R$9.4 million and income from services fees of R$11.8
seize opportunities for gains in the arbitrage between stock million. Excluding the investments and expenses to conduct
markets and the ADR market. Indusval Corretora’s operations and including the income
Qualified investors – Operators and a self-service platform from the sale of financial assets (BM&FBOVESPA’s shares),
are available for both individual and institutional customers. those amounts would have produced net income of R$5.3
individuals – A structure is being developed to provide million in 2009. Total volumes traded on
top-quality services for individual customers, dealing with the stock exchange amounted to R$4.3
lower volumes and operating by themselves through the billion in BOVESPA shares and derivatives
homebroker. Information and courses specially designed for and to R$47.8 billion involving 686,000
non-professional investors will be offered. derivative and commodity contracts
on BM&F. Information about Indusval
Corretora can be found on its website:
www.indusvaltrade.com.br.
46. “once in a while you have to take
a break and visit yourself.”
Audrey Giorgi
Seen by (photo) Jeniffer Soares Paes, 15 years old and Felipe trindade, 16 years old
Viewed by (colored interference) Rodrigo de Souza, 24 years old
