Transcript Acquisition of BEG

Acquisition of BEG
December 2001
Strategic Vision
Goiás
 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.
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Strategic Vision
Motivators
 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.
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BEG Benefits for Itaú

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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:
32.4%
28.7%
23.1%
16.9%
11.1%
5.4%
BEG+Itaú
BB
Bradesco
CEF
HSBC
57
28
Number of Branches (in Goiás)
168
119
87
Strategic Vision
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Operating Statistics (BEG vs. Itaú) – September 2001
BEG
Number of Branches (Goiás)
Number of Branches (Other States)
Number of Employees *
ITAÚ Goiás
149
3
1,710
19
2,090
45,547
Demand Deposits
Savings Deposits
Mutual Funds
Time and Legal Deposits
Total of Resources
302
89
312
252
955
41
84
103
6
234
Credit Operations (Total)
261
102
52.4%
73.6%
60.9%
54.9%
(R$ Million)
Consolidated *
Banking Service Fees / Net Income from
Financial Operations
Efficiency Ratio
* BEG – Financial Consolidated, Itaú – Consolidated. Sep/01
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.
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Effects of the Acquisition
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R$ Million
Amount paid considering bonds by their face
value
665
Amount paid considering Economic Value
546
Recorded Value of the Investment
628
Net Income by Reversal of the Provisions for
Bonds belonging to the Group
512
116
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.
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.
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Acquisition of BEG
December 2001