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					FINANCIAL
S TAT E M E N T S   2009
                                    FS’09

Message from the CEO


In the past years, Banco do Estado do Rio       Nevertheless, the Bank’s actions have never
Grande do Sul has met targets, crossed new      been just for boasting or to reach landmark
frontiers,      reorganized      processes,     figures. We never intended to achieve
modernized structures and changed its own       technological status for its own sake. All of
paradigms. At the same time, the Bank           Banrisul’s investments – in IT and other areas
solidified a culture of continuous corporate    – arose from technical diagnoses and were
development – a legacy from yesterday that      the result of a strategic management focused
continues today and is prepared for             on institutional results and the satisfaction
tomorrow.                                       of its clients, shareholders and employees.
                                                The Bank’s current corporate governance is
Institutional balance ran parallel to and
                                                creating solid management mechanisms that
complemented bold changes within
                                                are grounded on steady guidelines.
Banrisul. This equation brought about
internal progress and very positive results There were also significant operational
for clients and shareholders. By acting changes. Internal processes were reviewed,
audaciously and strategically, our Institution sectors were integrated in business
has reached an outstanding level within the platforms, targets were reassessed, and a
global scenario in terms of financial maturity people management policy sustained by
and management practices.                       continuous training and performance
                                                valuing was adopted. Banrisul is in line with
Among many others, two factors were
                                                the State government’s public policies –
essential to arrive at this point: investments
                                                and that is how it should be, given the
in technology and structuring permanent
                                                Bank’s important social role. Howe ver,
corporate       go vernance.         Banrisul’s
                                                technical and joint decisions represent a
Information Technology initiatives became
                                                straight, secure path for the Organization
global references. The past years were
                                                and its various stakeholders.
marked by substantial investments in
technological innovation and Banrisul Banrisul’s continuity is ensured by its
received national and international awards. consolidated management model, which is




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 FINANCIAL
 S T AT E M E N T S   ´09
                                          FS’09
    supported by corporate governance                 into the future without losing its Rio Grande
    practices focusing on institutional results       do Sul State identity.
    and delivering increasing efficiency to its
                                                 Banrisul opened itself to the world but kept
    clients. If it were any different, we would
                                                 its genuine Rio Grande do Sul features: it is a
    not have been able to hold a successful
                                                 human and hospitable bank that prioritizes
    public offering in 2007, raising R$800 million.
                                                 respect for people. That is possible thanks
    2009 confirms that corporate pace. Despite to a highly-qualified staff that is prepared to
    the global international crisis, Banrisul face challenges.
    closed the year with a net income of R$541.1 It is with people, then, that we explain
    million, a result that corresponds to a Banrisul. In the service sector especially,
    profitability of 16.7% on average people play an essential role. If it were not
    shareholders’ equity. In December of 2009, for our team members – from clerks to top
    shareholders’ equity totaled R$3.4 billion executives – we would not be a bank that is
    and total assets R$29.1 billion, year-on-year able to deliver financial results in addition
    increases of 10.7% and 15.4%, respectively. to so many social projects. After all, Banrisul
    Funds Raised and Under Management is a bank that likes people!
    reached R$21.9 billion, growing 14.9% in
                                                    We h ave balanced modernity and
    twelve months, and credit assets R$13.4
                                                    personalized service, boldness and respect,
    billion at the end of December 2009, posting
                                                    efficiency and accessibility, results and
    17.1% growth in the same period.
                                                    community participation, profit and people
    W ith over eighty years of history, Banrisul is valuing, commercial prospects and social
    prepared to continue its progressiveness as, actions. Now, the road that will lead to the next
    in addition to having sound financial and victories is paved, open, wide and ready to be
    corporate structures, the Bank displays walked even faster. The Bank of the people of
    solidity on all fronts; it managed to make Rio Grande do Sul State continues its history of
    the most of a valuable legacy and project it success, building the roads of the future.




                                        Fernando Guerreiro de Lemos
                                                   CEO




3




                                                                                 FINANCIAL
                                                                                 S TA T E M E N TS   ´09
                                                          FS’09

Contents
    Mensage from the CEO .........................................................................................................                   2
Management Report..................................................................................................................                  8
    Economic Scenario ................................................................................................................               9
    Corporate Strategy...............................................................................................................                11
    Consolidated Performance ...................................................................................................                     14
         Net Income .............................................................................................................................    14
         Shareholders’ Equity ..............................................................................................................         14
         Total Assets ............................................................................................................................   15
         Taxes and Contributions ........................................................................................................            15
    Operating Performance ........................................................................................................                   16
         Funds Raised and Under Management ................................................................................. 16
         Breakdown of Funds Raised and Under Management ......................................................... 17
         Securities ............................................................................................................................... 18
    Credit Policy .........................................................................................................................          19
    Loan Operations ...................................................................................................................              21
         Commercial Credit - Individuals ..........................................................................................                  21
         Commercial Credit - Companies .........................................................................................                     22
         Agribusiness ..........................................................................................................................     23
         Foreign Exchange ...................................................................................................................        23
         Real Estate Loans ...................................................................................................................       24
         Long-Term Financing ..............................................................................................................          24
         Microcredit ............................................................................................................................    24
    Produts, Services and Channels.............................................................................................                      25
         Banricompras ........................................................................................................................       25
             Banricompras B2B ...........................................................................................................            25
             Banricompras Rural ........................................................................................................             25
             IPE Saúde ..........................................................................................................................    26
         Banrisul’s Correspondent Banks ...........................................................................................                  26
         Virtual Branch – Home and Office Banking ..........................................................................                         27
         Banrifone and Call Center .....................................................................................................             27
         Authorized Direct Bill Pay .....................................................................................................            27
         Eletronic Bidding ...................................................................................................................       28
         Credit Cards ...........................................................................................................................    28
         Insurances, Private Pension and Capitalization .................................................................                            29
    Banrisul’s Customer Ser vice Network ...................................................................................                         30
    Subsidiaries ..........................................................................................................................          31
         Banrisul S.A. Administradora de Consórcios .......................................................................                          31
         Banrisul S.A. Corretora de Valores Mobiliários e Câmbio ..................................................                                  31
         Banrisul Armazéns Gerais S.A ...............................................................................................                32
         Banrisul Serviços Ltda ...........................................................................................................          32

                                                                                                                                                          4




  FINANCIAL
  S TA T E M E N TS    ´09
                                                                FS’09
         Corporate Governance ......................................................................................................... 33
              Overview ................................................................................................................................   33
              Banrisul’s Corporate Governance Structure ........................................................................                          34
                 Board of Directors ...........................................................................................................           35
                 Audit Committee ...............................................................................................................          36
                 Fisc al Council ..................................................................................................................       36
                 Board of Executive Officers and Auxiliary Bodies ..........................................................                              37
                 Shareholding Structure ....................................................................................................              38
              Corporate Governance Policies ............................................................................................                  39
                 Code of Ethics ...................................................................................................................       40
                 Corporate Management and Modernization Model .......................................................                                     41
                 Investor Relations and Communication Policy ..............................................................                               42
                 Interest on Equity and Dividends Distribution Policy ....................................................                                43
                 Regulatory Aspects: IFRS - Internacional F inancial Reporting St andards ....................                                            44
         Internal Controls and Compliance ......................................................................................... 46
            Risk Management ..................................................................................................................            48
                Credit Risk ........................................................................................................................      49
                Market Risk ......................................................................................................................        49
                Liquidity Risk ....................................................................................................................       50
                Operational Risk ..............................................................................................................           50
            New Basel Capital Accord - Basel II ......................................................................................                    52
                Capital Management ........................................................................................................               53
                Banrisul’s Capital Management ......................................................................................                      54
                Calculation of the Reference Equity – PR and the Required Reference Equity - PRE......                                                    55
            Basel Ratio .............................................................................................................................     56
         Technology Modernization ....................................................................................................                    57
         Public Sector Activities ..........................................................................................................              58
            Municipal Public Sector ........................................................................................................              58
            State Public Sector .................................................................................................................         59
            Federal Public Sector.............................................................................................................            59
         Marketing.............................................................................................................................           60
         Human Resources .................................................................................................................                62
         Corporate Responsibility.......................................................................................................                  64
            Social and Environmental Relationship ...............................................................................                         66
            Relationship with Employees ................................................................................................                  68
            Relationship with the Community .........................................................................................                     69
         Awards .................................................................................................................................         71
         Acknowledgements ..............................................................................................................                  76

    Index of Graphs
       Graph 1: Net Income ....................................................................................................................           14
       Graph 2: Shareholders’ Equity Growth .......................................................................................                       14
       Graph 3: Total Assets Growth .....................................................................................................                 15
       Graph 4: Growth of Funds Raised and Under Management ......................................................                                        16
       Graph 5: Breakdown of Funds Raised and Under Management................................................                                            17
5      Graph 6: Securities Growth .........................................................................................................               18




                                                                                                                             F IF I A N C IC IL L
                                                                                                                                N NAN A A
                                                                                                                                ATEM MEN           ´09
                                                                                                                                                    ´09
                                                                                                                             S TS T A T E E N T S T S
                                                         FS’09
     Graph 7: Loan Operations Growth..............................................................................................            21
     Graph 8: Commercial Credit Growth – Individuals and Companies .........................................                                  22
     Graph 9: Banricompras ...............................................................................................................    26
     Graph 10: Shareholding Structure..............................................................................................           38
     Graph 11: Market Value X Shareholders’ Equity ........................................................................                   43
     Graph 12: Basel Ratio Growth ....................................................................................................        56

Index of Tables
   Table 1: Board of Directors Members .........................................................................................              35
   Table 2: Audit Committee Members ............................................................................................              36
   Table 3: Fiscal Counci l Members ...............................................................................................           36
   Table 4: Board of Executive Of ficers ...........................................................................................          37
   Table 5: Shareholders ..................................................................................................................   38
   Table 6: Geographic Distribution of Shareholders by Number and Shares ..............................                                       43
   Table 7: Reference Equity Calculation ........................................................................................             55
   Table 8: Required Reference Equity Calculation ........................................................................                    55
   Table 9: Selection Processes and Training Programs ................................................................                        63

Financial Statements .................................................................................................................. 77
    Balance Sheet ....................................................................................................................... 78
     Statement of Income ............................................................................................................ 82
     Cash Flow ............................................................................................................................. 83
     Statement of Value Added ................................................................................................... 85
     Statement of Changes on Shareholders’ Equity .................................................................... 86
     Notes of Management to the Financial Statement ............................................................... 87
          Note 01 – Operations ............................................................................................................ 88
          Note 02 – Presentation of the Financial Statemen ts ........................................................... 88
          Note 03 – Significant Accounting Practices ......................................................................... 90
          Note 04 – Interbank Investments ......................................................................................... 93
          Note 05 – Securities and Derivatives ................................................................................... 94
          Note 06 – Restricted Deposits .............................................................................................. 97
          Note 07 – Loans, Lease Operations and Other Receivables ................................................ 97
          Note 08 – Other Receivables ................................................................................................ 99
          Note 09 – Permanent Assets ................................................................................................. 100
          Note 10 – Deposits and Money Market Funding ................................................................. 101
          Note 11 – Borrowings ........................................................................................................... 102
          Note 12 – Onlendings ........................................................................................................... 102
          Note 13 – Other Payables ..................................................................................................... 103
          Note 14 – Reserves for Tax, Labor and Civil Contingencies ................................................ 104
          Note 15 – Income from Services Rendered .......................................................................... 104
          Note 16 – Income from Bank Fees ........................................................................................ 105
          Note 17 – Other Administrative Expenses ........................................................................... 105
          Note 18 – Other Operating Income ...................................................................................... 105
          Note 19 – Other Operating Expenses ................................................................................... 106
          Note 20 – Shareholders’ Equity - Banrisul ........................................................................... 106
          Note 21 – Commitments, Guarantees and Other ................................................................. 108                        6




  FINANCIAL
  S T AT E M E N T S   ´09
                                                          FS’09
          Note 22 – Income Tax and Social Contribution .................................................................... 109
          Note 23 – Fundação Banrisul de Seguridade Social and Cabergs – Caixa de Assistência
            dos Empregados do Banco do Estado do Rio Grande do Sul ........................................... 111
          Note 24 – Financial Instruments .......................................................................................... 113
          Note 25 – Transactions with Related Parties. ....................................................................... 114
          Note 26 – Autorization for Completion of the Financial Statemen ts .................................... 119

    Reports    .................................................................................................................................. 121




7




                                                                                                                         FINANCIAL
                                                                                                                         S TA T E M E N TS    ´09
                 Management
                   Report
          WE PRESENT THE MANAGEMENT REPORT AND FINANCIAL STATEMENTS
          OF BANCO DO ESTADO DO RIO GRANDE DO SUL S.A. FOR THE YEAR OF
          2009, PREPARED IN ACCORDANCE WITH THE RULES OF THE BRAZILIAN
          SECURITIES AND EXCHANGE COMMISSION (COMISSÃO DE VALORES
          MOBILIÁRIOS – CVM) AND THE CENTRAL BANK OF BRAZIL.




FINANCIAL
           ´09
S T ATEMENTS
                                  FS’09
Economic Scenario

The Brazilian economic scenario was marked by
stronger signs of production recovery after the
recession that began at the end of 2008.
Economic measures were implemented to
minimize the effects of the global financial
crisis. This recovery, driven by gross domestic
product (GDP) growth in the second and third
quarters of the year and the favorable
performance of various economic indicators, is
primarily sustained by growing domestic
demand.

Driving domestic demand is family
consumption favored by stable real income
levels within a scenario of reduced inflation and
the improvement in credit market conditions.
In terms of inflation, 2009 was marked by the deceleration of key price indexes, with clear
signs of recovery in the last quarter. This movement, in addition to reflecting the impacts
of a higher ethanol price, the partial reestablishment of the Excise Tax (IPI) on new cars,
and of the seasonal increase in clothing prices, also reflected the scenario of economic
recovery after the global crisis, however without interfering in the natural convergence of
inflation on the annual target of 4.5%. That, combined with foreign exchange rate
appreciation, was decisive for the maintenance of the target basic interest (Selic) rate to
remain at 8.75% at the end of the year.

W ith respect to the Rio Grande do Sul State economy, the improvement of the main
sector indicators suggests gradual economic recovery after the impact of the global
financial crisis. According to data from the Federation of Industries of the State of Rio
Grande do Sul (FIERGS), the industrial sector showed clear signs of an economic
r ecovery, especially from May to November, when it posted gro wth of 6.7%, and
revenues grew with the help of domestic demand and a favorable foreign exchange
rate. Similarly, Installed Capacity Use (UCI) grew in the same period, reaching 83.6%.
In addition, employment and payroll presented signs of recovery, increasing 0.7% and
1.8%, respectively, according to the latest data. It is worth mentioning that the rebound
                                                                                              9




 FINANCIAL
 S TA T E M E N TS   ´09
                                         FS’09
     of economic activity in Rio Grande do Sul can be observed in all sectors, without,
     nevertheless, returning to the pre-crisis performance levels.

     The State’s grains crop will probably perform well even despite the possible 2.9% year-on-
     year reduction, as it was less affected than in other Brazilian states, where the projected
     annual reduction is 8.6%. This performance mainly reflected 20.2% and 14.3% reductions
     in corn and wheat, respectively, and was partially offset by the 22.4% and 7.3% increases in
     beans and rice, respectively.

     Thus, the analysis of the main economic indicators indicates that the most severe impacts
     on the Brazilian economy as a whole have already been overcome, as currently the general
     scenario is of economic recovery, growing consumer and corporate confidence, and
     moderate inflation, making for a reassuring outlook for 2010.




10




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                   FS’09
Corporate Strategy
2009 started with a turbulent macroeconomic
scenario. The worsening of the global financial
crisis at the end of 2008 significantly changed
the dynamics of the Brazilian banking system,
affected by the measures taken by regulatory
agencies, restrictions on liquidity conditions,
and a higher non-performing loan ratio.

The process of implementing a more flexible
monetary policy began at the end of 2008 and
continued in 2009, while credit supply was
partially sustained by public institutions. These
circumstances resulted in a gradual recovery of
economic activity and credit volume
proportionally to GDP. 2009 began with scarce
credit and ended with reassuring prospects.

In 2010, the return of the liquidity levels, the
low leverage of the Brazilian banking system and
favorable economic conditions will most likely increase competitiveness among public
and private institutions in the credit market and reduce spreads, a scenario that will demand
an increase of scale.

Past and future meet and sometimes oppose each other in an equation whose result,
especially in a volatile financial environment, is translated by strategy management. In a
sector that is easily affected by broader changes and technological innovations, the
rationalization of the decision-making process is one of the primary foundations of the
business model. Portfolio, prices, terms, more competitive segments, customer
preferences, distribution channels, approaches, internal processes, people – everything
is constantly changing. Adding efficiency and quality to the management has been Banrisul’s
main strategy over the past years.

This strategy was consolidated through the implementation of a management model
focused on income generation, a decision that entailed profound changes in all of the
Bank’s channels, modernization of its technological resources, optimization of internal
processes, development of a new credit model, restructuring of sales targets and employee
compensation, and the implementation of an opportune financial action – Banrisul’s public       11




 FINANCIAL
 S TA T E M E N TS   ´09
                                         FS’09
     offering in 2007. The structuring of this operational and financial infrastructure has served
     as the base for the Bank to attain its overall goals, which include:

        Maintain its leadership in the State of Rio Grande do Sul and expand its operations in
        other markets. Market leadership demands scale, credit growth, customer
        segmentation and loyalty, strong relationships with investors, quality customer service
        process, strengthened channels, and an expansion of Banrisul’s Correspondent Banks
        and Banricompras Commercial Network. The strategies of branch network expansion
        and sharing the ATM network with other banks aim to achieve this goal.

        Expand Banrisul’s customer service network, especially in southern Brazil. Banrisul has
        strengthened its presence in southern Brazil. In 2010, the Bank plans to open new
        branches in Santa Catarina and São Paulo states, upstate Rio Grande do Sul and the city
        of Porto Alegre, in addition to implementing new service stations in Rio Grande do Sul
        State cities where banking services are not provided, banking service stations in other
        locations and several electronic service stations. This strategy aims to expand the
        Bank’s customer base and, consequently, increase revenues from services. The opening
        of new service stations allows the Bank to increase its market share, strengthen its
        retail segment and, most importantly, to minimize the risks related to a regionalized
        operation.

        Increase revenues generated by a broad, diversified, and growing customer base.
        Banrisul counts on a solid customer base, which is why customer loyalty is an important
        mechanism to widen the contribution margin generated per client. This cycle is
        currently in a stage of maturation. To expand its customer base, the Bank relies on
        strategies of opening new service stations in Rio Grande do Sul and southern Brazil, as
        well as sharing its ATM network with other banks. The successful participation of the
        Bank in the 2009 bidding process held by the National Institute of Social Security – INSS
        for the acquisition of the right to manage Rio Grande do Sul State’s benefits distribution
        for the next five years will also help Banrisul reach this goal.

        Incorporation of innovative technologies. The technology strategy has to be adjusted
        to the operational model, which sustains the business growth guidance. A national
        and international reference in financial sector innovation, Banrisul prepares employees
        that were recently hired through civil service exams for the systems and automation
        area and maintains its strategy of using Information Technology to sustain business
        growth through increased client security and comfort in using the Bank’s services or
        through the modernization of internal processes that provide quality information for
        decision-making. For the next year, the IT policy establishes modernization of
12




                                                                                FINANCIAL
                                                                                S TA T E M E N TS   ´09
                                   FS’09
   hardware, expansion of cellular phone access mechanisms, the continuity of the
   certification process, expansion of Cartão Múltiplo Banrisul (Banrisul Multiple Card)
   use, and improvements in the infrastructure of the Institution’s systems, ensuring
   greater operational efficiency with a modern platform.

   Enhance the management model, adapting it to rapid market changes. A business
   model focused on the profitability of each transaction and the Institution’s overall
   performance is the result of a long maturation and learning process of the Bank’s staff.
   In the last years, circumstances were created so that technology, processes and people
   would operate in favorable integration conditions. Investing in new tools, adding
   rationality to decisions, and adopting new concepts and visions are natural processes
   that bring about changes in people and in the Institution itself, ensuring expansion in
   the market.




                                                                                              13




FINANCIAL
S T AT E M E N T S   ´09
                                            FS’09
     Consolidated Performance
           Net Income

     In 2009 Banrisul’s net income totaled R$541.1 million, 7.2% or R$36.4 million above the
     recurring result recorded in the previous year. Considering the results for 2008 with non-
     recurring items totaling R$86.2 million, net income dropped by 8.4% or R$49.8 million.
     Performance in 2009 was positively impacted by an upturn in revenues from loans and
     treasury operations, and negatively impacted by a higher non-performing loan ratio,
     especially in the first months of the year, which demanded a larger allowance for loan
     losses.

     Graph 1    Net Income                                                                                                  R$ MILLION
                                                                                                                590.9
      4Q09                                                                  184.3




                                                                                                                 86.2
                                                                                                                          Tax Credit

      3Q09                                                       146.0




                                                                                    Recurring Net Income 7.2%




                                                                                                                              541.1
                                                                                                                 504.7
      2Q09                                         104.2




                                                                                    Net Income -8.4%
      1Q09                                          106.5




                                                                                                                              2009
                                                                                    % Change



                                                                                                                 2008
      4Q08                                                               171.9




          Shareholders’ Equity

     At the end of December of 2009, Banrisul’s shareholders’ equity totaled R$3,408.5 million,
     growing 10.7% in twelve months as a result of the incorporation of the results generated
     net of dividend and interest on equity payments and provisions. Annualized return on
     average shareholders’ equity reached 16.7% in 2009.


     Graph 2    Shareholders’ Equity Growth                                                                                R$ MILLION


      DECEMBER’09                                                                                                          3,408.5

      SEPTEMBER’09                                                                                                       3,299.8

      JUNE’09                                                                                                       3,198.3

      MARCH’09                                                                                         3,139.2

      DECEMBER’08                                                                   3,079.1
                                              % Change
                                     QoQ Six-month Period YoY
                                     3.3%     6.6%       10.7%
14




       FINANCIAL
                       ´09
       S TA T E M E N TS
                                        FS’09
      Total Assets

Total assets amounted to R$29,084.1 million in December of 2009, a 15.4% increase in
relation to the R$25,205.4 million recorded in the same month of 2008. The asset growth in
twelve months derived from the expansion of deposits and the Judicial Deposit Reserve
Fund – FRDJ, which amounted to R$3,581.7 million. In the asset breakdown, the increase in
treasury operations, totaling R$1,967.2 million, and in loan operations, totaling R$1,960.6
million, stand out.


Graph 3    Total Assets Growth                                                          R$ MILLION


DECEMBER’09                                                                            29,084.1

 SEPTEMBER’09                                                                        28,573.2
 JUNE’09                                                                         27,743.3
 MARCH’09                                                                 26,501.5

 DECEMBER’08                                                          25,205.4
                                          % Change
                                 QoQ Six-month Period YoY
                                 1.8%      4.8%      15.4%




      Taxes and Contributions

In 2009 Banrisul collected and provisioned R$575.6 million in taxes and contributions,
while taxes retained and passed through levied directly on financial intermediation and
other payments amounted to R$451.5 million.




                                                                                                     15




 FINANCIAL
 S T AT E M E N T S   ´09
                                            FS’09
     Operating Performance
          Funds Raised and Under Management

     Funds Raised and Under Management totaled R$21,902.4 million in December of 2009, up
     14.9% or R$2,844.2 million in a year.

     The balance of time deposits reached R$8,530.7 million, an increase of 12.9% or R$972.9
     million in relation to December of 2008. Savings deposits grew 17.3% or R$830.9 million,
     totaling R$5,636.8 million. Demand deposits increased 12.7% or R$236.6 million in twelve
     months and reached R$2,100.6 million.

     In December of 2009, assets under management amounted to R$5,532.7 million, versus
     the R$4,802.1 million recorded in the same month of the previous year, corresponding to
     an increase of R$730.6 million or 15.2% in a year. Due to changes in the regulations related
     to the application of funds of Independent Social Security Systems (RPPS), in 2009 Banrisul
     restructured its investment funds portfolio to adjust it to the municipal social security
     segment and created two new funds.




     Graph 4    Growth of Funds Raised and Under Management                                  R$ MILLION


      DECEMBER’09                                                                            21,902.4
      SEPTEMBER’09                                                                         20,855.8

      JUNE’09                                                                          20,173.5
      MARCH’09                                                                  19,422.9

      DECEMBER’08                                                           19,058.2
                                           % Change
                                  QoQ Six-month Period YoY
                                  5.0%      8.6%      14.9%




16




       FINANCIAL
                       ´09
       S TA T E M E N TS
                                        FS’09
     Breakdown of Funds Raised and Under Management

Funds raised and under management consist of time deposits, the key funding instrument
for loan operations, with R$8,530.7 million in December of 2009, accounting for 38.9% of
the total, assets under management with R$5,532.7 million, accounting for 25.3%, savings
deposits with R$5,636.8 million, accounting for 25.7% of the total, and demand deposits
with R$2,100.6 million, accounting for 9.6% of the total.




Graph 5   Breakdown of Funds Raised and Under Management                          R$ MILLION



 38.9%     TIME DEPOSITS                                                         8,530.7

  9.6%    DEMAND DEPOSITS                   2,100.6

 25.7%     SAVING DEPOSITS                                  5,636.8

  0.5%    OTHER DEPOSITS            101.6

  25.3%    FUNDS UNDER MANAGEMENT                              5,532.7




                                                                                               17




 FINANCIAL
 S T AT E M E N T S   ´09
                                                      FS’09
          Securities

     The balance of investments in securities stood at R$10,758.6 million in December of 2009,
     representing an increase of R$2,194.9 million or 25.6% year-on-year. This balance includes
     interbank investments net of resale and repurchase agreement liabilities.

     The upturn in treasury funds in the last twelve months results from fact that these
     transactions became an alternative to investments in credit assets in the beginning of
     2009 due to the economic slowdown in that period.

     As confirmed by internal technical studies, Banrisul has a strong financial capacity and
     intends to hold securities classified as “held-to-maturity” pursuant to Article 8 of the
     Central Bank of Brazil Circular Letter 3,068 of November 8, 2001.




     Graph 6    Securities Growth   Excluding Matched Transactions
                                                                                             R$ MILLION


      DECEMBER’09                                                                            10,758.6
      SEPTEMBER’09                                                                       10,683.3

      JUNE’09                                                                        10,133.2

      MARCH’09                                                                 9,114.0

      DECEMBER’08                                                          8,563.6

                                               % Change
                                      QoQ Six-month Period YoY
                                      0.7%      6.2%      25.6%




18




                                                                              FINANCIAL
                                                                              S TA T E M E N TS   ´09
                                      FS’09
Credit Policy
In the beginning of 2009, the credit market was
affected by reduced liquidity resulting from the
world financial crisis that arose at the end of 2008.
From the second quarter of 2009, more reassuring
prospects in relation to economic activity
stimulated by the measures taken by the
regulatory bodies favored the rebound in the
banking system’s businesses, although at a
slower pace when compared to the pre-crisis
period.

The scenario of turmoil in the first months of
2009 required a credit policy focused on
monitoring non-performing loans. At Banrisul,
this activity aligns the methods applied to the
standards recommended by the Basel II Accords
and adopts market practices that prioritize
profitability and seek to ensure the best possible
allocation of capital to the various asset alternatives. In the beginning of 2009, the credit
policy focused on reducing payment terms, increasing prices, and encouraging the
acquisition of payroll-deductible loan portfolios from other banks.

As the scenario became more promising, the rebound in credit, including in the corporate
segment by making working capital lines available, became the primary guideline. Prices
and payment terms were also made more flexible, in line with the expansionary
mechanisms of the monetary policy. The consolidation of the risk mitigation models ensured
the continuous expansion of the portfolio, especially in the last quarter of 2009, when
macroeconomic conditions were favorable.

In December of 2009, the efficient management of risk exposure allowed operations
classified as Normal Risk, which encompass levels AA to C, to account for 88.1% of the
total portfolio, 2.3 p.p. above the figure recorded in the same month of 2008, totaling
R$11,821.9 million. Risk 1 operations, including levels D to G, totaled R$1,221.6 million, accounting
for 9.1% of the portfolio. Risk 2, which consists exclusively of level H operations and requires a
100% provision, totaled R$370.7 million or 2.8% of the total. The classification of the portfolio
by risk follows the procedures set forth in Central Bank of Brazil Resolution 2,682/99.                 19




 FINANCIAL
 S TA T E M E N TS   ´09
                                         FS’09
     For 2010, Banrisul expects credit assets to grow continuously. The tendency to substitute
     working capital lines for investment lines with extended payment terms, the new
     regulation for the credit card market that should come into force in 2010 that restructures
     the relationship model between card brands and acquiring companies, and the continuous
     growth of employment and income with favorable effects on consumption promote the
     recovery of the credit growth rhythm.

     Banrisul’s credit policy is grounded on the increase in corporate credit, especially through
     lines backed by receivables, payroll-deductible loans for civil servants, pensioners, INSS
     retirees and employees of private companies, and in credit card and real estate operations.
     Improvements in the proprietary loan portfolio classification models, combined with a
     management that is committed to portfolio quality indicators, are expected to be carried
     out.




20




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                    FS’09
Loan Operations
In December of 2009, Banrisul’s loan portfolio totaled R$13,414.2 million, 17.1% or R$1,960.6
million above the R$11,453.6 million recorded in the same months of the previous year.
Accounting for 84.7% of this growth, the commercial portfolio increased from R$8,448.5
million to R$10,108.6 million, rising R$1,660.1 million or 19.6% in twelve months. The volume
of operations targeted at individuals totaled R$5,421.6 million, increasing 38.1%. In the
corporate segment, the balance of operations reached R$4,687.0 million, increasing 3.7%.

In twelve months, the other portfolios performed as follows: rural credit posted an increase
of R$168.7 million or 19.8% and amounted to R$1,020.1 million; ACC and ACE (pre- and
post-shipment export financing) contracts increased R$35.8 million or 8.0%, totaling R$482.9
million; real estate loans increased R$124.0 million or 12.9%, amounting to R$1,085.3 million;
long-term financing recorded an increase of R$53.5 million or 11.9%, reaching R$501.3
million, and leasing fell by R$12.2 million or 11.5%, totaling R$94.6 million. Public sector
loans amounted to R$121.5 million.


Graph 7    Loan Operations Growth                                                         R$ MILLION



 DECEMBER’09                                                                             13,414.2
 SEPTEMBER’09                                                                          12,528.5

 JUNE’09                                                                           12,068.6

 MARCH’09                                                                   11,833.8

 DECEMBER’08                                                            11,453.6
                                              % Change
                                     QoQ Six-month Period YoY
                                     7.1%     11.1%      17.1%



     Commercial Credit - Individuals

At the end of 2009, commercial loan operations targeted at individuals totaled R$5,421.6
million, accounting for 53.6% of the commercial portfolio and 40.4% of all loan operations.
The year-on-year increase of R$1,494.5 million was largely driven by the acquisition of
payroll-deductible loan portfolios from other banks.

Our own payroll-deductible loans amounted to R$2,726.1 million, 21.7% above the figure
recorded in the same month of 2008. The 313,200 payroll-deductible loans granted totaled
R$1,435.6 million in twelve months. The balance acquisitions of payroll-deductible loan
portfolios from other financial institutions, in December of 2009, totaled R$1,346.9 million,
up 129.1% year-on-year.                                                                                21




 FINANCIAL
 S TA T E M E N TS   ´09
                                                           FS’09
          Commercial Credit - Companies

     Commercial loan operations targeted at companies amounted to R$4,687.0 million in
     December of 2009, accounting for 46.4% of the commercial portfolio and 34.9% of total
     loan operations. The corporate segment posted an R$165.6 million increase compared to
     the same month of the previous year.

     Working capital extended to hospitals, clinics and laboratories totaled R$50.0 million in
     2009. In the same period, R$169.8 million was allocated to the education sector, comprised
     of universities and educational institutions.


     Graph 8   Commercial Credit Growth - Individuals and Companies                                               R$ MILLION



       DECEMBER’09 INDIVIDUALS                                                                                   5,421.6
       DECEMBER’09 COMPANIES                                                                          4,687.0

       SEPTEMBER’09 INDIVIDUALS                                                                               5,136.6
       SEPTEMBER’09 COMPANIES                                                                4,195.3

       JUNE’09 INDIVIDUALS                                                                          4,573.8
       JUNE’09 COMPANIES                                                                       4,300.0

       MARCH’09 INDIVIDUALS                                                                   4,250.3

       MARCH’09 COMPANIES                                                                       4,495.1

       DECEMBER’08 INDIVIDUALS                                                            3,927.1
       DECEMBER’08 COMPANIES                                                                        4,521.4
                                 % Change - Individuals           % Change - Companies
                             QoQ Six-month Period YoY         QoQ Six-month Period YoY
                             5.5%      18.5%       38.1%     11.7%      9.0%       3.7%




22




                                                                                                FINANCIAL
                                                                                                S TA T E M E N TS   ´09
                                    FS’09
      Agribusiness

Banrisul offers credit lines for agribusiness specifically designed to meet the needs of
each producer. For agricultural producers, companies and cooperatives in the sector, these
credit lines finance soybean, corn, rice, wheat, and barley crops, in addition to fruit and
vegetable production. Ranching loans are allocated to the production of milk, poultry,
lamb, buffalo, pork, beef, fish and honey. The manufacturing and processing industries
rely on loans in order to store their products for future sale. The Bank also provides loans
for the acquisition and modernization of equipment used in agricultural production and
for the implementation of environmental preservation projects.

Banrisul’s rural loan portfolio totaled R$1,020.1 million in 2009, up 19.8% year-on-year. A
total of 36,500 new operations aimed at agribusiness were contracted, amounting to R$811.5
million, an increase of 37.3% over the same period of 2008. Of the total amount granted,
R$703.9 million was allocated to agricultural production and R$107.6 million to investments.

Rural savings deposits allowed the Bank to increase the volume of funds allocated to
agribusiness and develop new credit lines for agricultural producers and companies in the
sector. Among the new lines are loans for companies involved in poultry and pig raising
and financing for the processing, manufacture and sale of farming and ranching supplies
and products to supplement the need for loans to the entire agribusiness chain.

In 2009, Banrisul participated in 189 farming and ranching trade shows, granting loans in
the total of R$23.0 million with the Bank’s own funds and R$3.5 million from rural savings.
The Bank also established partnerships with 43 companies and cooperatives to finance
their summer and winter crops and investments.


     Foreign Exchange

ACC and ACE operations totaled R$482.9 million at the end of 2009, an increase of 8.0% or
R$35.8 million in twelve months. From January to December of 2009, 7,300 export operations
and 10,900 import operations were contracted, amounting to US$1,217.6 million, 2.8%
lower than in the same period last year. Export operations totaled US$708.5 million, while
import operations totaled US$509.1 million.




                                                                                               23




 FINANCIAL
 S T AT E M E N T S   ´09
                                         FS’09
         Real Estate Loans

     Banrisul’s real estate loan portfolio closed 2009 at R$1,085.3 million, an increase of 12.9%
     or R$124.0 million year-on-year.

     Through the Bank’s real estate credit lines, 5,300 operations were financed in 2009, granting
     a total of R$369.9 million. Of this total, R$108.3 million was allocated to purchase 1,400
     previously-owned properties, R$31.3 million to purchase 280 new properties, and R$4.1
     million to purchase 83 commercial properties. As part of the corporate plan, R$175.7 million
     was invested in 2,400 units, and for individual home construction, R$29.2 million was
     invested in 368 homes.



         Long-Term Financing

     The long-term financing portfolio totaled R$501.3 million in December of 2009, an increase
     of 11.9% or R$53.5 million year-on-year. In 2009, 435 operations were approved, totaling
     R$221.5 million in funds from Finame and BNDES, a figure 96.6% higher than the one
     recorded in the same period of 2008. Of this total, R$81.5 million was allocated to the
     industrial sector in 217 operations, R$75.5 million to the service sector in 47 operations,
     R$14.2 million to business in 33 operations, and R$50.3 million to the public sector in 138
     new operations.



         Microcredit

     Microcredit lines aim to facilitate working capital access for micro-companies and SMBs. In
     2009, microcredit granted totaled R$1,203.0 million, a figure 5.0% or R$57.5 million higher
     than the one recorded in 2008. The line that had the best performance was Banricompras
     Receivables, granting R$403.7 million, a volume that is 55.1% higher than the one recorded
     in 2008. The most significant reduction occurred in the Promicro line, which granted a total
     of R$423.6 million or 18.9% less year-on-year.




24




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                    FS’09
Products, Services and Channels
    Banricompras

Banricompras, an electronic payment method available through Banrisul’s debit cards, has
consolidated its brand and today is part of the daily lives of the Bank’s clients. Present in
most of Rio Grande do Sul’s commercial establishments and constantly in the process of
expanding its associate network into other Brazilian states, the product is strategic for
leveraging the Bank’s businesses. Among Banricompras’ benefits are safer payment
methods, easy monitoring of transactions through account statement for clients and the
possibility for business owners to discount the receivables.

Today the Banricompras associate network is comprised of 87,600 registered
establishments that carried out 61.3 million transactions totaling R$3,854.7 million in 2009.
When compared to the same period last year, these figures increased 19.8%, 12.6% and
20.2%, respectively. This increase is a result of the product’s new facilities and applications
launched in 2009, which will be developed further in 2010.



Banricompras B2B

Banricompras B2B is an online electronic payment method associated with purchase and
sale transactions between suppliers and clients. It is an alternative for suppliers registered
with Banricompras, particularly those who ship products only with payment confirmation
and work with regional distributors. Launched in September of 2009, 1,192 transactions
were carried out through Banricompras B2B in four months, totaling R$8.4 million.



Banricompras Rural

Beginning in the 2009/2010 summer harvest, the Bank has provided producers who contract
loans for agricultural production with the Banricompras Rural Card, which works as a debit
card. Of the total funds of the contracted operation, 40% become available in a checking
account to be used through the Banricompras Card, enabling clients to pay for agricultural
raw materials directly at the registered establishments or via Banricompras B2B.

Banricompras Rural carried out 44,800 transactions totaling R$53.7 million since its launch
in September of 2009.                                                                             25




 FINANCIAL
 S TA T E M E N TS   ´09
                                               FS’09
     IPE Saúde

     The State Social Security Institute partnered with Banrisul to replace users’ cards with
     magnetic cards to authorize procedures under health insurance. The cards can also be
     used for transactions via Banricompras at doctor’s offices, hospitals, clinics and laboratories,
     enabling the registration of these establishments with the Banricompras network.

     Since this product was launched in January of 2009, 950,000 cards have been issued and
     2,889 health establishments have registered. In a year, 8,300 transactions totaling R$600,200
     were carried out.


     Graph 9   Banricompras                                                                                         MILLION


      4Q09               Financial Transactions - R$                             1,169.9                        3,854.7
                                                                                                      3,206.8
      3Q09                                                            943.6

      2Q09                                        900.6                                    % Change
                                                                                            20.2%
      1Q09                                             840.6




                                                                                                                     2009
                                                                                                        2008
      4Q08                                                                    958.7


      4Q09                Number of Transactions                               17.4                                 61.2
                                                                                                       54.4
      3Q09                                                        15.2

      2Q09                                                      14.6                       % Change
                                                                                            12.5%
      1Q09                                                     14.0
                                                                                                        2008




                                                                                                                    2009

      4Q08                                                             15.5




             Banrisul’s Correspondent Banks

     The Correspondentes Banrisul (Banrisul’s Correspondent Banks) program is a flexible
     customer service alternative that avoids trips to Banrisul branches and extends business
     hours.

     Banrisul has approximately 2,300 Correspondent Banks, moving R$12,119.1 million in 58.8
     million operations in 2009. Financial transactions increased 42.6% and the number of
     operations 19.8% in relation to the same period of 2008. In 2010, the Bank expects to
     implement new systems and facilities that will turn Banrisul’s Correspondent Banks into
26
     an option for a service even more like that obtained at a branch.




                                                                                                FINANCIAL
                                                                                                S TA T E M E N TS   ´09
                                     FS’09
     Virtual Branch – Home and Office Banking

The Agência Virtual Banrisul (Banrisul Virtual Branch) is an online service through which
clients can perform several banking operations. In 2009, 81.9 million operations totaling
R$102.3 billion were carried out through this service. In relation to the same period of
2008, when 68.8 million operations totaling R$71.9 billion were performed, these figures
grew 19.0% and 42.3%, respectively.



     Banrifone and Call Center

Banrisul provides its clients with two service channels via telephone: Banrifone and the
branches’ Call Center. Through the Banrifone, clients are able to verify their account balance
and banking transactions and request services. Through the Call Center, calls directed to
the branches included in the project are filtered and resolved whenever possible, thus
making the branch staff available for performing business transactions.

The Banrifone channel processed 5.1 million electronic service operations and carried out
552,600 personalized assistance operations, totaling R$197.0 million in 2009. The Call Center
received 914,400 personalized assistance calls, 38.4% of which were answered and
resolved, valued at R$9.8 million.

Created in 2006, the Call Center project is currently being consolidated, achieving the
goals of customer acceptance and process rationalization at branches. In 2010, Banrisul
will extend the services provided by the channel and structure its expansion to other
cities.



     Authorized Direct Bill Pay

Authorized Direct Bill Pay (DDA), the new integrated payment system proposed by the
Brazilian Federation of Banks (FEBRABAN), represented the most significant change
payment methods since the standardization of payment slips and the inclusion of bar
codes. This service, implemented by Banrisul in October of 2009, allows electronic billing,
eliminating paper billing.

Some of DDA’s advantages are safety, the convenience of grouping all one’s bills in one
place, the possibility to view and pay third-party bills of the client’s responsibility, and the
facility to access payment slips from anywhere without handling, thus eliminating the risk
of loss, fraud or late receipt.
                                                                                                   27




 FINANCIAL
 S T AT E M E N T S   ´09
                                        FS’09
     The Bank’s competitive edges in service, which received seven medals from the Interbank
     Payment Chamber, are the possibility of automatic calculation of discounts and deductions
     for prepayments. To make payments electronically, clients can use Home and Office
     Banking, Banrifone and ATMs.



         Electronic Bidding

     Pregão On Line Banrisul (Banrisul Online Bidding) is an electronic purchasing website
     whose goal is to provide managers with control and efficiency of activities related to the
     public purchase process, seeking transparency, rationalization and cost reduction as it
     allows the public to follow the governments’ purchasing processes throughout all spheres.
     As State Laws 13,179 and 13,191 making the use of online bidding tools by government
     authorities mandatory came into effect, training courses coordinated by the Human
     Resources Development Foundation (FDRH) in partnership with Banrisul and the Public
     Bidding Central (CELIC) were offered to civil servants responsible for purchasing processes.

     In 2009, Pregão On Line Banrisul hosted 17,400 bidding processes, totaling R$347.2 million
     and enabling public sector users to save R$127.4 million. When compared to the same
     period last year, when 10,400 bidding processes totaling R$87.7 million were carried out,
     these figures increased 66.8% and 295.9%, respectively. Banrisul, as user of its own system,
     held 379 bidding processes, totaling R$37.4 million and saving 25.0% or R$12.6 million. The
     savings percentage is the difference between the average amount determined for the
     bidding process in relation to the lowest offer at the end of each bidding process.




         Credit Cards

     Banrisul’s credit card base, which operates under the Visa and MasterCard flags, was
     comprised of 302,900 credit cards at the end of 2009. In a year, 9.7 million transactions
     were performed totaling R$659.2 million, an increase of 1.2% and 3.5%, respectively, over
     the previous year. Average tickets increased 5.3% for purchases and 38.1% for withdrawals
     in the same period.

     In 2009, the Bank started issuing the BNDES Card, a product that is based on the credit card
     concept and finances the investments of micro-companies and SMBs. Banrisul grants Visa
     and MasterCard holders the option of paying their BNDES Card bill in up to twelve
     installments.
28




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                    FS’09
     Insurance, Private Pension and Capitalization

Seeking to meet its clients’ needs and in partnership with Icatu Hartford and Sul América
Seguros, Banrisul provides capitalization and insurance through its branch network.

In 2009, capitalization amounted to, in production values, R$5.0 million and asset and life
insurance production surpassed R$6.0 million. In the same period, approximately R$13.8
million in prizes was paid out to 9,086 clients with life insurance and capitalization. The
launch of the new capitalization BanriCap Mais due to changes in the securities legislation,
and the Fazendinha Banrisul (Banrisul Little Farm) promotion, which awarded prizes to
clients who acquired the product, contributed to the satisfactory performance of the
insurance and capitalization products.




                                                                                               29




 FINANCIAL
 S T AT E M E N T S   ´09
                                        FS’09
     Banrisul’ s Customer Service Network
     Present in 410 Rio Grande do Sul cities, by
     December of 2009, Banrisul’s customer
     service network was comprised of 1,167
     service stations throughout 434 branches, 276
     banking service stations and 457 electronic
     service stations, covering 83% of Rio Grande
     do Sul’s cities, which corresponds to 98% of
     the population and the state’s GDP. Of all 434
     branches, 397 are located in Rio Grande do
     Sul State, 20 in Santa Catarina State, 15 in
     other Brazilian states and two branches are
     located overseas in New York and Grand
     Cayman. In addition, 2,300 Banrisul
     Correspondent Banks, the virtual branch,
     Banrifone and the Banricompras Network
     complement the service options available to
     Banrisul’s clients.

     In 2009, seven new branches and seven new
     service stations were opened. For 2010, the Bank plans to inaugurate new branches in Rio
     Grande do Sul, Santa Catarina and São Paulo, in addition to advanced service stations,
     banking service stations and several electronic service stations.

     Banrisul’s strategy regarding its customer service network aims to increase the Bank’s
     market share by expanding its operations to new locations with great potential for revenue
     generation, penetrating un-served areas within Rio Grande do Sul State and establishing
     payroll agreements with companies and public entities.




30




      FINANCIAL
                      ´09
      S TA T E M E N TS
                                         FS’09
Subsidiaries


       99.6%   ON           State of Rio                             Other       0.4% ON
       70.5%   PNA                                                               29.5% PNA
                           Grande do Sul                         Shareholders´
       13.0%   PNB                                                               87.0% PNB
       57.0%   Total                                                             43.0% Total




                                             Banco do Estado
                                         do Rio Grande do Sul S.A.




     Banrisul S.A.              Banrisul S.A.            Banrisul Armazéns       Banrisul Serviços
    Adm.Consórcios                 CVMC                     Gerais S.A                 Ltda.

       99.6% Total              98.7% Total                 99.5% Total              99.8% Tot al




    Banrisul S.A. Administradora de Consórcios

Banrisul S.A. Administradora de Consórcios offers several types of letters of credit programs
for the scheduled acquisition of real estate, cars and motorcycles. The company sold 5,500
quotas in 2009, totaling R$123.5 million, and ended the year with 20,200 active quotas and
a credit volume of R$458.8 million. In twelve months, the company granted 3,500 letters of
credit and injected R$68.3 million into the economy. Net income in the period totaled
R$10.9 million, up 0.5% year-on-year.



    Banrisul S.A. Corretora de Valores Mobiliários e Câmbio

Banrisul S.A. Corretora de Valores Mobiliários e Câmbio operates in the capital markets
intermediating the trading of shares on the spot, options, futures and forward markets,
and in the asset management market, with individual or group portfolios, through funds
and investment clubs. In 2009, the company intermediated R$1,034.7 million in the equity
market, R$741.5 million of which was moved via Home Broker, accounting for 71.7% of all
transactions. Net income in the period totaled R$7.8 million.                                        31




 FINANCIAL
 S TA T E M E N TS   ´09
                                         FS’09
         Banrisul Armazéns Gerais S.A.

     Banrisul Armazéns Gerais S.A., bonded by the Federal Revenue Service to provide public
     warehousing and logistics services such as dry port general warehousing, reached a net
     income of R$1.3 million in 2009. Among the strategies aimed at business expansion put
     into practice this year is increasing the storage and handling capacity, with customs
     warehousing covering an area of 2,985 m².



         Banrisul Serviços Ltda.

     Banrisul Serviços Ltda., manager of the Refeisul brand, operates in southern Brazil in the
     grocery cards, meal vouchers, fuel, gift, private label and benefit cards segments. Each day
     more than 270,000 users benefit from the efficiency of Refeisul services, with a network of
     over 47,000 participating establishments. In 2009, 8.4 million transactions were performed
     with Refeisul products, posting a 33% increase over the previous year. The company recorded
     a net income of R$7.3 million in 2009, up 11.7% year-on-year.




32




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                      FS’09
Corporate Governance

    Overview

In 2007, Banrisul joined the Corporate
Governance Level 1 listing segment of the
BM&F Bovespa S.A. - Stock, Commodities and
Futures Exchange, a natural step toward the
primary and secondary public offerings held in
the same year. Corporate governance is part of
the Bank’s process of continuous improvement;
therefore, Banrisul does not only strive to fulfill
the requirements of its listing level, but also
to be in line with the best market practices and
meet the requirements of the other corporate
governance levels.

It is through corporate governance practices
that the Bank reaffirms its interest in improving
and strengthening its relationship with its
controllers, shareholders, Board of Directors,
Audit Committee, Fiscal Council, Board of
Executive Officers, Independent Auditors and regulatory bodies.

The participation of the Board of Directors and Fiscal Council in the decision-making
structure, the management model focused on the profitability and quality of the Bank’s
operations and the creation of corporate governance policies have conferred Banrisul
solidity and recognition, reflected in performance compatible with its business segment.




                                                                                           33




 FINANCIAL
 S TA T E M E N TS   ´09
                                            FS’09
       Banrisul’s Corporate Governance Structure


                                                   General
                                                 Shareholders’
                                                   Meeting
                                                                                                  Fiscal
                                                                                                 Council

        Audit                                     Board of
      Committee                                   Directors




                                                  Board of
                           Internal
                                                  Executive
                           Auditors
                                                   Officers



                                                    Chief
                                                  Executive                                   Subsidiaries
                                                   Officer


                                                                       Banrisul                         Banrisul
                                                                      Foundation                       Armazens
                                                                                                       Gerais S.A.
     Consultative Bodies                                                 Cabergs
                                                                     (Bank Employees Social
                                                                        Assistance Fund)               Banrisul
                                                                                                     Corretora de
                                                                                                  Valores Mobiliários
           Bidding                     Credit                 Administrative                          e Câmbio
          Committee                   Director                 Director
                                                                                                       Banrisul
                                                                                                     Serviços Ltda
      Bank Management         Chief Information
                                                              Commercial
         Committee           Officer and Executive
                                                                Director                            Banrisul S.A.
                                V ice-President
                                                                                                  Administradora de
         Committees                                                                                  Consórcios
                             Chief Financial Officer
                                                              Distribuction
                                 and Investor
                                                                Director
                               Relations Officer


                                    Asset
                                  Management
                                   Director

34




                                                                                                  FINANCIAL
                                                                                                  S TA T E M E N TS   ´09
                                                  FS’09
Board of Directors


The Board of Directors is responsible for establishing Banrisul’s general business policies,
including its long-term strategy and its decisions are made by majority vote of the members
attending any meeting. Banrisul’s Bylaws establish a minimum of five and a maximum of
nine board members, all of them shareholders, although the Brazilian Corporation Law
establishes a minimum of three members.

Committed to the best corporate governance practices and not only to the requirements
of BM&FBovespa’s Level 1 Corporate Governance, Banrisul voluntarily changed its Bylaws,
establishing that at least 20% of the members of its Board of Directors must be independent.
The Bank also established a unified two-year term of office for all board members.

Another important corporate governance practice implemented in 2009 was the election
of a member representing the preferred shareholders to the Board of Directors. Today
four of the nine members of the Board of Directors are independent, as the table below
shows.


Table 1   Board of Directors Members

       MEMBERS OF THE                                                     DATE OF                   END OF TERM
     BOARD OF DIRECTORS                       TITLE                      ELECTION                     OF OFFICE
Ricardo Englert                              Chairman                    Mar 31, 2009   First Meeting of BD, after ASM of 2011
Fernando Guerreiro de Lemos                Vice-Chairman                 Mar 31, 2009   First Meeting of BD, after ASM of 2011
Ario Zimmermann                        Independent Member                Mar 31, 2009   First Meeting of BD, after ASM of 2011
Dilio Sergio Penedo           Member elected by preferred shareholders   Mar 31, 2009   First Meeting of BD, after ASM of 2011
João Verner Juenemann                  Independent Member                Mar 31, 2009   First Meeting of BD, after ASM of 2011
João Zani                     Member elected by minority shareholders    Mar 31, 2009   First Meeting of BD, after ASM of 2011
Manoel André da Rocha                  Independent Member                Mar 31, 2009   First Meeting of BD, after ASM of 2011
Mateus Affonso Bandeira       Member appointed by majority shareholder   Mar 31, 2009   First Meeting of BD, after ASM of 2011

Rubens Salvador Bordini                      Member                      Mar 31, 2009   First Meeting of BD, after ASM of 2011




                                                                                                                                 35




 FINANCIAL
 S T AT E M E N T S   ´09
                                                        FS’09
     Audit Committee
     Directly connected to the Board of Directors, the Audit Committee is also part of Banrisul’s
     corporate governance structure. The committee is composed of three members appointed
     by the Board, which also has authority to remove them from office at any moment. The
     term of office of the members of the Audit Committee is one year and may be renewed for
     the same period upon prior authorization of the Central Bank of Brazil. Because of the 5-
     year term limit for Committee members, in August of 2009 the new members took office,
     as shown in the table below. At least one of the members of the Committee has proven
     knowledge in the accounting and auditing areas that qualifies him or her for the position.
     At the end of the six-month periods ending June 30 and December 31, the Audit Committee
     prepares the Audit Committee Report, which remains available to the Central Bank of
     Brazil and the Board of Directors for at least five years.


     Table 2     Audit Committee Members
            MEMBERS OF THE                                                      DATE OF                       END OF TERM
            AUDIT COMMITTEE                         TITLE                       ELECTION                        OF OFFICE
     João Verner Juenemann                       Qualified Member           Jun 12, 2008          First Meeting of BD, after ASM of 2009
     João Zani                                        Member                Jun 12, 2008          First Meeting of BD, after ASM of 2009
     Manoel André da Rocha                            Member                Jun 12, 2008          First Meeting of BD, after ASM of 2009
     Leopoldo Henrique Krieger Schneider         Qualified Member          Aug 19, 2009           First Meeting of BD, after ASM of 2010
     Ario Z immermann                                 Member               Aug 19, 2009           First Meeting of BD, after ASM of 2010
     Bruno Nubens Barbosa Miragem                     Member               Aug 19, 2009           First Meeting of BD, after ASM of 2010




     Fiscal Council
     The Fiscal Council’s duties are established by the Bylaws of each company and the current
     Brazilian Corporation Law. Banrisul’s Fiscal Council is permanent, issuing financial
     statements and reporting its conclusions to the Bank’s shareholders. With a one-year
     term of office, pursuant to the Bylaws, the Fiscal Council is composed of five sitting
     members, one of them appointed by preferred shareholders, and five alternates:


     Table 3     Fiscal Council Members
               MEMBERS OF THE                                                      DATE OF                    END OF TERM
               BOARD OF COUNCIL                     TITLE                          ELECTION                     OF OFFICE
      Cláudio Morais Machado                        Member                         Mar 31, 2009                  ASM of 2010

      Rubens Lahude                Member Appointed by Majority Shareholders       Mar 31, 2009                  ASM of 2010

      Ronei Xavier Janovik                          Member                         Mar 31, 2009                  ASM of 2010

      Irno Luiz Bassani                             Member                         Mar 31, 2009                  ASM of 2010

      Jorge Michel Lepeltier       Member representing Preferred Shareholders      Mar 31, 2009                  ASM of 2010
36




                                                                                                               FINANCIAL
                                                                                                               S TA T E M E N TS   ´09
                                                       FS’09
Board of Executive Officers and Auxiliary Bodies

Administered by the Board of Directors and the Board of Executive Officers, Banrisul’s
management is composed of the Presidency and the Administrative, Business, Asset
Management, Credit, Distribution, Information Management, Financial and Investor
Relations, identified below:

Tabela 4   Board of Executive Officers
              EXECUTIVE                                  TITLE                            DATE OF                  END OF TERM
              OFFICERS                                                                    ELECTION                   OF OFFICE
Fernando Guerreiro de Lemos                              CEO                           June 22, 2007 First Meeting of BD, after ASM of 2010

Rubens Salvador Bordini          Executive Vice-President and Chief Information Officer June 22, 2007 First Meeting of BD, after ASM of 2010

Ricardo Richiniti Hingel         Chief Financial Officer and Investor Relations Officer June 22, 2007 First Meeting of BD, after ASM of 2010

Urbano Schmitt                                      Credit Director                    June 22, 2007 First Meeting of BD, after ASM of 2010

Luiz Gonzaga Veras Mota                       Asset Management Director                June 22, 2007 First Meeting of BD, after ASM of 2010

Paulo Roberto Garcia Franz                       Commercial Director                   June 22, 2007 First Meeting of BD, after ASM of 2010

Carlos Tadeu Agrifoglio Vianna                   Distribuition Director                June 22, 2007 First Meeting of BD, after ASM of 2010

Luiz Valdir Andres                              Administrative Director                June 22, 2007 First Meeting of BD, after ASM of 2010



In addition, other corporate governance structures essential for Banrisul’s management,
governed by the Bank’s Bylaws, are the Audit Committee, subordinated to the Board of
Directors, and the committees, bodies that assist the Board of Executive Officers on matters
of strategic importance, as follows:

     a)      Banking Management Committee;
     b)      Economic Management Committee;
     c)      Business Management Committee;
     d)      Channel Management Committee;
     e)      Administrative Management Committee;
     f)      Internal Controls Management Committee;
     g)      Information Technology Management Committee;
     h)      Credit Committee;
     i)      People Management Committee, and
     j)      Corporate Responsibility Committee.




                                                                                                                                               37




  FINANCIAL
  S T AT E M E N T S   ´09
                                                                         FS’09
     Shareholding Structure
     The Rio Grande do Sul State Government, as the majority shareholder, has control over the
     election of the Board of Directors and, therefore, over Banrisul’s management and
     operations. The Bank has a free float above to the minimum of 25% required by Level 1
     Corporate Governance: 42.8% of its total shares are held by shareholders without any
     connection with the Institution. Banrisul’s shareholding structure is presented below.


     Graph 10: Shareholding Structure

                                  Voting Capital                                                                        Total Capital
                                                                                                           ON - 50.1%     PNA - 1.0%      PNB - 48.9%
                                        Free Float                                                                                Social Security Institute of
                                                         Social Security Institute of                   Banrisul Foundation       the State of Rio Grande do Sul
                Banrisul Foundation                      the State of Rio Grande do Sul
                                       0,17%
                                            2%


                                                 0,02%




                                                                                                                          0,15%
                                        0,2




                                                                                                                                  0,05%
                                                                                                   Free Float
                                                                                                    42.83%




                                      State of Rio Grande do Sul
                                                99.59%                                                                    State of Rio Grande do Sul
                                                                                                                                    56.97%




                         Main Controller: 99.59% of Voting Capital                                      Main Con troller: 56.97% of Total Capital


     The table below shows major shareholders, i.e., holders of more than 5% of Banrisul
     shares of each type and class.

     Table 5    Shareholders

                SHAREHOLDERS                             ON               PNA                PNB                TOTAL             % ON        % PNA      % PNB     % TOTAL

         State of
         Rio Grande do Sul                     204,199,859            2,721,484           26,086,957     233,008,300              99.6%       70.7%      13.0%     57.0%
                     1
         Skagen AS                                                                        40,662,100     40,662,100                                      20.3%      9.9%
         Itaú-Unibanco SA2                                                                10,510,485     10,510,485                                       5.3%      2.6%
         Credit Suisse Hedging-Griffo
         Corretora de Valores SA
         (CSHG)3                                                                          10,123,100     10,123,100                                       5.1%      2.5%

         Others                                   843,515             1,125,708           112,701,269    114,670,492              0.4%        29.3%      56.3%     28.0%

          ot
         T al                                  205,043,374            3,847,192           200,083,911    408,974,477              100%        100%        100%      100%
     1
         Mutual Investment Funds - Norway

     Funds: SKAGEN KON-TIKI VERDIPAPIRFOND, AK SJEFONDET SKAGEN GLOBAL,

     VERDIPAPIRFONDET SKAGEN GLOBAL II and VERDIPAPIRFONDET SKA GEN GLOBAL III
     2
         Inve stmen t Funds Itaú-Unibanco S.A. and UAM-ASSESSORIA E GESTÃO INVES TIMENTOS

38   3
         Investment Funds




                                                                                                                                                FINANCIAL
                                                                                                                                                S TA T E M E N TS   ´09
                                         FS’09
         Corporate Governance Policies

On June 21, 2007, Banrisul executed BM&F Bovespa’s Term of Commitment to Level 1
Corporate Governance Practices aiming to comply with the standards of the segment.
Among the initiatives adopted after that, the following stand out:

I.       election of the Market Arbitration Chamber for settling any disputes or controversies
         related to the Level 1 Special Corporate Governance Practices Regulation, the Bank’s
         Bylaws, shareholders’ agreements filed at the Institution’s headquarters, the
         provisions set forth in Laws no. 6,404/76 and 10,303/01, the rules issued by the National
         Monetary Council (CMN), the Central Bank of Brazil and by the Brazilian Securities and
         Exchange Commission (CVM), the regulation of the São Paulo Stock Exchange – BM&F
         Bovespa, and to the other rules applicable to the general operation of capital markets
         or resulting from it;

II.      public tender offering for acquisition of shares to be held by Rio Grande do Sul State
         in case Banrisul decides to delist itself from BM&F Bovespa’s Level 1 Corporate
         Governance Practices; public tender offering for acquisition of shares owned by the
         other shareholders to be held by the Bank or state government in the event that
         Banrisul cancels its registration as a publicly-held company;

III. development of the “Banking Confidentiality Manual” and its distribution to all Banrisul
     employees, aiming to reinforce legal compliance and respect for the confidential
     nature of clients’ information;

IV. approval, in March of 2008, the payment of supplementary dividends for the 2007 and 2008
    fiscal years at 10%, totaling dividends equivalent to 35% of adjusted net income, and in March
    of 2009, 15%, totaling dividends of 40% of the adjusted net income for the 2009 fiscal year;

V.       election for the first time, in March of 2009, representatives nominated by holders of
         preferred shares to the Board of Directors and Fiscal Council;

VI. implementation of the Operational Risk management structure at Banrisul in April of
    2009 to improve the Institution’s Internal Control management. In order to engage all
    employees, a booklet entitled “Efficiency and Responsibility Above All – Zero Risk”
    was developed and distributed;

VII. in 2009, Banrisul created the “Get to Know your Employee” policy to provide guidance
     to all Banrisul employees and promote the Bank’s ethical and moral values among
     them, helping prevent the Bank’s involvement in any type of illegal practice, especially
     regarding corruption and money laundering.                                                      39




     FINANCIAL
     S T AT E M E N T S   ´09
                                          FS’09
     In March of 2009, Banrisul was one of the winners of the Corporate Reputation Award from
     Amanhã magazine, for which the following aspects were assessed: (i) quality of products
     and services, (ii) trust and ethics, (iii) social and environmental commitment, (iv) innovative
     attitude, (v) admiration and (vi) the company’s history and growth.

     Pursuant to CVM Rule 381/03, Banrisul limits the services provided by its Independent
     Auditors to preserve the auditor’s independence and objectiveness in compliance with
     Brazilian and international rules. In January and March of 2009, the Bank contracted Deloitte
     Touche Tohmatsu to provide professional services other than independent auditing services
     valued at R$330,000 to perform an accounting diagnosis in relation to the IFRS - International
     Financial Reporting Standards, and R$115,000 to consult on the adaptation to systems
     used for the Public Digital Bookkeeping System - SPED, representing 44% of Banrisul’s
     external auditing fees, concluded in 1H09. In accordance with the statement provided by
     the independent auditors, the services are inherent to the auditor’s duties and do not
     conflict with their independence due to the scope and procedures adopted.

     Pursuant to CVM Rule 480/09, the Board of Executive Officers states that it has discussed,
     reviewed and agreed with the financial statements for the fiscal year ended on December
     31, 2009, as well as the opinion expressed by external auditors in their Independent
     Auditor’s Report as of February 03, 2010.


     Code of Ethics

     Banrisul’s relationship with its stakeholders is governed by the Code of Ethics, a reference
     for the professional conduct of the Bank’s employees. The Code of Ethics’ provisions are
     known by Banrisul’s shareholders, management, employees, suppliers and clients, and
     must be observed according to their respective responsibilities. The ethical principles
     included in the Code of Ethics are not exhaustive and therefore other principles may be
     included in the Code at the discretion of the competent areas. The Code of Ethics is available
     on Banrisul’s Investor Relations website (www.banrisul.com.br/ir or www.banrisul.com).

     Banrisul also counts on an Ethics Commission composed of five sitting members and their
     respective alternates, three of which are appointed by the Board of Executive Officers and
     two elected from among employees, who are responsible for examining breaches of the
     Code as established by specific regulation.




40




                                                                                 FINANCIAL
                                                                                 S TA T E M E N TS   ´09
                                       FS’09
        Corporate Management and Modernization Model
Banrisul’s current management model establishes the various commercial, operational,
economic and logistical processes necessary for structuring and integrating the Bank’s
activities according to its goals. Management requirements concerning the modernization
of technological resources and the specialization of the processes related to business and
logistics - necessary to make the distribution of products and services feasible - are set
forth by the Management Committees subordinate to the Board of Executive Officers,
based on the technical areas’ proposals.

Among these processes, whose management is supported by modern technological tools,
the following stand out: target definition and monitoring; management of credit, funding
and fee policies; management of the branch network’s logistical demands; and
management of training for the commercial team. The Bank relies on two websites for
centralizing communication, receiving commercial demands from the branch network and
publishing training programs and commercial messages: the Distribution website and the
“Com Você” (With You) multimedia tool.

Banrisul’s decision-making processes are established according to the following structure:

1) Board of Executive Officers: sets forth the guidelines for studies, projects and proposals;

2) Banking Management Committee and Specialized Management Committees: propose
   options and recommendations concerning business, logistics, information technology
   and internal controls; and

3) Head Office Units: prepare proposals for price and product policy amendments, creation
   or alteration of products and services, and carry out prior consultations, according to the
   guidelines established by the Board of Executive Officers and within its specific duties.

The Management Model is comprised of three decision-making levels:

·     Level 1: Specialized Management Committees with authority to approve prior
      consultations and recommend proposals for the Banking Management Committee within
      the scope of each specialty;

·     Level 2: Banking Management Committee with exclusive authority to approve proposals,
      and, contingent upon approval of the Board of Executive Officers, policies and
      repositioning of products and services, and to recommend guidelines to the Board of
      Executive Officers, and

·     Level 3: Board of Executive Officers with exclusive authority to set forth guidelines and
      resolve on policies and repositioning of products and services in the market.               41




    FINANCIAL
    S T AT E M E N T S   ´09
                                         FS’09
     Investor Relations and Communication Policy

     A transparent relationship with clients and investors is built through the disclosure of data
     and information to the market, communication that allows broader and more timely
     knowledge of the Bank’s business, especially for experts.

     Banrisul has improved its communication with the market since listing on BM&F Bovespa’s
     Level 1 Corporate Governance segment when it held a primary and secondary public
     offering of shares in 2007.

     Banrisul’s Investor Relations website, available in Portuguese and English, provides clear,
     detailed and timely information for the Bank’s shareholders, institutional investors,
     individuals, market analysts and other interested parties. To improve and expand its
     communication with the market, the Bank regularly publishes news and announcements,
     maintaining efficient and regular communication with its stakeholders.

     In 2009, the Institution has held 47 meetings, 49 conference calls, three APIMEC meetings,
     one presentation at Expo Money, and 65 events abroad, totaling 165 opportunities to build
     closer relationships with market analysts, investors and individual, corporate, Brazilian
     and foreign shareholders. A total of nearly one thousand participants were involved in all
     events targeting investors held during the year.

     The significance of these events is reflected on Banrisul’s trading volume. At the end of
     December of 2009, the Bank’s PNB stock (BRSR6) ranked 83r d among the 100 most-traded
     stocks on BM&F Bovespa (83 rd in twelve months).

     Banrisul’s market value in December of 2009, represented by the total number of
     outstanding shares multiplied by the closing price of its PNB stock, was 76.4% higher than
     shareholders’ equity in the same period.




42




                                                                                FINANCIAL
                                                                                S TA T E M E N TS   ´09
                                                    FS’09
Graph 11   Market Value X Shareholders’ Equity                                                                                R$ MILLION




                                                                                                                   6,011.9


                                                                                         4,457.8
                                                               3,230.9

            3,079.1                3,139.2

                                                                                         3,299.8                   3,408.5
                                                               3,198.3
                                   2,858.7
            2,290.3

            4Q08                   1Q09                        2Q09                       3Q09                      4Q09

                                Sharehoders’ Equity                                Market Value


The table below shows the geographic distribution of shareholders by number and number
of Banrisul shares held.

Table 6   Geographic Distribution of Shareholders by Number and Shares

                                          BRAZIL                  EUROPE                     NORTH                      OTHER
     NUMBER OF SHARES                                                                       AMERICA                   COUNTRIES
                                SHARES      SHAREHOLDERS     SHARES     SHAREHOLDERS    SHARES     SHAREHOLDERS    SHARES SHAREHOLDERS

      from 1 to 10,000       3,150,217         56,505         54,294          14         94,592           21        54,484         10
   from 10,001 to 100,000    5,248,534             173     2,424,986          51       1,211,408          29       451,022         15

  from 100,001 to 500,000    8,563,884              36     7,580,810          31       8,540,897          34      1,655,541         6
 from 500,001 to 1,000,000 5,780,937                9      6,871,749          10       9,099,900          13      2,203,580         3
    More than 1,000,000     257,155,421             12     64,013,753         12   18,866,384             8       5,952,084         4

           TOTAL            279,898,993        56,735      80,945,592        118   37,813,181           105    10,316,711          38
             %                  68.44%         99.54%         19.79%       0.21%          9.25%       0.18%          2.52%     0.07%


At the end of 2009, five institutions covered Banrisul’s securities.



Interest on Equity and Dividends Distribution Policy

Since the beginning of 2008, the Bank has maintained its policy of paying interest on
equity on a quarterly basis.

Related to the 2009 fiscal year, R$189.0 million was paid as interest on capital, with R$9.8
million withheld in Income Tax and the net amount of R$179.2 million credited to
shareholders. The interest on capital paid in advance corresponds to the distribution of
34.9% on the accumulated income as of December of 2009 as a means to maximize the tax
                                                                                                                                           43




 FINANCIAL
 S T AT E M E N T S   ´09
                                         FS’09
     benefit provided for in Law 9,249/95. The payment of R$26.4 million in supplementary
     dividends from the 2009 fiscal year to reach 40% distribution of the adjusted net income
     for the year will be submitted to the next Annual and Extraordinary General Meeting.

     Throughout its history, Banrisul has remunerated its shareholders by paying interest on
     capital and dividends above the minimum level required. The total amount disbursed was
     R$207.0 million in 2008, R$304.7 million in 2007, and R$210.0 million in 2006, equivalent to
     35%, 35% and 58% of the adjusted net income, respectively.



     Regulatory Aspects: IFRS - International Financial Reporting Standards

     The International Financial Reporting Standards (IFRS) are a set of accounting standards
     developed by the International Accounting Standards Board (IASB) that aim to universalize
     the presentation of publicly-held companies’ financial statements. In Brazil, the Brazilian
     Securities and Exchange Commission, through CVM Resolutions no. 457 of July 13, 2007
     and no. 603 of November 10, 2009, implemented the new procedures for the presentation
     of consolidated financial statements for the 2010 fiscal year by publicly-held companies
     according to IFRS standards.

     The Central Bank of Brazil, through its Resolution no. 3,786 of September 24, 2009,
     establishes that as of December 31, 2010 financial institutions prepare and disclose their
     consolidated financial statements each year according to the international accounting
     standards. Through Notice no. 14,259 of March 10, 2006, the Central Bank of Brazil had
     already informed financial institutions about the need to adjust to the standards developed
     by IASB in that year.

     By adopting IFRS, companies take a big step toward internationalization of financial
     information and improvement of their corporate governance practices. The more
     transparent and comparable financial statements are, the more useful they become, in
     addition to facilitating decision-making and increasing investor confidence.

     The migration process will require an assessment of the impacts on the Bank’s management,
     business, information systems, business processes and on the need for continuous training
     of the professionals involved. The implementation of IFRS standards at Banrisul will require
     three phases:

     Phase I: Diagnosis. Preliminary collection of the data necessary for processing the
     adjustments to the financial statements for compliance with IFRS, comprising a diagnosis
     of accounting practices, disclosure standards, systems and processes. This phase was
44   concluded by the Bank in September of 2009, with the assistance of consulting firm Deloitte




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                     FS’09
Touche Tohmatsu, hired in March of 2009. The result of this survey was presented to the
Bank’s management and consultants contracted for the next phases of the migration process.

Phases II and III: Execution and implementation of the migration of the Bank’s consolidated
financial statements for the 2009, 2010 and 2011 fiscal years to the international accounting
standards. In addition, it involves the creation of accounting manuals, implementation of
internal controls and other operational processes that will be relevant for the maintenance
of IFRS financial statements.

For phases II and III, in September of 2009 the Bank contracted through a public bidding
process consulting firm PricewaterhouseCoopers to assist it in this process. During these
first four months, professionals from several areas involved in the migration participated
in various training programs, and meetings were held for understanding the processes
and differences between the current and IFRS accounting practices and identifying changes
in the operational systems. In addition, initial accounting policies were prepared.

Another initiative worth mentioning was the acquisition of the SCA FINANCIALS system,
specifically to allow the automation and integration of the preparation process of the
Banrisul Group’s consolidated financial statements. This process includes the integration
of transactional systems and the issue of final reports, preparing Banrisul, as far as systems
are concerned, for migration to IFRS.

In November of 2009, internal resolution no. 4,406 created the Management Group for the
IFRS Implementation at Banrisul, defining responsibilities at the strategic and operational
levels related to the implementation, monitoring and evaluation of the project for migration
to IFRS.

With this, Banrisul has moved closer achieving its goal of concluding IFRS implementation,
not only due to requirements of the regulatory bodies, but also to fulfill its commitment,
made upon the Bank’s primary and secondary public offerings held in July of 2007, to
publish its financial statements according to international standards.




                                                                                                 45




 FINANCIAL
 S T AT E M E N T S   ´09
                                        FS’09
     Internal Controls and Compliance

     The internal control system is a process established
     by the Bank’s senior management involving all
     hierarchical levels and aimed at ensuring
     compliance by monitoring business processes.

     Banrisul instituted a method geared towards
     protecting the Bank’s resources while complying
     with laws and regulations in the Bank’s various
     departments.

     External Regulations

     Banrisul has instituted mechanisms for registering
     and accompanying operational routines and risk
     management processes in its various areas, with
     the goal of effectively monitoring aspects of its
     operations as recommended by regulatory bodies
     and the External Auditors.

     The control of processes governed by external regulations, carried out internally by the
     Legislation Group, consists of monitoring rules published by regulatory agencies and
     representative bodies of the banking sector, such that all the Bank’s areas remain in
     compliance.

     Internal Regulations

     The Institution has intensified its actions aimed at strengthening the culture and
     management of the internal control and compliance system, instituting a specific
     Regulatory Instruction to reaffirm the related concepts, basic elements, goals,
     responsibilities and regulations.

     Branch Certification

     The Branch Certification Model, focusing on compliance and internal controls, seeks to
     support the Bank’s standard operating procedure and provide incentives for internal control
     management. Implemented in December of 2008, Banrisul first targeted its registry,
     considering two simultaneous distance monitoring processes (systematic monitoring and
46




      FINANCIAL
                      ´09
      S TA T E M E N TS
                                    FS’09
physical verification). With this, adherence to internal policies was intensified, gradually
improving the Bank’s operating and commercial models by standardizing procedures to
reduce operational risk and offer high security and internal control standards.

Money Laundering Prevention - MLP

Based on the institutional money laundering prevention policy, Banrisul established
specific processes and systems seeking to minimize money laundering risk in the various
financial operations under the Bank’s responsibility. The “Get to Know your Employee”
policy was formalized, a training program for employees who perform activities in the
MLP area was expanded and its respective video was distributed to all Banrisul employees.

Internal Control Structure

Corporate policies established by the Internal Control Management Committee, ratified
by the Banking Management Committee, seek to institutionalize control procedures based
on regulatory compliance, training programs focusing on best market practices, and
definitions of the Institution’s standards of ethics and conduct.




                                                                                               47




 FINANCIAL
 S T AT E M E N T S   ´09
                                               FS’09
         Risk Management

     Risk management is an essential and strategic tool for any financial institution. Inherent
     risks of this business range from easily identified financial risks to market, liquidity and
     credit risks, including those not directly identified as such but extremely important, such
     as operational and image risks, among others.

     Banrisul seeks to bring its activities in line with the standards recommended by the New
     Basel Capital Accords – Basel II, adopting best market practices to maximize profitability
     and guarantee the best possible combination of increases in assets and use of required
     capital. The Bank continuously works to systematically improve its risk policies, internal
     control systems and security rules integrated with its strategic and marketing goals.




                                                                     Pillar 2
                                                               Banking Supervision


                                   Senior
                                 Management                        Regulatory
                                                                    Agencies




                                                                        Pillar 3
                                                                     Transparency




                   Operational   Market   Liquidity   Credit
                      Risk        Risk       Risk      Risk        Market   Investors




48




                                                                                  FINANCIAL
                                                                                  S TA T E M E N TS   ´09
                                     FS’09
Credit Risk

Banrisul’s risk assessment structure is grounded on the principle of joint technical decisions,
with the definition of credit granting scopes corresponding to the decision level, from the
extensive network of branches with their various categories to the administration and its
risk and credit committees in the General Management. This process aims to accelerate
credit granting based on technically pre-defined limits that determine the risk the
Institution is willing to incur with each client, meeting the risk/return ratio.

The continual and increasing use of statistical methods to evaluate risk for clients with the
application of parameters established in credit policies and business rules, together with
optimized controls for registry information through a certification model, have intensified
and strengthened assessments. The Bank’s adoption of credit and behavior score analyses
has made it possible to pre-approve individual clients based on risk classifications
projected by statistical models that are conceptually more attractive for managing mass
credit. These proprietary models comply with Central Bank of Brazil Resolution 2,682 of
December 22, 1999.

In 2009, Banrisul began approving operational processes and implementing corporate
client registries, web revenue and checklist, discussing the risk limitation project,
approving the automatic statistical risk calculation and testing for the implementation of
statistical credit and behavior score methodologies and the parameters of corporate client
credit risk policies.

For the corporate segment, the Bank uses techniques that evaluate companies in terms of
financials, management, marketing and productivity, with periodic reviews that take into
account the company’s position in current economic and competitive scenarios and
prospects. Credit risk management is guided by the Institution’s selective, conservative
posture according to strategies defined by the management and the company’s technical
areas.

Market Risk

Market risk arises from fluctuations in the economic scenario that may cause losses for the
Institution. These fluctuations can happen in the prices of financial assets and liabilities or
in their determining variables, such as interest and exchange rates, price indexes, etc.

Banrisul monitors market risk by using statistical methods such as VaR (Value at Risk) and
Sensitivity Analyses, which seek to simulate and determine maximum expected loss levels
in a given period of time with a certain degree of confidence under ordinary market
conditions and in scenarios of turmoil and volatility.
                                                                                                  49




FINANCIAL
S T AT E M E N T S   ´09
                                          FS’09
     Market monitoring and daily status reports on the Bank’s assets and liabilities portfolio,
     among other operating procedures, allow monitoring, prevention and correction of possible
     imbalances, ensuring the Institution’s solidity.

     Liquidity Risk

     Liquidity risk refers to the inability to meet cash needs, in other words, mismatches
     between cash flows of assets and liabilities that affect the Institution’s financial ability to
     obtain funds to honor its obligations.

     Banrisul jointly monitors liquidity and market risks, observing cash flow projections and
     possible changes in its structure arising from variations in the macroeconomic scenario
     that might affect allocation and fund raising on the market.

     With regard to assets, several scenarios projected for credit portfolio growth and financial
     instrument settlement are taken into consideration. On the other hand, for liabilities, the
     adopted assumptions cover the possibility of early redemption and difficulties in
     maintaining the funding structure.

     Operational Risk
     Banrisul’s institutional policy, processes, procedures and systems necessary for the
     implementation of an operational risk management structure were elaborated according
     to Central Bank of Brazil Resolution no. 3,380 of June 29, 2006. By Internal Resolution and
     consolidated in a regulatory instruction, the Operational Risk Management Policy is
     disseminated to the Bank’s staff. The executive responsible for operational risk is Banrisul’s
     CEO.

     Included in the operational control structure are: the Internal Control Committee,
     responsible for deciding on issues of that have been determined to be of its responsibility;
     the Internal Control Committee, as the managing area of operational risk management;
     the Controllership, responsible for compliance with internal controls at its facilities; and
     Compliance, Head Office Unit Superintendents and branch managers are, as well as the
     Controller. This structure is chiefly responsible for identifying, evaluating, monitoring,
     controlling and mitigating Banrisul’s operational risks, including those resulting from
     outsourced services.

     All of Banrisul’s employees and interns, as well as outsourced service providers, are
     responsible for adopting behaviors that avoid risk within the scope of their functions. To
     support these activities, the operational risk management uses an automated system
     based on knowledge management, which allows the Organization to identify, create,
50   represent and distribute knowledge, allowing its use, awareness and learning. Through




                                                                                 FINANCIAL
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                                          FS’09
analysis of the information collected, the Banrisul Operating Risk Matrix is generated.
Through action plans, actions that allow reduced risk and financial losses are evaluated
and prioritized by the Institution’s decision-making bodies.

A description of the operational risk management structure, in pyramid form, is available
at http://www.banrisul.com.br by clicking “Investor Relations/Corporate Governance/
Operational Risk Management Structure.”




                                             Board of
                                             Directors
                                         Board of
                                                  Executive
                                             Officers

                                           Committe
                                                        es


                                         Controlle
                                                     rship

                            Manager s
                                        of Head O
                                                  ff   ice’s Unit
                                                                 s and Bra
                                                                          nches
                                  Internal C
                                            ontrol      Agents




Banrisul adopted the Basic Indicator Approach Method to determine how much capital to
allocate to provisions for operational risk, as established by Central Bank of Brazil Circular
no. 3,383 of April 30, 2008 and Notice no. 16,913 of May 20, 2008.

The qualitative evaluation of operational risks consists of continuous, decentralized
verification of the effectiveness of controls and the potential (probability versus severity)
of risks, allowing detection of unwanted risk and implementation of corrective measures.

Operational risk management is implemented through two basic methods that the bank
uses complementarily: process mapping and the use of the Control Self-Assessment
technique, consisting of applying internal control checklists.                                   51




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                                         FS’09
     Risks are classified into two categories: general and specific. General risks are operational
     risks that are inherent to all the company’s business processes. Specific risks apply only to
     their related business processes. In 2009, Banrisul concluded another cycle of general
     operational risk assessment, considering the macroprocesses prioritized by the Institution.
     From this assessment, an operational risk matrix was generated, consolidating the results
     obtained.


         New Basel Capital Accords - Basel II

     The primary goal of the Basel Committee with the creation of the Basel Accords was to
     develop a system for measuring and standardizing minimum capital requirements
     calculated from risk-weighted assets. The capital requirement is one of the instruments
     most used by regulatory authorities to inject solidity and stability in the international
     banking system.

     Since the introduction of the first version of the Basel Accords, which sought the
     internationalization of risk management in banking, there have been major changes in
     the sector. The revision of the Accords sought to develop a capital structure that was
     significantly more sensitive to risk and that, at the same time, considered the peculiarities
     of each bank and the oversight and accounting systems of each country. The Basel II Accords,
     also called the New Basel Capital Accords – Basel II, was meant to compliment the structure
     of risks considered in the capital requirement calculation that, in addition to credit and
     market risks already considered in the original accords, introduced operational risk. It is
     also meant to allow more flexibility, allowing institutions to use their own risk control and
     management models. However, this flexibility should be accompanied by effective
     oversight and increased market discipline.

     The New Basel Accords are based on three pillars:

     Pillar I: Minimum Capital

     The first pillar establishes minimum capital requirements for credit, market and operating
     risks. For credit risk, three models are acceptable: the standard method and basic and
     advanced internal models. Operating risk has three levels for its calculation: the basic and
     advanced indicator and internal measurement. Market risk will suffer minor changes.

     Pillar II – Banking Oversight

     The second pillar is related to banking oversight. The new structure requires banks to
     have adequate capital to support all the risks involved in their banking operations and
52   develop and use the best risk management techniques.




                                                                                FINANCIAL
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                                       FS’09
Pillar III - Transparency

The third pillar establishes better market discipline through banks’ increased transparency
so that market agents can be well-informed and have a better understanding of banks’ risk
profiles.

Capital management

The New Basel Capital Accord – Basel II offers a more precise measurement of the risks to
which financial institutions are exposed.

Central Bank of Brazil (BACEN) Resolution no. 3,490/07 established modifications to the
calculation of the required reference equity to cover financial institution activity and asset
risks. BACEN requires the Reference Equity (PR) to be compatible with assumed risks, that
is, greater than the Required Reference Equity (PRE), which is calculated as the sum of the
following:

                        PRE = PEPR + PCAM + PJUR + PCOM + PACS + POPR

PEPR – Portion referring to credit risks weighted by their respective factors. Circular no.
3,360 of September 12, 2007.

PCAM – Portion referring to risks related to exposition to gold and foreign currency
oscillations and in operations subject to foreign exchange variations. Circular no. 3,389 of
June 25, 2008, Circular no. 3,388 of June 4, 2008 and Circular Letter no. 3,309 of April 15,
2008.

PJUR – Portion referring to risks of operations subject to interest rate variations and
classification in the trading portfolio (Pjur1+Pjur2+Pjur3+Pjur4)

    ·     PJUR1 – Circular no. 3,361 of September 12, 2007: refers to risks subject to pre-fixed
          interest rates denominated in Reais. Circular Letter no. 3,310 of April 15, 2008.

    ·     PJUR2 – Circular no. 3,362 of September 12, 2007: refers to risks subject to coupon
          rates in foreign currency. Circular Letter 3,310 of April 15, 2008.

    ·     PJUR3 – Circular no. 3,363 of September 12, 2007: refers to risks subject to variations
          in price index coupon rates. Circular Letter no. 3,310 of April 15, 2008.

    ·     PJUR4 – Circular no. 3,364 of September 12, 2007: refers to risks subject to variations
          in interest rate coupon rates. Circular Letter no. 3,310 of April 15, 2008.


                                                                                                    53




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                                           FS’09
     PCOM – Portion referring to risks of operations subject to commodities price variation.
     Circular no. 3,368 of September 12, 2007.

     PACS – Portion referring to risks of operations subject to stock price variations and classified
     in the trading portfolio. Circular no. 3,366 of September 12, 2007.

     POPR – Operational risk. Circular no. 3,383 of April 30, 2008, Circular Letter no. 3,315 of April
     30, 2008, and Circular Letter no. 3,316 of April 30, 2008.

     RBAN – In addition to the above, BACEN began requiring financial institutions to maintain
     sufficient capital to cover the interest rate risks of operations not included in the trading
     portfolio with Resolution no. 3,464/07 and 3,490/07 and Circular no. 3,365/07.


     Banrisul’s Capital Management

     Banrisul, focusing on complying with the Basel II requirements and the Brazilian Central
     Bank’s directives, developed and implemented its own capital management system,
     consolidating information from the financial conglomerate and business group and
     calculating the Reference Equity and the Required Reference Equity.

     Minimum capital management is carried out through measuring all risks involved in
     calculating the Required Reference Equity by consolidating the information of the
     Institution’s risk systems.

     Credit risks – PEPR are calculated daily through an interface with all the Institution’s
     operating systems. The Bank’s chief business portfolios that participate in credit risk
     measurement can be identified.

     To calculate the portion of operational risk – POPR, the Bank adopted the Basic Indicator
     Method. The calculation is done though information from accounting systems.

     The other portions that make up market risk are calculated by an internal system and sent
     to this system, where they are consolidated with other information to calculate the
     Required Reference Equity.

     The Statements of Operating Limits - DLOs are automatically generated by the system in
     the layout required by BACEN Circular no. 3,398 and Circular Letter no. 3,415/09.




54




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Calculation of the Reference Equity – PR and Required Reference Equity – PRE

Using the method described above, the tables below show the calculation of Banrisul’s
Reference Equity and Required Reference Equity for three periods.

Table 7   Reference Equity Calculation
                                                                                               R$ MILLION

                                                                              09
                                                                           Dec/    Sep/09    Dec/08

Reference Equity                                                         3,349.4   3,240.8    3,027.3
Tier I Reference Equity                                                  3,477.0   3,365.2    3,150.2
Shareholders’ Equity                                                     3,409.3   3,201.1    3,081.7
Income Accounts                                                                -   2,093.1           -
Expense Accounts                                                               -   1,993.7           -
Deferred Fixed Assets                                                       10.1     10.1        10.1
Fair Value Adjustment - Securities and Derivatives                         (5.9)     (4.0)       (9.5)
Additional Allowance to the Minimun Allowance Required by
Resolution No. 2,682/99                                                     72.0     70.8        69.2
Tier II Reference Equity                                                   (5.9)     (4.0)       (9.5)
Fair Value Adjustment - Securities and Derivatives                         (5.9)     (4.0)       (9.5)
Reference Equity Exclusions                                               121.7     120.4       113.5
Shares issued by Financial Institutions and other Institutions
authorized by the Central Bank of Brazil                                  121.7     120.4       113.5

Table 8   Required Reference Equity Calculation                                              R$ MILLION

                                                                         Dec/09    Sep/09      Dec/08
     Credit Risk                                                         1,565.9   1,473.1    1,319.5
     Loan Portfolio - Retail                                               465.6     440.7      391.1
     Commitments - Retail                                                  138.5     133.9      120.3
     Loan Portfolio - Non Retail                                           590.0     520.9      501.0
     Commitments - Non Retail                                               50.8      54.1       60.4
     Guarantees Granted                                                     55.6      50.0       46.8
     Advances                                                               50.4      55.1       32.8
     Tax Credit                                                             65.8      67.8       65.4
     Other Assets                                                          149.2     150.5      101.7
     Market Risk                                                           303.3     262.7      282.7
     Foreign Exchange Risk                                                   0.0       0.0         0.0
     Interest Rates Risk - sum                                             301.0     259.9      263.1
                                         Fixed Rates in Reais - Pjur 1     143.7     174.4      176.5
                                 Foreing Currencies Coupons - Pjur 2         5.4       4.0       10.3
                                         Price Index Coupons - Pjur 3        9.4       6.8        7.3
                                      Interest Rates Coupons - Pjur 4      142.4      74.7       69.0
     Commoditty Price Risk                                                   0.0       0.0        0.0
     Share Price Risk                                                        2.3       2.8        19.7
     Operational Risk                                                      241.9     241.9        55.6
                                                                 Rban       27.4      26.0        13.2
1.   Reference Equity - PRE                                              3,349.4   3,240.8    3,027.3
2.   Required Reference Equity - PRE: Credit Risk + Market Risk +
     Operational Risk                                                    2,111.0   1,977.7    1,657.9
3.   Margin = PR - PRE - Rban                                                  -   1,237.1    1,356.2
4.   Basel Ratio                                                          17.5%     18.0%       20.1%
                                                                                                            55




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                                          FS’09
          Basel Ratio

     The Basel Index is the relation between the Base Equity (Reference Equity – PR) and
     weighted risks (Required Reference Equity – PRE), according to current regulations, showing
     the company’s solvency. The minimum percent required by the Central Bank of Brazil is
     11%, calculated according to the formula below:

                                                   PR* 100
                       BI = __________________________________________________
                                 {PRE + [1/F * (PCAM + PJUR + PCOM + PACS + POPR)]}

     In December of 2009, Banrisul’s Basel Ratio stood at 17.5%. The reduction in relation to the
     ratio as of December of 2008 was largely driven by the growth in the Bank’s credit portfolio.

     Of the portions that compose PRE, operational risk stands out with a variation resulting
     from the change of its multiplication factor, which in December of 2008 was 20% but was
     increased to 80% in July of 2009 as established by Central Bank of Brazil Circular 3,383/08.



     Graph 12   Basel Ratio Growth (%)

      DECEMBER’09                                                                17.5%

      SEPTEMBER’09                                                                  18.0%

      JUNE’09                                                                         18.4%

      MARCH’09                                                                            19.1%


      DECEMBER’08                                                                               20.1%


                                            Minimum Level 11.0%




56




                                                                                FINANCIAL
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                                    FS’09
Technology Modernization
Throughout 2009, Banrisul maintained its strategy of offering clients cutting-edge, secure
technology in electronic transactions. For this, in 2009 it invested R$226.8 million in
hardware, software and asset maintenance.

The gradual introduction of the Cartão Múltiplo Banrisul (Banrisul Multiple Card), the
application of digital certification with generation and management of internal certificates
through our own certifying authority, and the improved encryption processes for business
channels and in data transmission were policies the Bank adopted that reflect an increase
in the security of electronic transactions.

The reorganization and modernization of Banrisul’s main data center according to market
requirements, rules and practices and the implementation of the project to virtualize
servers and apply a new network structure, including state-of-the-art equipment
responsible for the network center functions in the two data centers, guarantee the capacity
to serve the business’ growth with exceptional availability and security.

With the goal of improving performance and guaranteeing increased reliability and data
storage capacity, Banrisul migrated the large-scale platform by acquiring new equipment
with greater processing capacity and invested in updating its historical data storage solution.
The improved information technology infrastructure management processes was
guaranteed by a group of integrated solutions and the use of a Configuration Management
Database (CMDB) according to the best practices suggested by the Information Technology
Infrastructure Library (ITIL).

In addition to investing in the latest information technology, in 2009 Banrisul
participated in several events related to this area, seeking new knowledge and also
showing what the Company has developed. Thus, the Bank, as the only Latin American
member of the PCI Council Board of Advisors, participated in the group’s international
meetings and the PCI Community Meeting, as well as presenting in Malaysia at the
Multos World Conference, a panel discussing the implementation of the single, chip-
bearing card for electronic bank and government functions, and was at the GRC Meeting
2009 in Rio de Janeiro that united Latin America’s chief professionals in the segments
of corporate governance, risk and compliance. Moreover, in partnership with the
Information Technology Institute (ITI), Banrisul hosted the 2nd International IT Forum
and 7th Digital Certificate Forum- CertForum.

                                                                                                  57




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                                         FS’09
     Public Sector Activities
     In addition to the remarkable results achieved and the business conducted with the public
     sector in 2009, Banrisul made significant investments in drawing closer to its clients through
     its relation with public entities, striving to identify needs and understand the context of
     government and the local community, considering the history, profile and the diversity of
     the cities and the state.

     In view of to the sector’s importance, the growth strategy in 2009 was implemented to
     provide sustainability for future business grounded in the search for increased revenues,
     reduced costs, technological modernization of processes and, at the same time, promotion
     of local and regional development.

     The development of new solutions for the public sector conditionally establishes the
     participation and contribution of public entities and communities with the goal of
     generating effective results for society, considering opportunities and problem resolution,
     respecting and getting to know the local culture, its peculiarities, potential and aspirations
     to build the future and improve the quality of life.

     Banrisul invests in the future of the economy, in the power and competence of the players,
     managers and local leaders and, especially, in the establishment of strategic partnerships
     and alliances aimed at social transformation and sustainable business development.

     These premises hold true at the end of 2009 and become drivers of results generation in
     2010. Banrisul, as a public bank and in line with its institutional mission, is aware of its role
     of promoter, articulator and facilitator of financial solutions and development for the
     public sector, which translates into significant improvements to the human, economic,
     social, and environmental aspects for the cities and state of Rio Grande do Sul.

         Municipal Public Sector

     In 2009, Banrisul prioritized the supply of products and services for the municipal sector to
     guarantee and optimize tax collection and reduce operating costs, following the example
     of the collection system with bar codes, fleet management through Cartão Combustível
     (Fuel Card) and purchasing management through Pregão On Line Banrisul (Banrisul Online
     Bidding), in addition to long-term loans to promote local development.

     There was an increase of 6.2% in the number of municipal employees who received their
     payment through Banrisul in 2009, totaling approximately 145,000 municipal employees
58   at the end of the year. The total of payments to these clients exceeded R$2.0 billion. In




      FINANCIAL
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2009, Banrisul reached 446 agreements to grant payroll-deductible loans for municipal
employees, representing the adhesion of 90% of the state’s cities.

The collection of municipal taxes and service fees amounted to 5.7 million bills totaling
R$889.0 million.

     State Public Sector

The Bank has been increasing its efforts for implementing technological solutions, following
the example of purchasing management through the use of Pregão On Line Banrisul
(Banrisul Online Bidding), modernization of the management of payment to suppliers,
collection processes and payroll to provide clients with faster, more secure operations
and reduced costs, expanding the Bank’s business relationship with state-owned
companies, foundations and government agencies.

Given the growing number of agreements for automated collection of fees and bills from
state-owned companies, in 2009, R$1.2 billion in 11.9 million bills was collected for state
public utilities concessionaires. On behalf of the State Finance Secretariat, 6.2 million bills
totaling R$14.6 billion were collected. In twelve months, R$2.9 billion was distributed to
cities through the allocation of Tax on Distribution of Goods and Services - ICMS quotas.

     Federal Public Sector

In August of 2009, Banrisul participated in and won the bidding process held by the National
Institute of Social Security (INSS) to disburse new benefits as of January of 2010 for the
next five years. With this achievement, the Bank ensures the right to preference in
payments to Rio Grande do Sul State retirees, pensioners and INSS beneficiaries.

Over the next five years approximately 31,000 new benefits are expected to be granted
each month, totaling, at the end of the period, 1.8 million new benefits. With this significant
increase in the customer base, the new agreement entered into with INSS creates conditions
to leverage businesses while minimizing risk, in addition to an increase in the Bank’s
market share in the state, enabling the banking inclusion of the beneficiaries and
strengthening the Banrisul brand in Rio Grande do Sul State.

Banrisul plays an important role in collection for federal entities. In 2009, 5.0 million bills
totaling R$7.4 billion were paid through the Banrisul network.




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                                        FS’09
     Marketing
     Banrisul’s marketing strategy is comprised of institutional campaigns, cultural initiatives,
     sponsorships and virtual communication vehicles. In 2009, the Bank focused its media
     campaigns on its new or existing key products to remain competitive and increase its
     market share. Among the institutional campaigns implemented in 2009, the corporate
     initiative “Ter Banrisul é pegar junto com os Gaúchos” (To have Banrisul is to be together
     with the people of Rio Grande do Sul), which promoted the Institution’s social and
     environmental projects, the campaign “Banricompras – tudo o que você quer”
     (Banricompras – it’s everything you want), which promoted a new concept of the product,
     and the end of the year campaign “2010 pode ser tudo aquilo que queremos - quem tem
     Banrisul tem tudo” (2010 can be all that we want – with Banrisul, you have it all) stand out.

     Mass use of the Internet has played a major role in achieving the core goals of the Bank’s
     marketing strategy: identification of new markets and creation of a competitive edge.
     Among the marketing initiatives developed by Banrisul in 2009, many are related to the
     benefits generated by this channel of communication with the Bank’s various stakeholders,
     and the following stand out: A maior roda de chimarrão do mundo (The world’s biggest chimarrão
     circle), Jogo da Vida Banrisul Online (Online Banrisul Game of Life) and Banrisul Multimedia.

     The A maior roda de chimarrão do mundo (The world’s biggest chimarrão circle) promotion
     was launched with the goal of giving Internet users the opportunity to interact and promote
     chimarrão, a traditional beverage that has become emblematic of Rio Grande do Sul
     tradition during the event Farroupilha Week. The 30-day promotion through the website
     www.amaiorrodadechimarrao.com.br had 1,463 participants in Rio Grande do Sul and more
     than 58 countries. It was an initiative that brought people together, showcased regional
     culture to the world, and reinforced the Institution’s identification with the local culture,
     a feature that distinguishes Banrisul in relation to its peers.

     Jogo da Vida Online (Online Game of Life) was developed as a cultural contest, available
     on the Internet at www.jodavidabanrisul.com.br, with the goal of teaching youths financial
     responsibility. More than 5,000 participants played the Game of Life, which targeted youth
     ages 8 to 18, over its four-month duration. It was another relatively simple initiative that
     did not require the Bank to mobilize sophisticated operational and financial engineering,
     but nonetheless of high cultural and educational value. Banrisul’s initiatives do not
     exclusively target prospective clients. The Bank’s intention is to contribute to society by
     creating responsible citizens.

     Another important Banrisul Internet marketing initiative concerns the development of a
60   new online corporate communication channel – Banrisul Multimedia - launched in 2009.




      FINANCIAL
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      S TA T E M E N TS
                                       FS’09
 At www.banrisulmultimidia.com.br, visitors can access specially produced videos
promoting the convenience of the Bank’s products and services, as well as its social,
educational and cultural actions. Banrisul Multimedia is an innovative and modern strategy
for the Bank to build closer relationships with its clients and show the importance of the
Institution in people’s lives to Internet users in general.

It is also worth highlighting one of Banrisul’s most traditional marketing initiatives: the
summer operation. Held every year, the Banrisol 2010 Summer campaign was launched in
2009 to provide clients spending their vacation on the coast of the states of Rio Grande do
Sul and Santa Catarina with total comfort and safety in their financial commitments. For
the 2010 season, which starts in December of 2009 and ends in March of 2010, Banrisul has
made more than 450 service stations, including branches, banking service stations, ATMs
and Correspondent Banks available to clients, in addition to over 5,000 commercial
establishments associated with the Banricompras Commercial Network credentialed to
receive payments in one or several installments for purchases made by Banrisul clients
with their debit cards. The summer operation also includes more flexible operating hours
of branches and ATMs located on the busiest beaches, promotional events in bars and
restaurants, increased beach kiosks, and Banricompras promotions at gas stations
distributing free gifts to the clients who use the product.

Banrisul sponsors Rio Grande do Sul State’s greatest soccer clubs, including Grêmio and
Internacional, in addition to prominent athletes from Rio Grande do Sul of various sports, such
as judo, swimming and skating. The Bank supports the following sports programs: “Bola pro
Futuro” (Ball for the Future), “Criança no Esporte” (Children in Sports), “Raquetes do Futuro”
(Rackets of the Future) and “Karatê Além do Esporte” (Karate Beyond Sports), which aim to
promote social integration and the practice of sports among youths, in addition to nurturing a
spirit of cooperation. In 2009, Banrisul also participated in events that seek to raise awareness
of the importance of health care, such as the 11 th Marathon for Diabetes, the 16th Marathon for
Life, the second edition of “Vamos dar as Mãos” (Let’s Hold Hands) and a program against the
use of crack, “Crack – Ignorar é Seu Vício” (Crack – Ignoring it is Your Addiction).

Through agreements and partnerships, the Bank contributes to the promotion of culture
and education and to raise people’s social and environmental awareness. Some of the
projects and events that Banrisul supported in 2009 are: “Memorial do Rio Grande do Sul”
(Rio Grande do Sul State Memorial), “Museu de Comunicação Social Hipólito José da Costa”
(José Hipólito da Costa Social Communication Museum), the Porto Alegre Symphony
Orchestra, the 10th edition of Banrisul Concerts for Youth – Theatre Chamber Orchestra, World
Cultural Festival for Peace, 13th National Literature Conference, 7th Mercosur Visual Arts Biennial,
the Ler é Tudo (Reading is Everything), Leia Mais (Read More) and Minha História de Natal (My
Christmas Tale) projects, and the Short Stories and Literary Fact awards.                              61




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                                        FS’09
     Human Resource
     Banrisul is aware that the good results of the few last years were primarily achieved
     thanks to the Bank’s relationship with its clients. Banrisul’s qualified staff is always ready
     to face the most diverse situations and respond with dedication and commitment. And
     that is why the design of Banrisul’s 2009 reports was inspired by stylized pictures of people.

     Investing in technology may be important, money - the essence of this business - may be
     indispensable in people’s lives and products and services may be extremely alike within
     the banking market, but it is its people who have made Banco do Estado do Rio Grande do
     Sul internationally known and respected: people who continue their education, change,
     interact with others, and transform activity into results. People make the difference in a
     company operating in the service sector.

     The Bank is constantly investing in its staff, seeking to ensure professional development,
     excellence in the services provided and to keep in step with the innovations in the banking
     sector. In 2009, the Bank offered 707 courses benefitting 9,400 employees, and three internal
     hiring processes evaluated 238 candidates. Investments in training totaled R$6.1 million,
     R$529,400 of which was allocated to degree programs, R$872,800 to post-graduate programs
     and R$412,300 to language classes.

     In May of 2009, a civil service exam was held for the information technology area, with 200
     job openings in Systems Development, Database Management, Information Technology
     Security and Support. A total of 2,600 candidates signed up for the exam and hiring
     procedures started in October.

     After the end of the period for hiring candidates who passed the last civil service exam for
     clerks and to ensure the future availability of professionals for the new branches according
     to Banrisul’s customer service network expansion project, in November of 2009 the Bank
     started accepting applications for a new civil service exam, offering 500 jobs. The tests will
     be held at the beginning of 2010.

     In December of 2009, Banrisul had 9,142 employees and 2,292 interns. In twelve months,
     221 new clerks and 202 information technology technicians were hired.




62




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      S TA T E M E N TS
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Table 9    Selection Processes and Training Programs

  DATE                    HIRING                                 DESCRIPTION                    NUMBER OF PARTICIPANTS   NUMBER OF HOURS OF
                       PROCESS/CIVIL                                                            (CIVIL SERVICE EXAMS,    CANDIDATES TRAINING
                       SERVICE EXAM                                                              INTERNAL PROCESSES,     APPROVED/
                                                                                                 TRAINING PROGRAMS         HIRED
 January/        Internal selection process            Hiring process instated to meet the                 262                91
   2009                for Business                  need for professionals in the business
                     Manager position                      area of the branch network,
                                                      through the selection of professional
                                                     from services and business platforms
 January/         Internal hiring process           Hiring process instated to meet the need             1,035               123
   2009               for Supervisor                for professionals in the branch network’s
                         position                               services platforms
  Abril to                Training of          Targets System for Managers: training of General            456                            304
June/2009              Banche Managers              and Assistant Managers geared toward
                                                management of results and teams, focused on
                                                   planning and monitoring the performance
                                                            of the Commercial Target
Call                  Civil Service Exam          Hiring process instated for development of             2,600*          483 approved,
05/20/2009               01/2009 f or                automated procedures as defined and                                   202 hired
                         Information               s tandardization of the Banrisul’s technical
                          Technology             architecture system, meeting the information
                          Technician                systems, logical security and computer
                            position                      infrastructure requirements
July, 2009                Training of           Training program for the sales team - individuals          357                            120
                         Sales team                 aiming to expand their knowledge of the
                                                  concepts and methods of the Targets Model
July to                   Training of            Training program for new employ ees working               602                            432
August/2009              Sales team                    with the Individual Segment and at
                                                             the Services Platforms
July to                   Training of           Training program for employees selected thr ough           91                            1,002
December/2009         Business Managers       internal process for the position of Business Manager
September to              Training of           Training program for Business Managers focused             357                            104
October/2009             Sales team                 on corporate client portfolio management
                                                        and the use of management tools
September to            Training of the        Training program for teams of the branch network           1.149                           392
October/2009          management and               on the New Corporate Client registry system
                      operational teams
October to            Training of the             Preparation of employees hired through civil            202                      300 hours
December/2009    Information Technology                 service exam for the position of                                       per employee,
                        Technicians                   Information Technology Technician                                          on average
November/                Training of            Training program for Assistant Branch Managers             354                            360
  2009                     Branch                      on the topic Business Management
                         Managers                              Focused on Results
    Call                Civil Service           The civi l service exam, to be held on 01/17/2010,     117.700 *          In progress
11/13/2009            Exam 01/2009-               aims to offer 500 openings for the position of
                   2 - for Clerk position           clerk, to work in Banrisul’s branch network
November to              Training for           Preparation of employees hired through internal            123                           1,200
December/2009            supervisors                 process for the position of Supervisor
  During                 Training of           Training program for New Br anch teams aimed to             67                             480
  2009                  teams for the             provide technical and commercial training,
                        new branches                focused on anticipated client prospecting
  During              Internal selection        Selection process instituted to meet the need for          48                 14
  2009                   process for              placement of professionals in the Call Center
                       Analyst position                 and Corporate Commercial Units
* Source: FDRH - Foundation for the Development of Human Resources




                                                                                                                                                 63




 FINANCIAL
 S T AT E M E N T S   ´09
                                        FS’09
     Corporate Responsibility
     Since its creation in 1928 to provide loans to the farming and ranching sector of Rio Grande
     do Sul State, Banco do Estado do Rio Grande do Sul has remained loyal to its mission of
     “being the state’s financial agent to promote the economic and social development of Rio
     Grande do Sul.”

     More than eighty years have gone by - the state has changed, the economy was globalized,
     market practices have changed - and social responsibility has become a primary concern.
     Social responsibility is built through actions, and the Bank’s social actions show that this
     principle is a part of its history.

     Looking back, it is possible to see that the creation of Banrisul’s Social Management in 2009
     was based on the Institution’s origins. The maturation of this continuous process mingles
     with the Bank’s various financial, administrative, and technological fronts. It is with this
     conviction that the future continues being designed.



     Sustainability History




              Banrisul is                     Banrisul Foundation         Banrisul Choir makes its
              founded.                        is inaugurated.             first presentation.




64




       FINANCIAL
                       ´09
       S TA T E M E N TS
                                       FS’09
Important aspects of Banrisul’s corporate responsibility management were developed in
2009. In March, the Social Responsibility Policy was instituted, aiming to mediate the
interaction of businesses, management and social action. The challenge is to seek positive
results without neglecting the axes of corporate responsibility, which are: employees,
clients and suppliers, community and the environment.




                                           Social and
                                         Environmental
                                          Relationship




                                                    Relationship with
                             Relationship with
                                                     the Community
                                Employees




Sustainability History




        Ombudsman’s            “Prosangue” (Blood                       Program for Prevention
        Office is created.     Donation Program) is                     and Treatment of Alcohol
                               created.                                 and Drug Abuse (PAD) is
                                                                        launched.




                                                                                                   65




 FINANCIAL
 S T AT E M E N T S   ´09
                                             FS’09
         Social and Environmental Relationship

     Despite being a financial institution, environmental awareness is present both in the negotiation
     of agricultural loan contracts and the option for the lowest interest rate. Adequate waste
     disposal by employees, saving electricity, and financial support for self-sustainable income
     and employment generation projects are some of the practices adopted by the Bank.

     Banrisul Recycling Program

     Created in 2001, this project is oriented by a broad ecological vision, seeking environmental
     education, concern for waste disposal, and increased social and environmental awareness
     among employees.

     This program consists of adequate disposal of waste generated by the Bank’s activities so
     that it may be reused by institutionalized communities, such as recycling plants, NGOs
     and neighborhood associations. Among waste that is disposed of or donated are organic
     trash and recyclable materials, such as paper, light bulbs, batteries, CDs, plastic packaging
     and bags.

     Since its launch, the Recycling Program has helped generate savings of R$4.0 million, collecting
     3,700 tonnes of paper for recycling – which corresponds to 59,900 spared trees – 12,300 CDs,

     Sustainability History




            Creation of the Hearing
                                                                                         Corporate
            Conservation Program (PCA),
                                                                                         Wellness
            Occupational Health Medical
                                                                                         program is
            Control Program (PCMSO).
                                                                                         implemented.



            Program for Prevention,              “Banrisul          Banrisul             Banrisul’s
            Diagnosis and Treatment of          Resgatando a        participates         first Social
            Occupational Diseases and           Natureza”           in Febraban’s        Report is
            Accidents (PROAT) for Banrisul      (Banrisul           Social Report        published.
            employees.                          Rescuing Nature)    for the first
                                                program is          time.
                                                launched.


66




                                                                                    FINANCIAL
                                                                                    S TA T E M E N TS   ´09
                                      FS’09
47,000 computer disks and 34,200 fluorescent light bulbs. Through the “Reciclar” (Recycle) Battery
Collector, the community collected 1.9 tonnes of domestic-use batteries for recycling.

The Banrisul Recycling Program has gained a new social dimension and become a tool of
income and employment generation for recycling communities.

Banrisul Energy Program - PROGEB

Created in 2004, the Banrisul Energy Program aims to rationalize the use of electricity,
combating waste and promoting energy efficiency.

This program includes actions against energy waste, raising awareness among employees,
and research and implementation of actions aimed at energy efficiency. Measures for
conservation, reduction of electricity consumption and costs, and minimizing the impact
of energy rationing have also been adopted by the Bank. In addition, choosing the best
fee structure and replacement of batteries and equipment are also part of the program.

From 2004 and 2009, PROGEB saved the amount equivalent to one month of consumption
per year, totaling 13,095,653 Kwh, which corresponds to R$5.6 million. This program became
a reference for other public agencies. As result, new habits are nurtured, spreading from
the workplace into households.

Sustainability History




         “Banrifitness” is
         created.



         Banrisul Concerts              Banrisul Recycling             Care and Follow-up for
         for Youth.                     Program – “A Vida em           Employees Suffering from
                                        Nossas Mãos” (Life is          Stress Program (PASS) is
                                        in Our Hands) is               created.
                                        launched.




                                                                                                     67




 FINANCIAL
 S T AT E M E N T S   ´09
                                            FS’09
          Relationship with Employees

     Fitness – Healthy Lifestyle

     Since 2000 the Fitness – Healthy Lifestyle program has held 50 events in which employees,
     their family members and guests from the community participate in sports, educational and
     leisure activities like dance lessons, yoga, shiatsu, hiking, fencing, physical and postural
     evaluation, lectures, etc., during one day or weekend. In the workshops, participants have the
     opportunity to try different activities, seeking to identity those that best meet their needs or fit
     into their lifestyle. In 2009, the six events that were held had over 6,000 participants.

     Banrisul Volunteering Program
     Since 2003 the Banrisul Volunteering Program has encouraged employees to become engaged
     in volunteer work for social entities located in the communities where the Bank operates. This
     program also promotes campaigns for winter clothing and Christmas donations. Through the
     Fishing and Recycling programs, Banrisul’s volunteers develop social responsibility practices,
     resulting in better social and cooperative postures among employees. In 2009, through its
     partnership with the Parceiros Voluntários NGO, Banrisul established another partnership with
     the Abrindo Horizontes NGO of the Mario Quintana Cultural House, in Porto Alegre, where
     theater and choir workshops were held benefiting 75 children and teenagers and counting on
     the help of seven active volunteers and 75 volunteers registered with the program.
     Sustainability History




                                                                             “Karatê Além do Esporte”
                                                                             (Karate Beyond Sports)
                                                                             project is created.




             Banrisul Volunteering           “Criança no Esporte”            Banrisul’s Code of E thics
             Program.                        (Children in Sports)            is instituted.
                                             program is created.             Corporate Responsibility
                                             Banrisul Energy Program         Management is created.
                                             (PROGEB) is launched.
                                             The 1st class of the F ishing
                                             Project graduates.


68




                                                                                     FINANCIAL
                                                                                     S TA T E M E N TS   ´09
                                          FS’09
     Relationship with the Community

Banrisul Concerts for Youth
This program benefits elementary students from public and private schools of Greater
Porto Alegre with concerts of the São Pedro Theatre Chamber Orchestra, aiming to promote
awareness of classical music among youths.

The orchestra presents works of great composers, such as Bach, Mozart and Vivaldi, and
popular songs by renowned Brazilian composers, in addition to informing the audience
about its musical instruments and featuring an actor and guest musicians, besides the
conductor. This project is in its 10 th year, totaling 90 performances to over 48,600 students.



Fishing Project
The Banrisul Fishing Project, created in 2004 in partnership with the Fishing Project
Foundation, started from the involvement of the Volunteering Group with the goal to
provide at risk youths ages 16 and 18 with the opportunity to become better citizens.
Banrisul was the first state-owned entity in Brazil to create an educational institution at
the level of the Fishing Project.
Sustainability History




         Body Awareness Activity                                         Banrisul joins the Green
         (TCC) is created.                Banrisul in Schools
                                          program is launched.           Protocol.




        Banrisul joins the RS Criança     “Reciclar” (Recycle) Battery   Social Responsibility
        (Rio Grande do Sul Children)      Collector is implemented.      Policy is instituted.
        program, in partnership with                                     Seeds Project is launched.
        the State of Rio Grande do Sul.




                                                                                                      69




 FINANCIAL
 S T AT E M E N T S   ´09
                                          FS’09
     Each year, 20 underprivileged youths from southern Porto Alegre, near the project’s
     headquarters, are selected for the Administrative Assistant Course, which follows the
     criteria established by the Fishing Project Foundation. This project counts on Bank 42
     employees who teach or provide guidance to the students.

     Through this project, good habits and citizenship are developed, helping the youths
     establish contacts for placement in the labor market and promoting entrepreneurship.

     From 2004 to 2009, 119 youths participated in the Fishing Project, 70% of which have already
     started their careers and 30% of which are engaged in Banrisul’s internship programs.

     In 2009, the Bank’s investments in corporate responsibility totaled R$42.8 million through
     social actions and programs, including sports, cultural, and educational activities and
     promoting health and environmental awareness. These significant investments reflect the
     Bank’s commitment to the development of the communities in which it operates. In 2009,
     most investments were allocated to sports programs targeting at-risk children and teenagers.
     From 2004 to 2008, social responsibility investments amounted to R$116.2 million.

     More information on the Bank’s 2009 corporate responsibility actions is available on the
     Internet, on a hot site that can be accessed from Banrisul’s website (www.banrisul.com.br).

     Since its founding, Banrisul has assumed the role of partner to foster the social and economic
     development of Rio Grande do Sul. The Institution grew and became a multiple bank. It
     faced the challenge of adopting a modern management to achieve results and succeeded.
     It built stronger relationships with employees, clients and investors, created products and
     services, and established projects and programs to build a sustainable future. For all that,
     Banrisul is on everyone’s side, when it is time to study or start a job, to save or finance, to
     participate in social actions or preserve the environment, to take care of our health, to buy
     things and enjoy life. Banrisul is everyone’s bank. Age does not matter, because the future
     is boundless.




70




                                                                                 FINANCIAL
                                                                                 S TA T E M E N TS   ´09
                                    FS’09
Awards
January/2009
    Banrisul was named a finalist for the 2009 IT Executives award.
    Banrisul was one of the three finalists in the “Finances: Banks and Insurance
    Companies” category of the 2009 IT Executives award sponsored by InformationWeek
    Brasil magazine.
    Banrisul Fixed Income Funds are among the best in Brazil.
    Banrisul ranks among the top three banking institutions with the best fixed income
    funds in Brazil in terms of its 12-month risk/return (through November 28, 2008). The
    Istoé Dinheiro magazine and TAG Investimentos study, presented in the magazine’s
    January 14, 2009 edition, included a Where to Invest in 2009 guide.

February/2009
    Banrisul is one of the 500 most valuable brands in the global financial sector.
    Banrisul was chosen one of the most valuable brands in the Global Banking 500 ranking
    prepared by Brand Finance, a multinational consulting firm specialized in brand
    evaluation and management, in a partnership with the English magazine The Banker
    and risk assessment agency Austin Rating. Banrisul’s brand value was estimated at
    US$165 million.

March/2009
    Banrisul leads Top 5 ranking.
    Banrisul was ranked first in the February Top 5 ranking for short-term inflation IPCA
    projections. The information was published by the Investor Relations Executive Board
    of the Central Bank of Brazil, which is responsible for compiling the projections
    provided by the market.
    Banrisul is honored in the 2009 Agribusiness Distinction.
    Banrisul won the 2009 Agribusiness Distinction award sponsored by Cotrijal and Grupo
    Diário da Manhã in the “Financial Institution” category.
    Banrisul is one of the most prestigious corporate brands in Rio Grande do Sul State.
    Banrisul was one of the winners of the Corporate Reputation award from Amanhã
    magazine that honored the most influential corporations in Rio Grande do Sul State
    according to a study by Troiano Consultoria de Marca.

                                                                                            71




 FINANCIAL
 S TA T E M E N TS   ´09
                                        FS’09
         Banrisul Consórcios assumes leadership in the Rio Grande do Sul State market.
         Banrisul S.A. Administradora de Consórcios became the leader in the Rio Grande do
         Sul State automotive segment according to the consortium managers’ ranking disclosed
         by the Central Bank of Brazil.
         Banrisul Corretora de Valores is honored in the Brands of Who Decides study.
         Banrisul S.A. Corretora de Valores Mobiliários e Câmbio was honored in the Brands of
         Who Decides study as the leading brand of choice and the second most remembered
         brand in the “Securities Broker” category. The 11th edition of the study was conducted
         by Jornal do Comércio and Instituto QualiData.
         Banrisul is one of the most innovative companies in southern Brazil.
         Banrisul was elected one of the most innovative companies in Brazil’s southern region,
         according to the Innovation Champions ranking published in Amanhã magazine,
         according to the methodology of the consulting company Edusys.

     April/2009
         Banrisul ranks among top banks in Latin America.
         Banrisul was highlighted in the Top Banks assets ranking published in the March/April
         2009 edition of Latin Trade magazine in the United States. The survey included financial
         institutions in Latin America.
         Banrisul is one of the most remembered companies among Rio Grande do Sul’s
         population.
         Banrisul was one of the companies that were most remembered by the people of Rio
         Grande do Sul State, according to the Top of Mind survey conducted by Amanhã
         magazine in partnership with PriceWaterhouseCoopers. Banrisul also stood out in the
         “Bank,” “Efficient State-Owned Company,” “Company that Invests in Culture” and “Best
         Company to Work For” categories. Banricompras was acknowledged in the “Credit
         Card” category and Refeisul, a product commercialized by Banrisul Serviços, in the
         “Meal Partnership” category.
         Banrisul is one of Brazil’s most valuable brands.
         Banrisul was chosen as one of Brazil’s most valuable brands in a Brand Finance’s fourth
         national study, which included 110 companies.

     June/2009
         Banrisul receives the Smart Card award.
         Banrisul received the Smart Card award for its new Banrisul Card with intelligent
         chip and digital certificate from the Belgian company VASCO Data Security
72       International Inc.




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                    FS’09
     Banrisul receives award in IT area.
     Banrisul received the 2009 E-finance award in the “Best Technology Infrastructure
     Management Solution” category with its “Faster Operation, Easier Management”
     project, and in the “Technological Innovation” category with Banricompras for Cellular
     phones. The awards were given by Executivos Financeiros magazine, a respected
     publication specializing in IT applied to the financial market.
      Banrisul high on the financial system’s national ranking.
     Banrisul ranked 14th among the 100 largest financial groups in Brazil by Conjuntura
     Econômica magazine, published by the Brazilian Economic Institute of the Getúlio
     Vargas Foundation. The Bank also stood out in the “By Growth of Assets” and “Fastest-
     Growing Groups in Loan Operations” categories of the state-owned banks segment.

July/2009
     Banrisul’s stock is among the 100 best investments.
     Banrisul stood out in “The 100 Best Shares to Invest In” ranking by Você S/A magazine
     and the consulting company Economática. The study presented the stocks with the
     best performance in the last twelve months.
     Banrisul is one of Brazil’s largest banks by number of clients.
     Banrisul is eighth in the ranking of banks by number of account holders in 2008, and
     ranks 10th among the 50 largest banks by assets. The study was published in the Exame
     Melhores e Maiores magazine.

August/2009
     Banrisul is one of Brazil’s 500 best companies.
     Banrisul was rated the 110th in the “500 Best of Dinheiro” ranking. The survey, which
     was published in As Melhores da Revista Dinheiro 2009 (The Best of Dinheiro Magazine
     2009), also honored Banrisul within the national financial system in the Social
     Responsibility, Human Resources and Corporate Governance categories.


     Banrisul receives Carbon Neutralization Certificate.
     Banrisul received the Carbon Neutralization Certificate from the Parceria Verde
     company for its participation in the Maquiné BioAtivo project in printing the 2008
     Social Report.




                                                                                              73




 FINANCIAL
 S T AT E M E N T S   ´09
                                        FS’09
     September/2009
        Banrisul earns Top Citizenship award.
        Banrisul earned the 2009 Top Citizenship award from the Brazilian Human Resources
        Association (ABRH-RS) in the corporate category for the Banrisul Fishing Project: An
        Experience to Transform and Grow.


        Banrisul ranks 13th in the Large & Leaders – the South’s 500 Largest ranking.
        Banrisul was 13th in the Large & Leaders – the South’s 500 Largest ranking, prepared by
        Amanhã magazine and the consulting firm PricewaterhouseCoopers. In Rio Grande do
        Sul State, Banrisul ranked third among the 100 largest companies, and is the leader
        with the largest net working capital. Also in Rio Grande do Sul State, Banrisul ranked
        second among the 50 largest companies by shareholders’ equity.

     October/2009
        Banrisul receives the Assiduity Seal after 3 years of Apimec-SP.
        Banrisul received the 3 Year Assiduity Seal from the Brazilian Capital Markets Analysts
        and Professionals Association (Apimec-SP). This recognition shows that the Bank
        operates according to good corporate governance practices, especially in terms of
        transparency, accountability and equality in disclosing information in its public meetings
        with analysts and investors.
        Banrisul’s chip card receives the 2009 World’s Best Solution award.
        Banrisul received the 2009 World’s Best Solution award for developing a debit card
        with a smart chip. The award was given during the Multos World Conference in
        Malaysia.

     November/2009
        Banrisul receives the 2009 Agas Shopping Cart award.
        Banrisul was one of the winners of the 2009 Agas Shopping Cart award from the
        Supermarket Association of Rio Grande do Sul State (Agas). The Bank was the winner
        in the Best Service Provider category.
        Banrisul receives the Top of Marketing award from ADVB-RS.
        Banrisul won the 2009 Top of Marketing award in the Social Responsibility category for
        its Banrisul Concerts for Youths. The award was given by the Brazilian Association of
        Sales and Marketing Executives (ADVB-RS) to the companies with the best marketing
        strategies in 2009.

74




                                                                               FINANCIAL
                                                                               S TA T E M E N TS   ´09
                                     FS’09
December/2009
     Banrisul receives the 2009 Retailer Merit award.
     Banrisul received the 2009 Retailer Merit award in the Services – Financial Institution
     of the Capital City category, voted one of the best retailers by the Retail Executives
     Chambers (CDL). The awards ceremony was hosted by the CDL-RS Federation.


     Banrisul receives the Quality award from Apimec-SP.
     The public presentation for disclosure of Banrisul’s results was elected one of the 10
     best meetings in 2009. The best meeting is chosen according to the evaluation of
     analysts and investors at the end of each meeting of the Brazilian Capital Markets
     Analysts and Professionals Association (Apimec-SP).


     Banrisul ranks among Brazil’s 100 largest economic groups.
     Banrisul is Brazil’s 83r d largest economic group according to the annual publication
     Valor Grandes Grupos, edited by São Paulo’s specialized economics and finance
     newspaper Valor Econômico. In the ranking of the 200 largest groups by gross revenue
     in Brazil, Banrisul climbed 11 positions from 2007 to 2008. The Bank had been ranked
     94th. The study also ranked Banrisul as the 13th largest group in finance. Banrisul is also
     one of the 20 largest groups of the financial sector that grew most by gross revenue,
     shareholders’ equity, and return on equity.


     Banrisul stands out nationwide with its Authorized Direct Bill Pay project.
     Banrisul stood out in the Brazilian financial system for its implementation of Authorized
     Direct Bill Pay (DDA). The Institution received seven medals from the Interbank
     Payment Chamber, the company that provides technology services to the Brazilian
     Federation of Banks.




                                                                                                   75




 FINANCIAL
 S T AT E M E N T S   ´09
                                      FS’09
     Acknowledgements
     We would like to thank the State Government for understanding and supporting our goals.
     We would like to thank our employees for their professionalism and assimilation of the
     culture of corporate challenges. We would like to thank our clients and shareholders for
     whom we strive to maintain a solid, stable and profitable bank. In 2009, we wrote another
     chapter of Banrisul’s history of success, and we continue moving toward the future.

                                                                           The Management.




76




      FINANCIAL
                      ´09
      S TA T E M E N TS
                  Financial
                 Statements




FINANCIAL
           ´09
S T ATEMENTS
                                                                  FS’09
Balance Sheet
December 31, 2009 and 2008
(In Thousands of Reais)

                                                                                                       BANRISUL     BANRISUL CONSOLIDATED
ASSETS                                                                                          2009       2008           2009       2008
CURRENT ........................................................................          17,416,546 16,298,255 17,484,583 16,354,440
 CASH .................................................................................      411,158    373,239    411,220    373,278
 INTERBANK INVESTMENTS (Notes 03 (b) and 04) .....                                         5,336,677 4,668,686 5,356,542    4,687,078
   Money Market Investments .....................................                          5,207,226 4,430,537 5,227,091    4,448,929
   Interbank Deposits ...................................................                    129,451    238,149    129,451    238,149
 SECURITIES AND DERIVATIVES (Notes 03 (c) and 05) ..                                       3,194,674 3,004,516 3,198,936    3,010,816
   Own Portfolio ..............................................................            1,821,121 2,472,028 1,825,378    2,478,323
   Linked to Repurchase Commitments .....................                                  1,096,768    327,052 1,096,768     327,052
   Derivatives ..................................................................             15,981      7,411     15,981      7,411
   Linked to Central Bank of Brazil .............................                            194,497    159,468    194,497    159,468
   Linked to Guarantees ...............................................                       66,307     38,557     66,307     38,557
   Privatization Certificates ..........................................                           -          -          5          5
 INTERBANK ACCOUNTS ..................................................                     1,380,802 1,341,804 1,380,802    1,341,804
   Payments and Receipts Pending Settlement .......                                            3,231      3,377      3,231      3,377
   Restricted Deposits (Note 06)
     Central Bank of Brazil ............................................                  1,349,540    1,318,412    1,349,540   1,318,412
     Correspondents .......................................................                  28,031       20,015       28,031      20,015
 INTERBRANCH ACCOUNTS .............................................                          35,070       43,936       35,070      43,936
   Third-party Funds in transit ....................................                            833        1,368          833       1,368
   Int ernal Trans fers of Funds .....................................                       34,237       42,568       34,237      42,568
 LOANS (Notes 03 (d) and 07) ........................................                     6,084,542    5,770,975    6,084,542   5,770,975
   Loans
     Public Sector ............................................................              36,075       79,942       36,075      79,942
     Private Sector ...........................................................           6,466,547    5,960,215    6,466,547   5,960,215
    Allowance for Loan Losses (Note 03 (f)) ..............                                (418,080)    (269,182)    (418,080)   (269,182)
 LE ASE OPERATIONS (Notes 03 (d) and 07)..................                                   46,117       45,001       46,117      45,001
   Lease Receivables
     Public Sector ............................................................                  817         634          817          634
     Private Sector ...........................................................               46,866      46,553       46,866       46,553
   Allowance for Doubtful Lease Receivables .........                                        (1,566)      (2,186)     (1,566)      (2,186)
 OTHER RECEIVABLES (Note 08) .....................................                          904,559    1,044,054     948,170    1,075,286
   Foreign Exchange Portfolio ......................................                        448,898      625,761     448,898      625,761
   Income Receivable ....................................................                     35,544      44,173       30,833       39,228
   Trading Accoun ts ........................................................                      -            -       4,615        1,858
   Specific Credits ...........................................................                    -            -          21            -
   Other .............................................................................      461,884      391,516     505,986      426,816
   Allowance for Losses on Other Receivables
     (Note 07) ...................................................................          (41,767)    (17,396)     (42,183)    (18,377)
 OTHER ASSETS .................................................................               22,947       6,044       23,184       6,266
   Temporar y Inv estimen ts ...........................................                         232       3,070          232       3,070
   Allowance for Losses ................................................                           -     (1,448)            -     (1,448)
   Other Assets ...............................................................                5,243       7,827        5,389       7,927
   Allowance for Valuation ..........................................                          (590)     (7,826)        (590)     (7,826)
   Prepaid Expenses, .....................................................                    18,062       4,421       18,153       4,543    78




  FINANCIAL
  S T AT E M E N T S     ´09
                                                                FS’09
                                                                                                          BANRISUL BANRISUL CONSOLIDATED
     ASSETS (Cont’d)                                                                             2009         2008        2009       2008

     LONG-TERM ASSETS ....................................................... 11,221,775                  8,464,826 11,241,609       8,486,872
       SECURITIES AND DERIVATIVES (Notes 03 (c) and 05)                                      4,206,831    3,097,472 4,209,585        3,099,975
         Own Portfolio ..............................................................        2,555,047    2,125,424 2,555,047        2,125,424
         Linked to Repurchase Commitments .....................                                972,732      491,999    972,732         491,999
         Derivatives ..................................................................        135,238      102,492    135,238         102,492
         Linked to Central Bank of Brazil .............................                        345,311      192,684    345,311         192,684
         Linked to Guarantees ...............................................                  198,503      184,873    201,257         187,376
       INTERBANK ACCOUNTS ..................................................                   440,898      382,057    440,898         382,057
         Restricted Deposits (Note 06)
           National Housing System .....................................                       440,898      382,057      440,898       382,057
       LENDING OPERATIONS (Notes 03 (d) and 07) ............                                 5,782,477    4,185,375    5,782,477     4,185,375
         Lending Operations
           Public Sector ............................................................            82,146     109,619       82,146       109,619
           Private Sector ...........................................................        6,248,460    4,748,716    6,248,460     4,748,716
         Allowance for Loan Losses (Note 03 (f)) ...............                             (548,129)    (672,960)    (548,129)     (672,960)
       LE ASING OPERATIONS (Notes 03(d) and 07) ..............                                   43,027      57,194       43,027        57,194
         Lease Receivables
           Public Sector ............................................................             2,442         425        2,442            425
           Private Sector ...........................................................            47,768     60,328        47,768         60,328
         Allowance for Doubtful Lease Receivables .........                                     (7,183)     (3,559)      (7,183)        (3,559)
       OTHER RECEIVABLES (Note 08) .....................................                       725,869     725,285      742,949        744,828
         Foreing Exchange Portfolio ......................................                           28       5,408           28          5,408
         Other .............................................................................   805,768     725,285      822,848        744,828
         Allowance for Losses on Other Receivables
           (Note 07) ...................................................................       (79,927)      (5,408)     (79,927)       (5,408)
       OTHER ASSETS .................................................................            22,673      17,443        22,673        17,443
         Other Assets ...............................................................            20,777      18,446        20,777        18,446
         Allowance for Valuation ..........................................                     (8,604)      (1,003)      (8,604)       (1,003)
         Prepaid Expenses ......................................................                 10,500            -       10,500             -
     PERMANENT ASSETS ......................................................                   645,254      629,603      357,945       364,063
       INVESTIMENTS ................................................................           299,800      278,688         7,758         8,241
         Investments in Domestic Subsidiaries (Note 02 (c))                                    292,895      271,765             -             -
         Other Investiments ...................................................                  11,888      11,920        13,214        13,711
         Allowance for Losses ................................................                  (4,983)      (4,997)      (5,456)       (5,470)
       PROPERTY AND EQUIPMENT IN USE (Note 09 (a)) .....                                       165,708      146,676      170,058       151,351
         Real Estate ..................................................................        119,969      120,056      127,012       127,086
         Other .............................................................................   433,551      405,585      438,659       410,432
         Accumulated Depreciation ......................................                     (387,812)    (378,965)    (395,613)     (386,167)
       INTANGIBLE (Note 09 (b)) .............................................                  179,746      204,239      180,129       204,471
         Intangible Assets ......................................................              311,289      280,218      311,672       280,450
         Accumulated Amortization ......................................                     (131,543)     (75,979)    (131,543)       (75,979)

     TOTAL ASSETS .................................................................    29,283,575 25,392,684 29,084,137 25,205,375




79




                                                                                                                         FINANCIAL
                                                                                                                         S TA T E M E N TS   ´09
                                                                   FS’09
                                                                                                        BANRISUL    BANRISUL CONSOLIDATED
LIABILITIES AND SHAREHOLDERS´EQUITY                                                              2009       2008          2009       2008

CURRENT ........................................................................           21,420,147 18,177,692 21,218,591     18,021,578
  DEPOSITS (Note 10) .......................................................               13,261,369 11,289,466 13,072,695 11,120,370
   Demand Deposits ......................................................                   2,107,702 1,869,619 2,100,614    1,864,035
     Saving Deposits .........................................................             5,636,799    4,805,853   5,636,799    4,805,853
     Interbank Deposits ...................................................                   89,968       11,981      89,968       11,981
     Time Deposits ............................................................            5,415,309    4,585,598   5,233,698    4,422,086
     Other Deposits ...........................................................               11,591       16,415      11,616       16,415
  MONEY MARKET FUNDING (Note 10) ..........................                                2,069,893    2,290,220   2,006,497    2,234,251
   Own Portfolio ..............................................................            2,069,893      819,131   2,006,497      763,162
    Third Parties ...............................................................                  -    1,471,089           -    1,471,089
  INTERBANK ACCOUNTS ..................................................                       10,739       11,779      10,739       11,779
     Receipt and Payment Pending Settlement ...........                                       10,737      11,773       10,737       11,773
     Correspondents ..........................................................                     2           6            2            6
  INTERBRANCH ACCOUNT ...............................................                        149,932     113,070     149,932      113,070
    Third-p arty Funds in Transit ....................................                       149,901     112,908     149,901      112,908
   Int ernal Trans fers of Funds .....................................                            31         162          31          162
  BORROWINGS (Note 11) ...............................................                       503,167     622,473     503,167      622,473
     Domestic Borrowings - Other Institutions ...........                                     60,307           -      60,307             -
     Foreign Borrowings ...................................................                  442,860     622,473     442,860      622,473
  DOMESTIC ONLENDINGS -
   OFFICIAL INSTITUTIONS (Note 12) ...........................                               369,832     329,949     369,832      329,949
     Nacional Treasur y ......................................................                51,632      42,290       51,632       42,290
     National Economic and Social Development
       Bank (BNDES) ...........................................................              212,574     204,358     212,574      204,358
     Federal Savings and Loan Bank (CEF) ....................                                  9,795       1,432       9,795        1,432
    National Equipment Financing Authority (FINAME)                                           95,831      81,869       95,831       81,869
  FOREING ONLENDINGS ..................................................                       35,768      31,792       35,768       31,792
   Foreign Onlendings (Note 12) .................................                             35,768      31,792       35,768       31,792
  DERIVATIVES (Note 05 (d)) ...........................................                       14,515       8,348       14,515        8,348
   Derivatives ..................................................................             14,515        8,348      14,515        8,348
  OTHER PAYABLES (Note 13) ............................................                    5,004,932    3,480,595   5,055,446    3,549,546
     Collected Taxes and Other .......................................                        28,445      80,948       28,445       80,948
     Foreign Exchanges Portfolio ....................................                         24,134      91,215       24,134       91,215
     Social and Statutory ..................................................                  33,315      39,229      33,387        39,295
     Tax and Social Security .............................................                   131,302      78,551     137,210        81,551
     Trading Account and In termediation .....................                                     -            -       4,223        1,554
     Financial and Development Funds .......................                               4,139,986    2,672,001   4,139,986    2,672,001
     Other .............................................................................     647,750     518,651     688,061      582,982




                                                                                                                                             80




  FINANCIAL
  S T AT E M E N T S     ´09
                                                                        FS’09
                                                                                                             BANRISUL    BANRISUL CONSOLIDADO
     LIABILITIES AND SHAREHOLDERS´EQUITY (Cont’d)                                                     2009       2008         2009        2008

     LONG-TERM LIABILITIES .................................................                    4,454,966    4,135,853   4,455,429     4,101,355
       DEPOSITS (Note 10) .......................................................               3,297,050    3,136,312   3,297,050     3,135,713
        Time Deposits ............................................................              3,297,050    3,136,312   3,297,050     3,135,713
       DOMESTIC ONLENDINGS -
        OFFICIAL INSTITUTIONS (Note 12) ...........................                               572,913     385,771     572,913        385,771
          Nacional Treasur y ......................................................                12,303      13,092       12,303         13,092
          National Economic and Social Development Bank
            (BNDES) ......................................................................        423,633     278,316     423,633        278,316
          Federal Savings and Loan Bank (CEF) ....................                                 21,732       8,339      21,732          8,339
        National Equipment Financing Authority (FINAME)                                           115,245      86,024     115,245          86,024
       DERIVATIVES (Note 5 (d)) ..............................................                     32,457      27,538      32,457          27,538
        Derivatives ..................................................................             32,457      27,538      32,457         27,538
       OTHER PAYABLES (Note 13) ............................................                      552,546     586,232     553,009        552,333
          Tax and Social Security .............................................                   386,006     367,419     386,006        367,419
          Other .............................................................................     166,540     218,813     167,003        184,914
     MINORITY INTEREST .......................................................                          -            -       1,655         3,303
     SHAREHOLDERS’ EQUITY (Note 20) ...............................                             3,408,462    3,079,139   3,408,462     3,079,139
       C apital .............................................................................   2,600,000    2,300,000   2,600,000     2,300,000
       Capital Reserves ...........................................................                 6,171        6,164       6,171         6,164
       Profit Reserves ...............................................................            808,138     782,482     808,138        782,482
       Assets valuation adjustment (Note 05 (b)) .............                                     (5,847)     (9,507)     (5,847)        (9,507)


     TOTAL LIABILITIE S AND SHAREHOLDERS’ EQUITY ..........                                     29,283,575 25,392,684 29,084,137      25,205,375




81




                                                                                                                           FINANCIAL
                                                                                                                           S TA T E M E N TS   ´09
                                                                  FS’09
Statement of Income
December 31, 2009 and 2008
(In Thousands of Reais)


                                                                                                                  BANRISUL        BANRISUL CONSOLIDATED
                                                                                  2 nd Half/2009          2009           2008         2009            2008
                                                                                                                 (reclassified)               (reclassified)

FINANCIAL INCOME ................................................                  2,117,918        4,253,397 3,870,493 4,262,620 3,879,663
  Loans .......................................................................    1,462,874        2,857,229 2,336,380 2,857,233 2,336,380
  Lease Operations .................................................                    9,543           19,651      16,192      19,651     16,192
  Securities ...............................................................         524,596        1,104,201 989,818 1,113,347 998,988
    Derivatives .........................................................               4,140           23,945           -     24,018            -
  Foreign Exchange ..................................................                  30,974           71,778 217,719         71,778 217,719
  Compulsory Investments .....................................                         85,791          176,593 310,384 176,593 310,384
FINANCIAL EXPENSES .............................................                     994,710        2,158,204 2,176,116 2,142,893 2,157,313
  Funding Operations .............................................                   637,745        1,350,596 1,420,123 1,334,526 1,401,077
  Borrowings, Assignments and Onlendings .....                                       195,122           385,728 482,146 385,728 482,146
  Derivatives .............................................................                 -                -     17,548            -     17,548
  Allowance for Loan Losses (Note 07 (d)) .........                                  161,843           421,880 256,299 422,639 256,542
GROSS PROFIT FR OM FINANCIAL OPERATIONS ......                                     1,123,208        2,095,193 1,694,377 2,119,727 1,722,350
OTHER OPERATING INCOME (EXPENSES) ...............                                  (601,210)       (1,257,431) (1,006,865) (1,266,460) (1,018,111)
  Income from Services Rendered (Note 15) ......                                       47,599           93,929      95,917 137,463 135,319
  Bank Fees Income (Note 16) ...............................                         226,050           441,881 403,374 441,878 403,372
  Equity in Subsidiaries (Note 02 (c)) ..................                              13,619           24,025      30,152           -           -
  Personnel Expenses .............................................                 (458,683)         (894,158) (830,099) (901,002) (835,369)
  Other Administratives Expenses (Note 17) .....                                   (347,221)         (669,845) (618,056) (678,885) (625,746)
  Tax Expense s..........................................................            (88,418)        (176,001) (147,433) (181,984) (152,586)
  Other Operating Income (Note 18) ....................                                83,147          144,221 194,983 143,711 193,218
  Other Operating Expenses (Note 19) ................                                (77,303)        (221,483) (135,703) (227,641) (136,319)
INC OME FROM OPERATIONS ..................................                           521,998           837,762 687,512 853,267 704,239
INC OME BEFORE TAXES ON INCOME AND
  EMPLOYEE PROFIT SHARING ................................                           521,998          837,762    687,512          853,267       704,239
INC OME TAX AND SOCIAL CONTRIBUTION
  (Notes 03 (l) and 22 (a)) .......................................                (162,274)        (252,290)    (66,659) (267,597)             (83,192)
EMPLOYEE PROFIT SHARING ..................................                          (29,385)         (44,376)    (29,980) (44,403)              (29,990)
MINORITY INTEREST ...............................................                          -                -           -     (171)                (184)
NET INCOME ...........................................................               330,339          541,096    590,873 541,096                590,873
  Number of Outstanding Shares (Thousands) ....                                      408,974          408,974    408,974          -                    -
  Earning per Thousand Shares (R$) ....................                               807.73         1,323.06    1,444.77         -                    -




                                                                                                                                                               82




  FINANCIAL
  S T AT E M E N T S     ´09
                                                                   FS’09

     Cash Flow
     December 31, 2009 and 2008
     (In Thousands of Reais)



                                                                                                             Banrisul       Banrisul Consolidated
                                                                                2 nd Sem/2009        2009       2008          2009           2008


     Adjustes to Net Income .........................................              601,249      1,117,816   857,855 1,143,227         890,314
      Net Income ...........................................................       330,339        541,096   590,873 541,096           590,873
     Adjustment to Net Income:
      Depreciation and Amortization .......................                          49,250       92,943     88,800        93,779       89,660
       Equity in Subsidiaries .......................................              (13,619)      (24,025)   (30,152)             -              -
       Dividends Received Fron Subsidiaires ..........                                    -         4,945      1,319             -              -
       Provision for Loan Losses .................................                 161,843       421,880    256,299      422,639      256,543
       Reserve for Securitization Losses ...................                        (5,510)       (4,679)    (2,221)      (4,679)      (2,221)
       Reserve for Contingencies ................................                    45,278       89,027      45,762      93,718        47,123
       De ferred Income T ax and Social Con tribution                                33,668       (3,371)   (92,825)      (3,326)     (91,664)
     Changes in Assets and Liabilities .......................... (1,548,289)                   (211,469)   519,399 (233,578)         486,940
      Valuation adjus tment t o Equity .......................            176                       3,660    (9,554)    3,660          (9,554)
       (Increase) Decrease in Interbank Deposits .                               (114,590) (114,590)           - (114,590)          -
       (Increase) Decrease in Securities ...................                     (849,150) (1,258,201) (963,646)(1,256,414) (966,701)
       (Increase) Decrease in Derivatives ................                          (8,307)      (30,230)    23,980      (30,230)       23,980
       (Increase) Decrease in Interbank and
          Interbranch Accounts ....................................              (264,337)     (53,151) 958,459 (53,151) 958,458
       (Increase) Decrease in Loan Operations ......                            (1,664,804) (2,306,124) (3,434,235) (2,306,125) (3,434,236)
       (Increase) Decrease in Lease Operations ....                                     210        9,893 (62,419)          9,893 (62,419)
       (Increase) Decrease in Other Receivables ...                                  60,122      117,004 (349,441)       108,296 (358,847)
       (Increase) Decrease in Other Assets ..............                          (22,715) (22,133)     2,286 (22,148)      2,149
       Increase (Decrease) in Deposits ....................                      1,511,222 2,132,641 1,903,922 2,113,662 1,890,125
       Increase (Decrease) in Money Market
          Funding ...........................................................    (850,586)      (220,327)     1,030 (227,754)               6,132
       Increase (Decrease) in Borrowing ..................                         122,156        111,695 427,744 111,695 427,653
       Increase (Decrease) in Other Liabilities .......                            532,314      1,418,394 2,021,273 1,429,628 2,010,200
     NET CASH USED IN OPERATING ACTIVITIES ..........                            (947,040)       906,347 1,377,254       909,649 1,377,254
     CASH FLOW PROVIDED BY INVESTING ACTIVITIES
       Adjustment of Asssets in Subsidiaries ............                                  7           7       (111)            7           (111)
       Disposal of Investiments ...................................                      142         164         138          680               -
       Disposal of Property and Equipment in Use ..                                      168          239        475          242            477
       Acquisition of Investiments ...............................                     (132)        (185)       (42)        (197)           (168)
       Acquisition of Property and Equipment in use                                (49,131)      (57,033)   (62,524)     (57,316)     (61,156)
       Acquisition of Intangible Assets ......................                     (19,542)      (30,688)   (57,993)     (31,070)     (58,264)




83




                                                                                                                        FINANCIAL
                                                                                                                        S TA T E M E N TS   ´09
                                                                   FS’09
                                                                                                                Banrisul     Banrisul Consolidated
                                                                                   2 nd Sem/2009        2009       2008        2009           2008


NET CASH USED IN INVESTMENT ACTIVITIES ........                                       (68,488)      (87,496) (120,057)     (87,654) (119,222)
CASH FLOW FROM FINANCING ACTIVITIES
 Dividends Paid ......................................................                         -    (38,506)   (87,056)    (38,506)    (87,056)
  Interest on Capital Paid ......................................                     (93,895)     (189,025) (157,937) (189,025) (157,937)
  Change in Minority Interest ................................                               -             -         -   (1,648)     1,902
NET CASH USED IN FINANCING ACTIVITIES ...........                                     (93,895)     (227,531) (244,993) (229,179) (243,091)
NET INCREASE/DECREASE IN CASH AND
  CASH EQUIVALENT S ............................................ (1,109,423)                        591,320 1,012,204      592,816 1,014,941
  Cash and Cash Equivalents ................................         314,821                        373,239 347,304        373,278 347,353
 Interbank Investments (Note 03(n)) .................                               6,427,847      4,668,686 3,682,417 4,687,078 3,698,062
CASH AND CASH EQUIVALENT AT THE
  BEGINNING OF THE PERIOD ...............................                           6,742,668      5,041,925 4,029,721 5,060,356 4,045,415
  Cash .........................................................................      411,158        411,158 373,239 411,220 373,278
 Interbank Investments (Note 03(n)) .................                               5,222,087      5,222,087 4,668,686 5,241,952 4,687,078
CASH AND CASH EQUIVALENT AT THE
  END OF THE PERIOD ...........................................                     5,633,245      5,633,245 5,041,925 5,653,172 5,060,356




                                                                                                                                                     84




  FINANCIAL
  S T AT E M E N T S      ´09
                                                                        FS’09

     Statement of Value Added
     December 31, 2009 and 2008
     (In Thousands of Reais)


                                                                                                                      BANRISUL         BANRISUL CONSOLIDATED

                                                                                        2 nd Half/2009        2009          2008            2009          2008
                                                                                                                     (reclassified)                (reclassified)

     INCOME .................................................................. 2.312.844                 4.511.384 4.308.676 4.562.844 4.355.238
       Financial Income .................................................. 2.117.891                     4.253.233 3.870.701 4.262.431 3.879.871
       Services Rendered and Bank Fees Income .....                                        273.649         535.810 499.291 579.341 538.691
       Allowance for loan losses ..................................                      (161.843)       (421.880) (256.299) (422.639) (256.542)
       Other ........................................................................       83.147         144.221 194.983 143.711 193.218
     FINANCIAL INTERMEDIATION EXPENSES (b) ...........                                     832.867       1.736.324 1.919.817 1.720.254 1.900.771
     INPUTS ACQUIRED FROM THIRD PARTIE S (c) .........                                     352.410        754.676    629.683           770.422      638.406
       Materials, Energy and other ..............................                          299.828        647.987    532.276           661.497      538.645
        Third-party Services .............................................                   52.609       106.853       97.199         109.114       99.553
       Asset s Value Recov ery (Loss) .............................                            (27)         (164)          208           (189)          208
     GROSS VALUE ADDED (d=a-b-c) ............................. 1.127.567                                 2.020.384 1.759.176 2.072.168 1.816.061
     DEPRECIATION AND AMORTIZATION (e) .................          49.250                                    92.943    88.800    93.779    89.660
     NET VALUE ADDED PRODUCED BY THE
      BANK (f=d-e) ........................................................ 1.078.317                    1.927.441 1.670.376 1.978.389 1.726.401
     VALUE ADDED RECEIVED IN TRANSFER ( g) ............                                      13.619        24.025       30.152                 -               -
      Equity in Subsidiaries ........................................                        13.619        24.025       30.152                 -               -
     VALUE ADDED FOR DISTRIBUTION (h=f+g) ............ 1.091.936                                         1.951.466 1.700.528 1.978.389 1.726.401
     DIS TRIBUTION OF VALUE ADDED ........................... 1.091.936                                  1.951.466 1.700.528 1.978.389 1.726.401
       Personnel ...............................................................           415.888        803.518    731.481           810.153      736.591
         Salary ...............................................................            321.120        617.607    564.791           623.152      568.994
            Benefits ...........................................................             72.512       136.591    125.186           137.213      125.709
            F.G.T.S. ..............................................................          22.256        49.320     41.504            49.788       41.888
       Tax Fees and c ontributions .................................                       322.872        563.307    342.690           584.833      364.546
          Federal ............................................................             307.680        532.507    314.304           552.038      334.443
            State .................................................................             241           506          532              534         558
            Municipality ...................................................                 14.951        30.294       27.854           32.261      29.545
        Third-party capital compensation .....................                               22.837        43.545       35.484           42.136      34.207
          Rentals ............................................................               22.837        43.545       35.484           42.136      34.207
        Shareholders’ equity compensation ...................                              330.339        541.096    590.873           541.267      591.057
          Interest on Capital ........................................                      93.895        189.025    168.499           189.025      168.499
            Dividends ........................................................              26.415         26.415    125.583            26.415      125.583
            Retained Earnings ........................................                     210.029        325.656    296.791           325.656      296.791
            Minority interest ...........................................                            -           -                -         171           184




85




                                                                                                                                      FINANCIAL
                                                                                                                                      S TA T E M E N TS   ´09
                                                                                 Statement of Changes on Shareholders´ Equity
                                                                                 December 31, 2009 and 2008
                                                                                 (In Thousands of Reais)




S T AT E M E N T S
                     FINANCIAL
                                                                                                                                                                         Capital Reserves                       Profit Reserves
                                                                                                                                                          Adjustment of
                                                                                                                                                          Memberships                                                                 Assets




´09
                                                                                                                                    Capital     Capital   Certificates in      Investments                                 For      Valuation    Retained
                                                                                                                                     Stock    Increase       Subsidiary            Grants       Legal    Statuory    Expansion    Adjustment     Earnings       TOTAL

                                 Balance as of January 01, 2008 ..................................................               2,034,000            -          1,764             4,511      98,770    229,095        423,826          47             -    2,792,013
                                   Capital Increase (Note 20 (a)) ...................................................              266,000            -              -                 -           -          -      (266,000)            -            -             -
                                   Adjustment of Memberships Certificates in Subsidiary ...........                                      -            -          (111)                 -           -          -              -            -            -         (111)
                                   Valuation Adjustmen t to Equity (Note 05 (b)) .........................                               -            -              -                 -           -          -              -      (9,554)            -       (9,554)
                                   Net Income ................................................................................           -            -              -                 -           -          -              -            -      590,873      590,873
                                   Allocation of Net Income (Note 20 (b))
                                     Recognition of Reserves ........................................................                    -            -              -                 -      29,544     147,718      206,585             -     (383,847)             -
                                     Interest on Capital .................................................................               -            -              -                 -           -           -             -            -     (168,498)    (168,498)
                                     Dividends Accrued ................................................................                  -            -              -                 -           -    (87,056)             -            -      (38,528)    (125,584)
                                 Balance as of December 31, 2008 .............................................                   2,300,000            -          1,653             4,511     128,314    289,757        364,411      (9,507)             -   3,079,139
                                   Capital Increase (Note 20 (a)) ...................................................              300,000            -              -                 -            -          -     (300,000)            -             -             -
                                   Adjustment of Memberships Certificates in Subsidiary ...........                                      -            -              7                 -           -           -             -            -             -            7
                                   Valuation Adjustmen t to Equtiy (Note 05 (b)) .........................                               -            -              -                 -            -          -             -        3,660             -        3,660
                                   Net Income ................................................................................           -            -              -                 -           -           -             -            -       541,096     541,096
                                   Allocation of Net Income (Note 20 (b))
                                     Recognition of Reserves ........................................................                    -         -                 -                 -      27,055    135,274       163,327             -     (325,656)            -
                                                                                                                                                                                                                                                                          FS’09




                                     Interest on Capital .................................................................               -         -                 -                 -           -           -            -             -     (189,025)    (189,025)
                                     Dividends Accrued ................................................................                  -         -                 -                 -            -         -             -             -      (26,415)     (26,415)
                                 Balance as of December 31, 2009 .............................................                   2,600,000         -             1,660             4,511     155,369    425,031       227,738       (5,847)             -   3,408,462
                                 Balance as of July 01, 2009 ........................................................            2,300,000   300,000             1,653             4,511     138,852    342,446       116,811       (6,023)             -   3,198,250
                                   Capital Increase (Note 20 (a)) ...................................................              300,000 (300,000)                  -                -           -           -            -             -             -             -
                                   Adjustment of Memberships Certificates in Subsidiary ...........                                      -         -                 7                 -            -         -             -             -             -            7
                                   Valuation Adjustmen t to Equity (Note 05 (b)) .........................                               -         -                 -                 -            -         -             -           176             -          176
                                   Net Income ................................................................................           -         -                 -                 -            -         -             -             -      330,339       330,339
                                   Allocation of Net Income (Note 20 (b))
                                     Recognition of Reserves ........................................................                    -            -              -                 -      16,517     82,585       110,927             -     (210,029)            -
                                     Interest on Capital .................................................................               -            -              -                 -            -         -             -             -      (93,895)     (93,895)
                                     Dividends Accrued ................................................................                  -                           -                 -            -         -             -             -      (26,415)     (26,415)
                                 Balance as of December 31, 2009 .............................................                   2,600,000            -          1,660             4,511     155,369    425,031       227,738       (5,847)             -   3,408,462




                                 86
          Notes to the
      Financial Statements




FINANCIAL
           ´09
S T ATEMENTS
         Notes to the Financial Statements



                                     FS’09
Notes to the Financial Statements

NOTE 01     Operations
Banco do Estado do Rio Grande do Sul S.A. (Banrisul) is a multiple-service bank, operating
commercial, lending, financing and investment, mortgage loan, development, lease and
investment portfolios, including exchange, securities brokerage, and credit card and
consortium management. Transactions are conducted within the context of a group of
financial institutions that operate on an integrated basis in the financial market. Banrisul
also operates as an instrument for the execution of the economic and financial policy of
the state of Rio Grande do Sul, in conformity with the state government’s plans and
programs.

NOTE 02     Presentation of the Financial Statements
(a) The individual and consolidated financial statements have been prepared in accordance
with Brazilian accounting practices and standards and instructions from the Central Bank
of Brazil and from the Brazilian Securities and Exchange Commission (CVM), include
accounting practices and estimates concerning the recognition of allowances and
determination of assets that comprise its securities portfolio. Actual results could differ
from those estimated.

(b) The Bank’s individual financial statements include operations conducted in Brazil as
well as the incorporation of its foreign branches (New York and Grand Cayman). Assets,
liabilities and income from foreign branches, before consolidation eliminations, are
summarized as follows:




                                                                                               88




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 S T AT E M E N T S   ´09
                                                                                                FS’09
                                                                                                                                                        In Thousands of Reais
                                                                                                                                                        2009            2008
     ASSETS
     Securities .............................................................................................................                       8,559               9,509
     Lending Operations ..........................................................................................                                144,000             195,585
        Operations in Brazil ................................................................................................                      81,795              98,553
        Other Lending Operations ..............................................................................                                    62,205              97,032
     Other Assets ......................................................................................................                           37,981              45,713
     Total Assets ........................................................................................................                        190,540             250,807

     LIABILITIES
     Deposits ...............................................................................................................                      74,908             101,632
        Operations in Brazil ........................................................................................                              20,363              28,077
        Other Deposits ................................................................................................                            54,545              73,555
     Other Liabilities ..................................................................................................                             449                (724)
     Shareholders’ Equity ...........................................................................................                             115,183             149,899
     Total Liabilities and Shareholders’ Equity ...................................................                                               190,540             250,807
     Demonstração do Resultado
        Financial Intermediation Income ......................................................................                                          7,343          13,016
        Financial Intermediation Expenses .................................................................                                           (1,689)          (3,652)
        Other Expenses, Net ......................................................................................                                    (2,154)          (2,918)
     Net Income for the period ...............................................................................                                          3,500           6,446

     The effects of the exchange variation over operations in foreign branches are distributed
     in the statement of income according to the nature of corresponding assets and liabilities.

     (c) The consolidated financial statements include the accounts of the Bank, its foreign
     branches and subsidiaries whose balance of investments, as of December 31, 2009,
     amounted to R$292,895 thousand (2008 – R$271,765 thousand), and generated equity gains
     in subsidiaries for the period of R$24,025 thousand (2008 – R$30,152 thousand), and are
     presented as follows:

     Main Information on Investments in Subsidiaries
                                                                                                                                                            In Thousands of Reais
                                                                                                   Banrisul         Banrisul S.A.     Banrisul S.A.       Banrisul
                                                                                                 Armazéns      Corretora de Val.    Administradora        Serviços
                                                                                                 Gerais S.A.     Mob. e Câmbio      de Consórcios             Ltda.         Total
     Thousands of Shares
        Common Shares ............................................................                     696               10,000            89,114               -               -
        Preferred Shares ............................................................                    -               19,608                 -               -               -
        Shares ............................................................................              -                    -                 -           2,780               -
     Adjusted Ownership Interest (%) ........................................                       99.498               98.693            99.569          99.785               -
     Capital ................................................................................       22,750               40,000           105,000          77,640               -
     Shareholders’ Equity ..........................................................                24,086               62,967           122,249          85,248               -
     Net Income .........................................................................            1,324                7,805            10,862           7,333               -
     Net Amounts Eliminated on Consolidation (Note 25):
     Assets (Liabilities)
        As of December 31, 2009. .............................................                         111             (61,360)          (118,606)       (96,040)     (275,895)
        As of December 31, 2008 ..............................................                         334             (54,003)          (105,657)       (87,234)     (246,560)
     Income (Expenses)
        As of December 31, 2009. .............................................                     (1,298)               (3,054)           (8,365)              460     (12,257)
        As of December 31, 2008 ..............................................                     (1,200)               (4,465)          (10,794)              463     (15,996)
     Book Value of the Investmen t
        As of December 31, 2009. .............................................                      23,965               62,144           121,721          85,065       292,895
        As of December 31, 2008 ..............................................                      22,961               54,455           113,474          80,875       271,765
     Equity in Subsidiaries
        As of December 31, 2009. .............................................                       1,318                7,703            10,815           4,189          24,025
        As of December 31, 2008 ..............................................                       2,118                7,967            10,763           9,304          30,152


89




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                                                                                                                                                       S TA T E M E N TS   ´09
                                     FS’09
The preparation of consolidated financial statements eliminated interests among
consolidated companies, remaining balance and results of transactions. The portions of
income for the period and shareholders’ equity referring to minority shareholders’ interest
have been highlighted.
(d) Financial Lease Operations are stated at present value in the Balance Sheet, and related
income and expenses, which represent the financial result of said operations, are grouped
in Lease Operations in the Statement of Income.
(e) Pursuant to Central Bank of Brazil Circular Letter 3357 of the, amounts related to
agreements that ensure exclusive banking services were reclassified from Prepaid
Expenses to Intangible Assets as of December 31, 2008. To enable comparability between
periods, the amount of R$50,507 thousand (Bank and consolidated) recorded as of December
31, 2008 was reclassified from Other Operating Expenses to Other Administrative Expenses.



NOTE 03     Significant Accounting Practices
(a) Results of operations
Income and expenses are recorded on the accrual basis.

(b) Interbank Investments
Represent funds invested in the interbank market, stated at present value, calculated on
“pro rata die” basis, according to the variation of both the agreed index and the interest
rate.

(c) Securities and Derivatives
According to Central Bank of Brazil Circular 3,068 of November 8, 2001 and supplementary
regulation, securities are classified and assessed into three specific categories, in conformity
with the following accounting criteria:

i) Trading Securities – securities acquired for the purposes of being actively and frequently
traded, adjusted to fair value, and realized and unrealized gains or losses recognized in
the statement of income.

ii) Available-for-Sale Securities – Include securities used as part of the strategy to manage
risk of changes in interest rates and which may be traded as a result of these changes,
changes in payment conditions or other factors. These securities are adjusted to fair value,
and income earned is recorded in the statements of income, whereas unrealized gains
and losses from changes in fair value are recorded in a separate shareholders’ equity
caption, net of taxes, where applicable, denominated “Valuation a djustments to equity”
until they are realized through sale.

Gains and losses, when realized, are recorded in the statement of income on the trading
date, with a contra entry to a specific shareholders’ equity account, net of taxes, where
applicable.

                                                                                                   90




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                                          FS’09
     iii) Held-to-Maturity Securities – Include securities for which Management has the intent
     and financial capacity to hold to maturity and are stated at cost plus income earned. Financial
     capacity is defined in cash flow projections, disregarding any possible sale of these
     securities.

     Derivatives – Derivatives contracted in conjunction with other investment operations are
     recognized based on income earned and expenses incurred through the balance sheet
     date in the statement of income.

     (d) Loans, Lease Transactions and Other Receivables
     All loans and lease transactions are classified based on Management’s risk assessment,
     taking into account the economic scenario, past experience and specific risks related to
     operations, debtors and guarantors, pursuant to National Monetary Council (CMN)
     Resolution 2,682/99, which requires a periodic analysis of the portfolio and its classification
     into nine risk levels, from AA to H. A summary of this classification is presented in Note 07.

     Loans and lease transactions are recorded at present value, calculated on a daily pro-rata
     basis, based on the agreed index and interest rate, and are adjusted up to the sixtieth day
     past-due. Thereafter, income is recognized only when received.

     The risk of renegotiated assets are classified in accordance with the criteria established by
     Resolution 2,682/99, i.e. the rating assigned before the renegotiation is maintained and
     renegotiated loans previously written-off against the allowance and controlled in
     memorandum accounts are rated level H. Any gains on renegotiation are recognized as
     revenue only when actually received.

     (e) Other Receivables – Operations with Credit Cards
     Unbilled amounts are represented by receivables from cardholders for transactions in
     Visa and MasterCard banners. These amounts are accounted for as Notes and Credits
     Receivable, without credit characteristics, and transactions paid in installments when
     Banrisul is the issuer, and the outstanding balance of transactions paid by the minimum
     amount of the bill (Revolving), are reclassified as Loans.

     (f) Allowance for loan losses, for doubtful lease receivables and for losses on other
     receivables
     Recorded in an amount considered sufficient to cover possible considering the risk level
     classification of the customer based on periodic assessment of credit quality, and not only
     on the minimum percentages required by the Central Bank of Brazil (BACEN) Resolution
     2,682/99 when a default event occurs.

     As of December 31, 2009, the total amount related to the allowance for loan losses,
     allowance for doubtful lease receivables and losses and other receivables, as stated in
     Note 07, exceeds the minimum amount required if only the rating of transactions based
     on the number of past due days is considered as set forth by Central Bank of Brazil Resolution
     2,682/99. This procedure has been adopted by Management since its publication to cover
     possible losses on operations.

91




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                                       FS’09
(g) Permanent Assets
Permanent assets are stated at acquisition cost, adjusted for inflation through December
31, 1995, considering the following aspects:

·     investments in subsidiaries are accounted for under the equity method, based on
      financial statements prepared in compliance with the same accounting practices. Other
      investments are accounted for their acquisition cost and, where applicable, adjusted
      based on allowances for losses;

.     depreciation of property and equipment in use under the straight-line method is based
      on the expected economic useful lives of assets considering the minimum rates set
      annually by the Central Bank of Brazil, and disclosed in Note 09.

·     Intangible Assets consist, basically, of investments whose benefits will occur in the
      future. This group is represented by bank services contracts and software acquisition.
      Amortization is calculated under the straight line method at the rates stated reported
      in Note 09. Annually, the bank reviews intangible assets for impairment losses. When
      identified, losses are charged to income and disclosed in Note 09
·     The institution reviews annually whether there is any indication of losses in recoverable
      asset amounts. Losses, when identified, are recognized in the statement of income.

(h) Assets and Liabilities Denominated in Foreign Currency
The assets and liabilities of foreign branches, as well as other assets and liabilities in
foreign currency, were translated at the exchange rate prevailing at balance sheet date.
(i) Deposits, Money Market Funding, Borrowings and Onlendings and Financial and
Development Fund
Stated at collectable amounts plus charges incurred through the balance sheet date,
recognized on a pro rata die basis.

                                        06
Pursuant to Laws 12,069/04 and 12,585/ of the Rio Grande do Sul State Government, up to
85% of the escrow deposits made by third parties in the Bank are made available to the
state of Rio Grande do Sul, and the remaining balance is retained at the Bank for allocation
to a fund. Transferred escrow deposits are controlled in a memorandum account and the
retained portion is classified as “Other Payables”, as described in Note 21(a). The charges
on the remaining balance are recorded under the caption Expenses with Borrowings,
Assignments and Onlendings.

(j) Reserves for Tax, Labor and Civil Risks
These reserves are recorded based on the legal counsel’s opinion, using models and criteria
which permit obtaining the most adequate measurement, despite the uncertainty about
their period and the final outcome amount. The criterion used according to the nature of
the contingency is as follows:

i) Labor Contingencies – Recognized upon court notification of judicial discussion involving
Banrisul, the risk of loss of which is deemed as probable. Amounts are determined according
to disbursement estimates by our Management, timely revised based on information
received from our legal counsels, adjusted based on the amount of the deposit related to
the execution, when required.                                                                     92




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    S T AT E M E N T S   ´09
                                                                             FS’09
     ii) Civil Contingencies – Recognized, upon court notice, and monthly adjusted based on
     the intended amount of indemnities, the evidence presented, and the legal counsel’s
     evaluation – which considers previous court decisions, factual support, evidence produced in
     the records and legal decisions that might be rendered in the lawsuit, for the lawsuit loss risk.

     iii) Tax and Social Security Contingencies – Refer basically to taxes whose lawfulness or
     constitutionality is being challenged at administrative or judicial level and whose likelihood
     of loss is – or has been in previous phases – deemed as probable and are recognized at the
     full amount under dispute. For lawsuits with respective escrow deposits, amounts are not
     updated except when the Bank is authorized to withdraw the deposits on account of a
     favorable outcome of the lawsuit.

     (l) Income Tax and Social Contribution
     Calculated at the rate of 15% for social contribution tax (9% until April 30, 2008) and 15%
     (plus a 10% surtax pursuant to legislation) for income tax on taxable income in the period,
     adjusted by permanent differences. Deferred income tax and social contribution were
     calculated based on the rates in force on balance sheet date over the temporary additions
     and recorded under Other Receivables, as contra entry of Income for the Period.
     (m) Post-Employment Benefits
     The Bank sponsors a “defined benefit” plan to its employees that has been valued in
     compliance with specific legislation. According to CVM Resolution 371/00 and based on an
     appraisal report issued by an independent actuary, the Bank values the plan annually, as
     explained in Note 23.

     (n) Cash and Cash Equivalents in Cash Flow Statement
     Include the balances of cash and cash equivalents and interbank investments, redeemable
     within 90 days from the date of investment. These highly-liquid investments, which are
     stated at cost plus income earned through the balance sheet dates, have maturities of up to 30
     days or no deadline for redemption and are subject to an immaterial risk of change in value.



     NOTE 04           Interbank Investments
                                                                                                                                      In Thousands of Reais
                                                                                                                       Banrisul          Banrisul Consolidated
                                                                                                             2009        2008         2009               2008

     Money Market Investments ....................................................                      5,207,226   4,430,537     5,227,091    4,448,929
      Pending Setlement resales - Own Portfolio
        Treasury Bills - LFT ...............................................................            1,740,897   1,564,122     1,740,897    1,564,122
        Na tional Treasury Bi lls - LTN ...............................................                   151,000   1,258,535       151,000    1,258,535
        Na tional Treasury Not es - NTN ...........................................                     3,315,329     139,032     3,315,329      139,032
        Other ......................................................................................            -           -        19,865       18,392
      Pending Setlement resales - Third-Party Portfolio
        Treasury Bills - LFT ................................................................                   -     148,473              -     148,473
        Na tional Treasury Bills - LTN ...............................................                          -     251,433              -     251,433
        Na tional Treasury Notes - NTN ...........................................                              -   1,068,942              -   1,068,942

     Interbank Deposits ...................................................................               129,451     238,149       129,451      238,149
        Interbank Deposits ..................................................................             129,451     238,149       129,451      238,149
     Total ..........................................................................................   5,336,677   4,668,686     5,356,542    4,687,078
93




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                                                                                                                                   S TA T E M E N TS   ´09
                                                                        FS’09
NOTE 05            Securities and Derivatives

Breakdown of the portfolio of Securities and Derivatives:

                                                                                                                                     In Thousands of Reais
                                                                                                                     Banrisul           Banrisul Consolidated
                                                                                                          2009         2008          2009               2008

Trading Securities .........................................................................       1,884,691        959,170     1,886,134         959,170
Available-for-sale Securities ......................................................               1,067,165        614,613     1,069,984         620,913
Held-to-Maturity Securities ........................................................               4,298,430      4,418,302     4,301,184       4,420,805
Derivatieos ....................................................................................     151,219        109,903       151,219         109,903
Total ..........................................................................................   7,401,505      6,101,988     7,408,521       6,110,791

Current Assets ..........................................................................          3,194,674      3,004,516     3,198,936       3,010,816
Long-Term Assets ......................................................................            4,206,831      3,097,472     4,209,585       3,099,975


The fair value presented in the chart below were assessed as follows: Treasury Bills that
hold active negotiations are determined based on prices published by the ANBIMA; for
shares of Publicly-held Companies the average price of the last negotiation of the day is
used; and for securities whose price is not published, the calculation of the fair value is
based on the internal pricing technique.

(a) Trading Securities
Composed mainly of Federal Government Securities (Treasury Bills - LFT) registered at fair
value.

Breakdown per maturity:
                                                                                                                                      In Thousands of Reais
                                                                                                                     Banrisul            Banrisul Consolidated
                                                                                                                                  Restated
                                                                                                    Acquisition          Fair   Acquisition               Fair
Maturity                                                                                                  Cost         Value           Cost             Value

Up to 3 months ..............................................................................              -              -         1,414          1,443
From 1 to 3 years, .........................................................................         784,677        784,701       784,677        784,701
From 3 to 5 years ..........................................................................       1,018,004      1,018,039     1,018,004      1,018,039
From 5 to 15 years ........................................................................           81,939         81,951        81,939         81,951
Total in 2009 .............................................................................        1,884,620      1,884,691     1,886,034      1,886,134
Total in 2008 .............................................................................          959,264        959,170       959,264        959,170



According to the Central Bank of Brazil regulations, these securities are classified in current
assets at their fair value.




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  FINANCIAL
  S T AT E M E N T S        ´09
                                                                                 FS’09
     (b) Available-for-Sale Securities
     Breakdown of the Available-for-Sale Securities Portfolio by category per fair value:
                                                                                                                                               In Thousands of Reais
                                                                                                                               Banrisul           Banrisul Consolidated
                                                                                                                    2009         2008          2009               2008

     Treasury Bills - LFT .........................................................................          1,049,208       608,608      1,049,208         608,608
     Shares of Publicly-Held Companies ...........................................                              12,915         6,005         13,072           6,084
     Privatization Certificates ............................................................                     5,042              -         5,047               5
     Fixed Income Fund Shares ...........................................................                             -             -         2,657           6,216
     Total ..........................................................................................        1,067,165       614,613      1,069,984         620,913



     Breakdown per maturity:
                                                                                                                                                In Thousands of Reais
                                                                                                                               Banrisul            Banrisul Consolidated
                                                                                                                                            Restated
                                                                                                              Acquisition          Fair   Acquisition               Fair
     Maturity                                                                                                       Cost         Value           Cost             Value

     No Maturity ....................................................................................           27,795         17,957        30,614         20,776
     1 to 3 years ....................................................................................         110,178        110,183       110,178        110,183
     3 to 5 years ....................................................................................         859,816        859,828       859,816        859,828
     5 to 15 years ..................................................................................           79,185         79,197        79,185         79,197
     Total in 2009 .............................................................................             1,076,974      1,067,165     1,079,793      1,069,984
     Total in 2008 .............................................................................               630,467        614,613       636,757        620,913


     The adjustment to fair value as of December 31, 2009, in the amount of R$9,809 thousand
     (2008 – R$15,854 thousand), was recorded under a specific Shareholders’ Equity account,
     net of taxes of R$3,962 thousand (2008 – R$6,347 thousand), recorded in “Other Credits”.

     (c) Held-to-Maturity Securities
     The Portfolio of Held-to-Maturity Securities, by category, stated at cost plus income earned
     is as follows:
                                                                                                                                                In Thousands of Reais
                                                                                                                               Banrisul            Banrisul Consolidated
                                                                                                                Restated                    Restated
                                                                                                              Acquisition          Fair   Acquisition               Fair
                                                                                                                    Cost         Value           Cost             Value

     Federal Government Securities
     Treasur y Bills - LFT ........................................................................          4,043,354      4,043,910     4,046,108      4,046,664
     Na tional Treasury Bills - NTN ......................................................                       7,293          7,293         7,293          7,293
     Salary Varia tion Compensation Fund - CVS ...............................                                 202,070        160,795       202,070        160,795
     Brazilian Foreign Debt Securities ..............................................                            8,559          8,559         8,559          8,559
     Other ...............................................................................................           6              6             6              6
     Mortgage-Backed Securities - LH ................................................                           34,467         34,467        34,467         34,467
     Certificate of Real Estate Receivables - CRI .............................                                  2,681          2,681         2,681          2,681
     Total in 2009 .............................................................................             4,298,430      4,257,711     4,301,184      4,260,465
     Total in 2008 .............................................................................             4,418,302      4,379,118     4,420,805      4,381,621




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                                                                         FS’09
The maturities of securities are as follows:

                                                                                                                                            In Thousands of Reais
                                                                                                                             Banrisul          Banrisul Consolidated
                                                                                                               2009            2008         2009               2008

Up to 3 months ..............................................................................          1,267,486          1,212,146     1,267,486      1,212,146
3 to 12 months ..............................................................................              8,559            432,689         8,559        432,689
1 to 3 years ....................................................................................      1,162,715          2,218,672     1,162,715      2,221,175
3 to 5 years ....................................................................................        553,171            321,995       555,925        321,995
5 to 15 years ..................................................................................       1,104,429             42,678     1,104,429         42,678
Over 15 years .................................................................................          202,070            190,122       202,070        190,122
Total ..........................................................................................       4,298,430          4,418,302     4,301,184      4,420,805
Current Assets ..........................................................................              1,276,045          1,644,835     1,276,045      1,644,835
Long-Term Assets ......................................................................                3,022,385          2,773,467     3,025,139      2,775,970

(d) Derivatives
In order to meet its own needs to minimize the effect of changes in the fixed rate, exchange
variation and TR (a managed prime rate), the Bank has conducted swap transactions to
exchange these rates for SELIC (Central Bank overnight rate) variation. Other risks are
stated in Note 24.

Banrisul and Banrisul Consolidated___________________________________________________________________________    In Thousands of Reais
                                         Notional  Up to 3      3 to 12    1 to 3     3 to 5   5 to 15   Over 15
                                           Value   months      months      years      years      years     years     2009        2008
Assets
SELIC + Fixed Rate-FCVS                            77,170               -                -                -         27       18,183     5,911 24,121        20,971
SELIC + Fixed Rate                                 97,872          10,425            5,556           22,223     22,223       66,671         - 127,098       88,932
Liabilities
Fixed Rate                                             -                 -              -                  -          -            -        -        -  (4,611)
TR + Fixed Rate                                 (77,170)           (7,324)        (6,592)           (11,921)    (5,888)      (9,320)    (984) (42,029) (31,275)
USD+BID+Fixed Rate                              (97,872)             (304)          (295)            (1,093)      (967)      (2,284)        - (4,943)         -
Net Adjustment                                                       2,797        (1,331)             9,209     15,395       73,250     4,927 104,247       74,017


The above-mentioned swap transactions have as counterparty the Rio Grande do Sul State
Government and were entered in connection to the assignment of credits of the Salary
Variation Compensation Fund (FCVS) and credit operations with municipal public entities,
and will be settled on the same dates the main operations are received.

Swap and transactions combined therewith are subject to rates equivalent to those
prevailing in the market on the contracting date, since maturity dates are the same and the
original transactions and swap contracts will not be negotiated.

As of December 31, 2009, the amounts receivable and amounts payable are as follows:
Banrisul and Banrisul Consolidated______________________________________________________________________________                               In Thousands of Reais

                                                                                                                                               2009           2008
Derivatives
 Adjus tments Receivable - Short Term .......................................................................                               15,981          7,411
 Adjus tments Receivable - Long Term ........................................................................                              135,238       102,492
 Adjus tments Payable - Short Term ............................................................................                            (14,515)        (8,348)
 Adjus tments Payable - Long Term..............................................................................                            (32,457)      (27,538)
Net Adjustment ........................................................................................................                    104,247         74,017

As of December 31, 2009, there were no futures or options contracts.
                                                                                                                                                                       96




  FINANCIAL
  S T AT E M E N T S        ´09
                                                                                        FS’09
     NOTE 06                  Restricted Deposits
                                                                                                                                                                In Thousands of Reais
                                                                                                                                                   Banrisul and Banrisul Consolidated
     Description                                                                    Interest Rate                                                            2009               2008

     Compulsory Deposits - Brazilian Central Bank ...............................................................                                     1,349,540          1,318,412
       Demand deposits and other funds                                 None ................................................................            267,960            217,045
       Savings deposits .............................                  Savings account ............................................                   1,057,438            925,677
       Other deposits ................................                 None ................................................................             24,142             15,544
       Other deposits ................................                 TR .....................................................................              -,-           160,146
     Credits with the National Housing System .....................................................................                                     440,898            382,057
       Acquired portfolio - swap ..............                        17.5% to 26% p.a. (*).....................................                       292,333            263,665
       Acquired portfolio ..........................                   TR + Interest ...................................................                133,368            103,776
       Own portfolio ..................................                TR + Interest ...................................................                 15,197             14,616
     Correspondents .................................                  None ................................................................             28,031             20,015
     Total ................................................................................................................................           1,818,469          1,720,484
     Current Assets ................................................................................................................                  1,377,571          1,338,427
     Long-term Assets ............................................................................................................                      440,898            382,057

     (*) Linked to swap transactions as detailed in Note 05 (d).



     National Housing System - Third-party Portfolio Acquired - From October 2002 to March
     2005, the Bank acquired from the Rio Grande do Sul State Government receivables from
     the Salary Variation Compensation Fund (FCVS). As of December 31, 2009, the credits are
     stated at cost plus income earned through the balance sheet date, at the amount of
     R$425,701 thousand (2008 – R$367,441 thousand). Their face value is R$718,529 thousand
     (2008 – R$717,828 thousand). These receivables will be converted into CVS securities,
     pursuant to ratification and novation processes, and, in spite of no established maturity,
     their fair values, upon the issuance of the securities, may differ significantly from the
     carrying amounts.

     National Housing System - Own Portfolio – Refers to credits of the FCVS arising from
     Banrisul’s own mortgage loans portfolio that have already been approved by the FCVS’s
     regulatory body.


     NOTE 07                 Loans, Lease Operations and Other Receivables
     The tables below show loans, lease and foreign exchange portfolio balances.

     (a) Breakdown by Type of Operation and Risk Level:
     Banrisul and Banrisul Consolidated                                                                                                                           In Thousands of Reais
                                                                     AA         A           B          C         D            E            F         G        H         2009       2008
     Loan and Discounted Receivables ........                     3,076,144 3,508,126 1,444,614     641,576   148,356     123,382     628,018     51,873 261,327 9,883,416   8,276,052
     Financing ................................................     164,316 388,894 165,178          19,699    13,298       7,728       7,893      4,801 27,356    799,163    764,382
     Rural and Agro-Industrial Financing ....                       142,476 318,868 259,666         134,212    39,071      23,236      39,428     22,092 41,880 1,020,929     853,145
     Real Estate Financing ............................             380,182 370,364 174,408          79,530    14,677      13,540      33,818      1,545 17,217 1,085,281     961,293
     Infrastructure and Development
      Financing ..............................................            -    42,766          -        148          -        322        -              -  1,203     44,439     43,620
     Total Loans ...........................................      3,763,118 4,629,018 2,043,866     875,165   215,402     168,208 709,157         80,311 348,983 12,833,228 10,898,492
     Lease Operations ...................................            15,024    31,251    21,868      11,915     6,675       2,874   4,828            422   3,037     97,894   107,940
     Advances on Foreign Exchange
       Contracts (1) ........................................        58,718 194,559 137,472          29,090    11,589       1,922   9,217               -  3,531    446,098   432,514
     Other Receivables - Foreign Exchange (2)                         1,003     4,788     3,922       1,137       812          31   1,961          8,160 15,177      36,991     14,636
     Total Banrisul in 2 009 ..........................           3,837,863 4,859,616 2,207,128     917,307   234,478     173,035 725,163         88,893 370,728 13,414,211
     Total Banrisul in 2 008 ..........................           2,708,889 4,027,162 2,156,482     932,951   282,091     247,921 700,314         62,357 335,415            11,453,582
97




                                                                                                                                                           FINANCIAL
                                                                                                                                                           S TA T E M E N TS   ´09
                                                                             FS’09
(1) Advances on foreign exchange contracts are classified as a reduction of “Other payables - Foreign exchange portfolio”
   (Note 13).
(2) Other Receivables - Foreign exchange include receivables from foreign exchange contracts and receivables from
   export contracts.


(b) Client Breakdown per Maturity and Risk Levels:
Banrisul and Banrisul Consolidated                                                                                                                              In Thousands of Reais
                                                          AA        A             B              C            D             E             F       G        H          2009       2008
Falling due (*) .................................... 3,837,261 4,854,816 2,197,035          904,005      226,492        165,095     672,051    61,416 203,682 13,121,853 11,196,901
     Up to 180 days ................................ 1,096,008 1,531,088 1,072,043          498,140      122,850         83,404     330,162    17,164  84,447 4,835,306 4,651,831
     181 to 360 days ..............................    532,991 757,573 356,024              140,477       34,702         28,178     105,888     7,563 38,928 2,002,324 1,715,084
     Over 360 days ................................. 2,208,262 2,566,155 768,968            265,388       68,940         53,513     236,001    36,689  80,307 6,284,223 4,829,986
Past-due ..............................................    602      4,800      10,093        13,302          7,986        7,940       53,112   27,477 167,046    292,358     256,681
    Up to 180 days ................................        602      4,800      10,093        13,302          7,986        7,428       48,208   26,481 97,154     216,054     162,011
    181 to 360 days ..............................           -           -           -            -              -          512        4,904      996 43,307      49,719      37,764
    Over 360 days .................................          -           -           -            -              -             -           -         - 26,585     26,585      56,906
Total Banrisul in 2 009 .......................... 3,837,863 4,859,616 2,207,128            917,307      234,478        173,035      725,163   88,893 370,728 13,414,211
Total Banrisul in 2 008 .......................... 2,708,889 4,027,162 2,156,482            932,951      282,091        247,921      700,314   62,357 335,415              11,453,582


(*) Amounts up to 14 days past-due are included in the current.

(c) Portfolio Breakdown by Business Sector:
Banrisul and Banrisul Consolidated                                                                                                                         In Thousands of Reais
                                                                                                                                                          2009              2008
Municipal Public Sector
   Government - direct and indirect administration ..................................................                                                 99,918               155,713
   Corporate activity - Other services ...........................................................................                                    21,562                34,907
Total Public Sector ....................................................................................................                              121,480              190,620
Private sector
 Rural ................................................................................................................................           1,020,929               853,145
  Industry .........................................................................................................................              2,962,982             2,892,648
  Commerce .....................................................................................................................                  1,615,221             1,589,811
  Financial brokers .........................................................................................................                              -                  247
  Services and other .......................................................................................................                      1,255,898             1,084,998
   Individuals ......................................................................................................................             5,352,420             3,880,820
  Housing ...........................................................................................................................             1,085,281               961,293
Total Private Sector ..................................................................................................                          13,292,731            11,262,962
Total ..........................................................................................................................                 13,414,211            11,453,582

(d) Changes in allowances for loan losses, doubtful lease receivables and other receivables:
Banrisul and Banrisul Consolidated                                                                                                                          In Thousands of Reais
                                                                                                                                                               2009          2008
Opening balance ......................................................................................................                                   970,691   891,990
 Allowance recorded in the year .................................................................................                                        421,880 256,299
 Write-offs to memorandum accounts ......................................................................                                               (295,919) (177,598)
 Allowance for Losses on Other Receivables without Loan Characteristics .......                                                                          (79,898)        -,-

Allowance for Loan Losses per risk level ..................................................................                                            1,016,754           970,691
Allowance for loan losses
   Current Assets ..............................................................................................................                          418,080          269,182
   Long-Term Asse ts .........................................................................................................                            548,129          672,960

Allowance for doubtful lease receivables
   Current Assets , .............................................................................................................                              1,566         2,186
   Long-Term Asse ts .........................................................................................................                                 7,183         3,559

Allowance for Loan losses for Other Receivables with Loan Characteristics
   Current Assets ..............................................................................................................                           41,767           17,396
   Long-Term Asse ts .........................................................................................................                                 29            5,408      98




   FINANCIAL
   S T AT E M E N T S              ´09
                                                                               FS’09
     (e) Breakdown of allowances for loans losses, doubtful lease receivables and other
     receivables per risk level:
     Banrisul and Banrisul Consolidated                                                                                                                  In Thousands of Reais
                                                                                                                                                          Recorded Allowance
                                                                      Minimum                              Minimum
              Risk                      Loan                    allowance required by                      allowance              Additional allowance
              Level                    Portfolio                 Resolution 2,682/99                        required                  (Note 03(f))                         Tot al
            AA                  3,837,863                            0.0%                                -,-                           7,551                          7,551
             A                  4,859,616                            0.5%                            24,298                            9,719                         34,017
             B                  2,207,128                            1.0%                            22,071                           11,036                         33,107
             C                    917,307                            3.0%                            27,519                           18,346                         45,865
             D                    234,478                           10.0%                            23,448                            4,690                         28,138
             E                    173,035                           30.0%                            51,910                            3,461                         55,371
             F                    725,163                           50.0%                           362,582                           14,503                        377,085
             G                     88,893                           70.0%                            62,225                            2,667                         64,892
             H                    370,728                          100.0%                           370,728                               -,-                       370,728
     Total in 200 9            13,414,211                                                           944,781                           71,973                      1,016,754
     Total in 200 8            11,453,582                                                           901,495                           69,196                        970,691

     Loans written off at loss in the year ended in December 31, 2009 and controlled based on
     the adjusted amount until the date of the respective write-off in a memorandum account
     amounted to R$295,919 thousand (2008 – R$177,598 thousand).
     Recoveries of loans previously written off as loss have been recognized as income from lending
     operations and amounted to R$87,576 thousand (consolidated – R$68,665 thousand) in the
     year ended in December 31, 2009 net of losses or gains generated from these recoveries.

     NOTE 08            Other Receivables
                                                                                                                                                         In Thousands of Reais
                                                                                                                                  Banrisul                 Banrisul Consolidated
                                                                                                                       2009         2008                 2009              2008
     Foreign Exchange Portfolio ......................................................                           448,926       631,169           448,926             631,169
       Pending Setlement exchange purchased .............................                                        431,159       545,719           431,159             545,719
       Term bills in foreign currency .................................................                                 -           149                 -                 149
       Rights to foreign exchange sold ..............................................                             11,626        81,416            11,626              81,416
       Advances in local currency .....................................................                           (6,861)       (9,120)           (6,861)             (9,120)
       Income receivable from advances ........................................                                   13,002        13,005            13,002              13,005
     Income receivable ...................................................................                        35,544        44,173            30,833              39,228
       Dividends and bonuses receivable .......................................                                    4,711          6,721                 -               1,776
       Receivables from services rendered ....................................                                    29,657        34,959            29,657              34,959
       Other ...........................................................................................           1,176         2,493             1,176               2,493
     Negociation and intermediation of amounts ...........................                                                -             -            4,615              1,858
       Negociation and intermediation of amounts ......................                                                   -             -            4,615              1,858
     Specific Credits .........................................................................                           -             -                  21                   -
       Specific Credits .........................................................................                         -             -                  21                   -
     Sundry .......................................................................................           1,267,652       1,116,801        1,328,834          1,171,644
       Advances to Loan Guarantee Fund (1) ..................................                                    77,044           96,715           77,044             96,715
       Advances to employees ..........................................................                          11,257           11,017           11,301             11,058
       Advances for payment by our account ..................................                                       487              461            6,507              6,228
       Deferred income tax and social contribution (Note 22(b))                                                 598,013         594,642          603,580            600,254
       Escrow deposits .......................................................................                  154,899         136,902          167,286             151,499
       Recoverable taxes ....................................................................                        18           10,920            3,076             12,225
       Reimbursable payments .........................................................                           79,329           67,680           79,384             67,727
       Notes and credits receivable(2) ............................................                             220,427          102,251         221,324            103,273
       Credit Cards ...............................................................................              66,446           61,686           66,446             61,686
       Amounts receivable from affiliated companies .................                                               655              606                 -                  -
       Other debtors – Domestic .......................................................                          59,077           33,921           92,886             60,979
     Allowance for losses on other receivables ..............................                                  (121,694)        (22,804)        (122,110)           (23,785)
     Total other receivables .............................................................                    1,630,428       1,769,339        1,691,119          1,820,114
     Current assets ...........................................................................                 904,559       1,044,054           948,170         1,075,286
99   Long-term assets ......................................................................                    725,869         725,285          742,949            744,828




                                                                                                                                                 FINANCIAL
                                                                                                                                                 S TA T E M E N TS      ´09
                                                                                      FS’09
(1) Pursuant to the Central Bank of Brazil Circular 3,416 and Circular Letter 3,347, in the
second half of 2008 Banrisul advanced the amount corresponding to sixty contributions to
the Loan Guarantee Fund which will be offset against future payments. This advance meets
the requirements for a Compulsory Deposit within the Central Bank in cash and interest
free.

(2) Notes and Credit Receivables are described mainly as follows:

a) in the first quarter of 2005, as part of receivables recovery policy, Banrisul received as
payment in kind bonds issued to pay court ordered debts of the Federal Government from
several companies to settle past-due loans of such companies. As of December 31, 2009,
these bonds amount to R$81,810 thousand (2008 - R$76,121 thousand). These bonds are
subject to the variation of the price and interest index.

b) in Other Receivables without credit characteristics, transactions with entities of the Municipal
Public Sector were registered in the amount of R$89,910 thousand related to receivables
acquired from the Government of the State of Rio Grande do Sul State Government or its
controlled entities. As of December 31, 2008, these credits, amounting to R$87,820 thousand,
were recorded under lending operations.


NOTE 09                 Permanent Assets
(a) Property and equipment
Banrisul                                                                                                                                    In Thousands of Reais
                                                                                                             Original                  Net Balance      Net Balance
                                                                                                     Rate        Cost   Depreciation        in 2009          in 2008
Property in Use
Land and Buildings in Use .............................................................               4%    119,969       (97,750)         22,219          22,988
Other
   Furniture and Equipment in inventory .....................................                           -     5,706              -          5,706          10,380
   Property and Equipment in Progress .......................................                           -       114              -            114           4,358
   Facilities ....................................................................................   10%     83,073       (72,101)         10,972          12,991
   Furniture and Equipment in Use ...............................................                    10%     68,337       (47,038)         21,299          21,594
   Other
Communication System .................................................................               10%      4,543        (4,017)           526              612
   Data Processing System ............................................................               20%    259,541      (157,954)       101,587           69,979
   Security System .........................................................................         10%      9,742        (6,925)         2,817            3,104
   Transportation System ..............................................................              20%      2,495        (2,027)           468              670
Total ...........................................................................................           553,520      (387,812)       165,708          146,676

Banrisul Consolidated                                                                                                                        In Thousands of Reais
                                                                                                             Original                  Net Balance      Net Balance
                                                                                                     Rate        Cost   Depreciation        in 2009          in 2008
Property in Use
Land and Buildings in Use .............................................................               4%    127,012      (102,227)         24,785          25,850
Other
   Furniture and Equipment in Inventory .....................................                           -     5,706              -          5,706          10,380
   Property and Equipment in Progress .......................................                           -       115              -            115           5,159
   Facilities ....................................................................................   10%     84,270       (72,387)         11,883          13,073
   Furniture and Equipment in Use ...............................................                    10%     71,527       (49,497)         22,030          22,375
   Other .........................................................................................
Communication System .................................................................               10%      4,544        (4,017)           527              613
   Data Processing System ............................................................               20%    260,195      (158,528)       101,667           70,127
   Security System .........................................................................         10%      9,742        (6,925)         2,817            3,104
   Transportation System ..............................................................              20%      2,560        (2,032)           528              670
Total ...........................................................................................           565,671      (395,613)       170,058          151,351      100




   FINANCIAL
   S T AT E M E N T S            ´09
                                                                             FS’09
      (b)          Intangible Assets
                                                                                                                                                  In Thousands of Reais
                                                                                                                                       Banrisul   Banrisul Consolidated
                                                                                           Original                  Net Balance   Net Balance Net Balance Net Balance
                                                                              Rate             Cost   Amortization       in 2009       in 2008     in 2009       in 2008
      Intangible Assets
      Right from Acquisition of
         Payroll operations (*) .............................
         Municipal Public Sector ..........................                   20%      266,125 (102,664) 163,461 191,232 163,461 191,232
         Private Sector ...........................................           20%       11,683   (2,715)   8,968   7,157   8,968   7,157
      Software Acquisition ...................................                20%       32,813 (25,571)    7,242   5,850   7,242   6,082
      Other ..............................................................       -         668     (593)      75        -    458        -
      Total ...........................................................                311,289 (131,543) 179,746 204,239 180,129 204,471


      (*) It refers to agreements entered into with the municipal government and private sector entities to ensure the
      exclusivity in banking services for processing of payroll credit and deductible payroll loans, bill collection
      portfolio, supplier payment and other services. Such agreements are effective for five years and are amortized
      over the agreement period. No indications that these assets are impaired were identified.



      NOTE 10             Deposits and Money Market Funding
      Banrisul                                                                                                                                 In Thousands of Reais
                                                                                Without         Up to          3 to             Over
                                                                                maturity     3 months     12 months        12 months             2009             2008
      Deposits
        Demand deposits .....................................                2,107,702          -         -        - 2,107,702 1,869,619
        Savings deposits ......................................              5,636,799          -         -        - 5,636,799 4,805,853
        Interbank deposits ..................................                        -         -    89,968         -     89,968     11,981
        T ime deposits (*) ......................................                6,838 1,357,198 4,051,273 3,297,050 8,712,359 7,721,910
        Other deposits ..........................................               11,591          -         -        -     11,591     16,415
      Total ...........................................................      7,762,930 1,357,198 4,141,241 3,297,050 16,558,419 14,425,778

      Current liabilities ......................................                                                                         13,261,369 11,289,466

      Long-term liabilities ..................................                                                                           3,297,050        3,136,312

      Money market funding
        Own Portfolio ............................................                     - 2,069,893                     -             -   2,069,893          819,131
        Third-party Portfolio ................................                         -         -                     -             -           -        1,471,089
      Total ...........................................................                - 2,069,893                     -             -   2,069,893        2,290,220

      Banrisul Consolidated                                                                                                                    In Thousands of Reais
                                                                                Without         Up to          3 to             Over
                                                                                maturity     3 months     12 months        12 months             2009             2008
      Deposits
        Demand deposits .....................................                2,100,614          -         -        - 2,100,614 1,864,035
        Savings deposits ......................................              5,636,799          -         -        - 5,636,799 4,805,853
        Interbank deposits ..................................                        -         -    89,968         -     89,968     11,981
        T ime deposits (*) ......................................                6,838 1,295,412 3,931,448 3,297,050 8,530,748 7,557,799
        Other deposits ..........................................               11,616          -         -        -     11,616     16,415
      Total ...........................................................      7,755,867 1,295,412 4,021,416 3,297,050 16,369,745 14,256,083

      Current liabilities ......................................                                                                         13,072,695 11,120,370
      Long-term liabilities ..................................                                                                            3,297,050 3,135,713

      Money market funding
        Own Portfolio ............................................                     - 2,006,497                     -             -   2,006,497          763,162
        Third-party Portfolio ................................                         -         -                     -             -           -        1,471,089
      Total ...........................................................                - 2,006,497                     -             -   2,006,497        2,234,251

      (*) Consider the maturities set for each investment.
101




                                                                                                                                           FINANCIAL
                                                                                                                                           S TA T E M E N TS   ´09
                                                                    FS’09
Time deposits are made by the Bank’s customers, with floating or fixed charges equivalent
to 71% and 29% of the total portfolio, respectively. The average funding rate for floating-
rate deposits corresponds to 97.02% (2008 – 96.80%) of the CDI variation, and for fixed-rate
deposits, to 8.54% (2008 – 10.43%) p.a.

Funding through money market purchase and sale commitments operations – own portfolio
– conducted with financial institutions, has an average funding rate of 100% of the CDI
variation.

NOTE 11           Borrowings
Domestic Borrowings: represented by funds obtained from Central Bank of Brazil at rate
auction for loans granted in foreign currency to be used in foreign exchange transactions
subject to the variation of the corresponding currencies plus annual interest rates from
2.71% to 3.76% maturing in up to 148days.

Foreign Borrowings: represented by funds obtained from foreign banks to be used in
foreign exchange commercial transactions subject to the variation of the corresponding
currencies plus annual interest rates from 2.0% to 9.00% (2008 – 2,00 % to 11.89%) with
maximum term of 294 days (2008 – 360 days).


NOTE 12            Onlendings
Banrisul and Banrisul Consolidated                                                                                         In Thousands of Reais
                                                                        Domestic Onlendings -
                                                                         Official Institutions       Foreign Onlendings                     Total
                                                                       2009             2008       2009          2008         2009         2008
Up to 90 days ................................................      249,709      226,362          2,538       9,345       252,247     235,707
91 to 360 days ..............................................       120,123      103,587         33,230      22,447       153,353     126,034
1 to 3 years ...................................................    245,937      183,477               -           -      245,937     183,477
3 to 5 years ...................................................    146,559      101,337               -           -      146,559     101,337
Over 5 years ..................................................     180,417      100,957               -           -      180,417     100,957
Total ...........................................................   942,745       715,720        35,768      31,792       978,513     747,512
Current liabilities ......................................          369,832      329,949         35,768      31,792       405,600     361,741
Long-term liabilities ..................................            572,913       385,771              -           -      572,913     385,771


Internal funds for onlending refer basically to funds from Official Institutions (BNDES –
National Bank for Economic and Social Development, FINAME – National Equipment
Financing Authority and Caixa Econômica Federal – Federal Savings and Loan Bank). These
liabilities mature on a monthly basis through July 2023, and are subject to interest of 1.00%
to 3.50% (2008 – 0.90% to 3.80%) p.a., plus variation of the indexes (TJLP, U.S. dollar and
Currency Basket) for floating-rate operations and up to 11.00% (2008 – 7.25%) p.a. year for
fixed-rate operations. Funds are transferred to customers on the same terms and with the
same funding rates, plus commission on financial intermediation. These funds are
collateralized by the same guarantees received for the related loans.




                                                                                                                                                    102




  FINANCIAL
  S T AT E M E N T S       ´09
                                                                                  FS’09
      NOTE 13            Other Payables
                                                                                                                                                In Thousands of Reais
                                                                                                                                 Banrisul         Banrisul Consolidated
                                                                                                                      2009         2008         2009              2008

      Collected taxes and other ..........................................................                        28,445       80,948         28,445        80,948
         Receipt of federal taxes .............................................................                   28,423       80,927         28,423        80,927
         Other ..............................................................................................          22           21             22           21
      Foreign exchange portfolio ........................................................                         24,134       91,215         24,134        91,215
         Pending Setlement exchange sold ............................................                             11,653       79,218         11,653        79,218
         Foreign exchange purchased .....................................................                        458,574      444,509        458,574       444,509
         Advances on foreign exchange contracts (Note 07 (a)) .........                                         (446,098)    (432,514)      (446,098)     (432,514)
         Other ..............................................................................................           5            2              5             2
      Social and statutory ....................................................................                   33,315       39,229         33,387        39,295
         Dividends and bonuses payable ...............................................                            29,366       39,229         29,438        39,295
         Bonuses and profit sharing payable ........................................                               3,949              -         3,949             -
      Taxes and social security .............................................................                    517,308      445,970        523,216       448,970
         Ta xes and c ontributions payable ..............................................                         41,314       43,716         42,335        44,609
         Reserve for taxes and social contribution ...............................                                80,579       30,147         84,031        30,876
         Reserve for deferred taxes and contributions
         (Note 22 (b2)) ................................................................................            9,409        4,688          9,440        4,692
         Reserve for tax contingencies (Note 14 (a)) ............................                                 386,006      367,419        387,410      368,793
      Trading and intermedia tion of securities ...................................                                      -            -         4,223        1,554
         Tra ding and intermedia tion of securitie s ................................                                    -            -         4,223        1,554
      Financial and development funds ..............................................                            4,139,986    2,672,001      4,139,986    2,672,001
         Payables for financial and
            development funds (Note 21 (a)) ..........................................                          4,120,636    2,651,411      4,120,636    2,651,411
         Other ..............................................................................................      19,350       20,590         19,350       20,590
      Sundry .........................................................................................            814,290      737,464        855,064      767,896
         Ca shier ’s check ............................................................................            14,363        9,717         14,363        9,717
         Creditors for unreleased funds .................................................                          41,730       26,388         41,937       26,579
         Payables for acquisition of assets and rights .........................                                    3,751        3,137          3,847        3,224
         Liabilities under government agreements .............................                                     15,029       13,970         15,029       13,970
         Accrued vacation and related charges ....................................                                181,293      156,696        152,938      130,936
         Actuarial deficit of Fundação Banrisul (Note 23) ................                                         58,648       61,349         58,648       61,349
         Reserve for labor contingencies (Note 14(b)) ......................                                       96,599       96,176        111,571      111,313
         Brazilian Central Bank fines on foreign exchange
            transactions (Note 14 (c)) ...................................................                       111,105      106,493        111,105       106,493
         Reserve for social security contingencies ............................                                   18,783       18,783         18,783        18,783
         Reserve for securitization losses (*) .....................................                               7,429       12,107          7,429        12,107
         Reserve for other contingencies ............................................                              7,200        6,386          7,200         6,386
         Reserve for debts assumed with Grupo de Empresas
            Seguradoras Brasileiras (GESB) arising from Companhia
            União de Seguros Gerais .....................................................                          7,538       10,017          7,538        10,017
         FGTS (Severance Pay Fund) for amortization .......................                                        2,569        2,583          2,569         2,583
         Sundry creditors – Domestic ..................................................                           85,386       76,489        138,555       116,785
         Card transactions payable .....................................................                          56,161       50,967         56,161        50,967
         Other ...........................................................................................       106,706       86,206        107,391        86,687

      Total Other Payables .................................................................                    5,557,478    4,066,827      5,608,455    4,101,879
      Current Liabilities ....................................................................                  5,004,932    3,480,595      5,055,446    3,549,546
      Long-Term Liabilitie s ................................................................                     552,546      586,232        553,009      552,333


      (*) The management of the Bank maintains provision for co-obligation of securitized receivables with the National
      Treasury, in the amount of R$43,462 thousand (2008 – R$43,404 thousand) controlled in a memorandum accoun t,
      which are the responsibility of agricultural borrowers.




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NOTE 14            Reserves for Tax, Labor and Civil Contingencies

(a) The reserve for tax contingencies refers mainly to Income Tax and Social Contribution
on deduction of expense arising from the settlement of the actuarial deficit of Fundação
Banrisul de Seguridade Social (pension plan), challenged by the Federal Revenue Service
for the period from 1998 to 2002, and amounts related to the same matter for 2003 to 2005,
which have not yet been challenged. Through its legal counsel, the Bank has been
challenging the matter in court and, on a conservative basis, has recorded a reserve for
contingencies considering the probable loss amount. As of December 31, 2008, the reserve
value was R$367,419 thousand and in the twelve-month period it was supplemented by
R$18,587 thousand, totaling R$386,006 thousand as of December 31, 2009.

(b) As of December 31, 2008, the Bank had a reserve for labor contingencies in the amount
of R$96,176 thousand that, occurring settlements in the twelve-month period in the amount
of R$59.256 thousand and a new reserve of R$59,679 thousand, totaled R$96,599 thousand
in December 2009. Of the aforementioned reserve, the amount of R$78,360 thousand has
been deposited in escrow accounts and is recorded under the item “Other Receivables –
Escrow Deposits (Note 08)”. In the consolidated balance as of December 31, twelve-month,
the Bank had a labor reserve of R$111,313 thousand, that after settlements in the nine-
month period of R$64,112 thousand and a new reserve of R$64,370 thousand, amounted to
R$111,571 thousand in September 2009. Of the aforementioned reserve, the amount of
R$90,802 thousand has been deposited in escrow.

There are other lawsuits for which a reserve for contingencies is not recognized and,
based on their nature, the Bank considers the likelihood of an unfavorable outcome as
possible. They amount to approximately R$47,000 thousand.

(c) On September 29, 2000, Banrisul received an assessment notice from the Central Bank
of Brazil in connection with administrative proceedings related to supposed irregularities
in foreign exchange transactions between 1987 and 1989. In a decision on an appeal at
administrative level, Banrisul was required to pay a fine equivalent to 100% of the amount
of the supposedly irregular transactions. This decision is being challenged in court by
Management, which on a conservative basis and in compliance with BACEN requirements,
recorded a reserve for this contingency. The balance as of December 31, 2009 is R$111,105
thousand, with an increase in the period of R$4,612 thousand.

NOTE 15             Income from Services Rendered
                                                                                                                             In Thousands of Reais
                                                                                                               Banrisul        Banrisul Consolidated
                                                                                                        2009     2008        2009              2008

Funds Management ........................................................................             52,933   53,984      58,566         61,175
Collection of Debt Instruments .....................................................                  40,088   40,893      40,096         40,896
Income from Refeisul ......................................................................                -        -      17,380         16,845
Income from Group Financing Management Fee .......................                                         -        -      10,874          7,632
Income from Brokerage of Operations .........................................                              -        -       4,253          3,680
Other Income ....................................................................................        908    1,040       6,294          5,091
 Total ............................................................................................   93,929   95,917     137,463        135,319


                                                                                                                                                       104




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  S T AT E M E N T S        ´09
                                                                                   FS’09
      NOTE 16              Income from Bank Fees
                                                                                                                                           In Thousands of Reais
                                                                                                                             Banrisul         Banrisul Consolidated
                                                                                                                    2009       2008        2009               2008

      Banricompras ...................................................................................            69,138    54,932       69,138         54,932
      Check Returns ..................................................................................            20,079    23,975       20,079         23,975
      Checking Account Debits ................................................................                    20,088    18,685       20,088         18,685
      Collection Services ..........................................................................              55,880    51,424       55,880         51,424
      Transactions with Checks ...............................................................                    12,510    18,944       12,510         18,944
      Bank Fees from Checking Accounts ...............................................                           225,815   199,964      225,815        199,964
      Credit Card ........................................................................................        11,335    14,801       11,335         14,801
      Other Income from Fees .................................................................                    27,036    20,649       27,033         20,647
      Total ............................................................................................         441,881   403,374      441,878        403,372

      From the income amount of R$441,881 thousand for the period, R$229,773 thousand (2008
      – R$213,874 thousand) arise from operations with individuals and R$212,108 thousand
      (2008 – R$189,500 thousand) from operations with legal entities.


      NOTE 17               Other Administrative Expenses
                                                                                                                                           In Thousands of Reais
                                                                                                                             Banrisul         Banrisul Consolidated
                                                                                                                    2009       2008        2009               2008
      Da ta Proce ssing and Telecommunica tion ...................................                               135,158   131,870      138,725        134,460
      Security and Money Transportation .............................................                             76,268    67,511       76,268         67,815
      Amortization and Depreciation ....................................................                          92,943    88,800       93,779         89,660
      Rentals ..............................................................................................      47,340    38,685       45,930         37,408
      Supplies .............................................................................................      19,483    22,251       19,534         22,307
      Outside Services ..............................................................................            106,853    97,200      109,114         99,553
      Advertising, Promotions and Publicity ........................................                              99,538    91,507      100,398         92,197
      Maintenance ....................................................................................            19,794    18,331       20,105         18,679
      Wa ter, Electricity and Gas .............................................................                   17,897    17,052       18,092         17,227
      Financial System Services ..............................................................                    16,669    13,825       17,400         14,292
      Other ..................................................................................................    37,902    31,024       39,540         32,148
      Total ............................................................................................         669,845   618,056      678,885        625,746



      NOTE 18             Other Operating Income
                                                                                                                                           In Thousands of Reais
                                                                                                                             Banrisul        Banrisul Consolidated
                                                                                                                    2009       2008        2009              2008
      Recovery of Charges and Expenses ...............................................                           47,662    44,638        42,899          40,779
      Reversal of Operating Reserves for:
         Losses on Equity Investments ...................................................                            346       962          346            962
         Labor ..............................................................................................          -     1,361             -         1,361
         Other Assets .................................................................................            4,572     8,992        4,572          8,992
         Reserve for Securitization Losses (Note 13) ...........................                                   5,510     6,347        5,510          6,347
      Other Taxes .......................................................................................             42     1,744           42          1,744
      Commission on Capitalization Cerficates ...................................                                  3,293     4,468        3,293          4,468
      Interbank Fees .................................................................................            21,085    21,865       21,085         21,865
      Foreign exchange adjustment .......................................................                              -    34,725             -        34,725
      Credit Notes Receivable .................................................................                    5,707    10,099        5,707         10,099
      Reserve Fund - Escrow Deposit - Law 12,069 ..............................                                   15,122    15,402       15,122         15,402
      Commission and Administration Fee on Placement of Insurance                                                  1,750     1,110        1,750          1,110
      Other Operating Income .................................................................                    39,132    43,270       43,385         45,364
      Total ............................................................................................         144,221   194,983      143,711        193,218

105




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                                                                                                                                        S TA T E M E N TS   ´09
                                                                                        FS’09
NOTE 19                 Other Operating Expenses
                                                                                                                                                                           In Thousands of Reais
                                                                                                                                                    Banrisul                  Banrisul Consolidated
                                                                                                                                   2009               2008                2009                2008
Discount Granted from Renegotiations ............................................................                                 5,526              4,531                5,526              4,531
Reserves for Labor Provisions (Note 14 (b)) ....................................................                                 59,679             15,643               64,370            15,895
Losses on Investment ........................................................................................                       482              1,187                   482             1,187
Provision for Properties - Assets not in use .....................................................                                  962                415                   962               415
Provision for Securitization Losses ...................................................................                             831              4,126                   831             4,126
Provision for Civil Lawsuits ...............................................................................                      1,783                338                1,783                338
Collection of Federal Taxes ................................................................................                      1,813              1,131                1,813              1,131
Inflation Adjustment of Reserve for Tax Contingencies
    (Social Contribution / Inc ome Tax) - (Note 14 (a)) .......................................                                  18,587             21,687               18,587                21,687
Lawsuits Indemnifications ................................................................................                        4,365              4,073                4,365                 4,073
Inflation Adjustment of Brazilian Central Bank fines
    on Foreign Exchange (Note 14 (c)) ...............................................................                                 4,612          5,381                   4,612              5,381
Inflation Adjustment of Actuarial Deficit of
    Fundação Banrisul (Note 23) .......................................................................                           2,505             9,833                 2,505              9,833
Overdraft Accounts and Banricompras Premiável ............................................                                          770             4,522                   770              4,522
Provision for Debts Assumed with GESB ..........................................................                                    457             4,010                   457              4,010
Exchange Adjustment - Foreign Branches .........................................................                                 38,215                 -                38,215                  -
Lawsuits .............................................................................................................            5,677            10,228                 5,677             10,228
Cards .................................................................................................................           3,875             5,248                 3,875              5,248
Other Operating Expenses (*) ............................................................................                        71,344            43,350                72,811             43,714
Total ............................................................................................................              221,483           135,703               227,641            136,319

(*) For the year ended December 31, 2009, the amount of R$39,124 thousand refers mainly to expenses to meet
reserve requirements relating to savings deposits from previous periods.



NOTE 20                Shareholders´ Equity - Banrisul

(a) Capital
Fully subscribed paid-up capital as of December 31, 2009 is R$2,600,000 thousand and it is
represented by 408,974 thousand shares without par value as follows:
                                                                                                            ON                            PNA                          PNB                       Tot al
                                                                                      Amount                 %              Amount          %          Amount            %           Amount          %
Rio Grande do Sul State .................................                      204,199,859              99.59             2,721,484      70.7 5    26,086,957        13.04     233,008,300      56.97
Fundação Banrisul de Seguridade Social
    (pension plan) ..........................................                        449,054              0.22             158,983        4.13                 -,-    0.00           608,037     0.15
Social Security Institute of Rio Grande
     do Sul State ..............................................                    44,934              0.02             168,612          4.38              -,-        0.00        213,546   0.05
Other ..............................................................              349,527               0.17            797,513          20.74    173,997,554         86.96    175,144,594 42.83
 otal
T .............................................................               205,043,374             100.00          3,846,592         100.00    200,084,511        100.00    408,974,477 100.00

On March 31, 2009, the Extraordinary Shareholders’ Meeting approved the capital increase
by incorporation of the Profits Reserve in the amount of R$300,000 thousand, with no new
shares issued, homologated by the Central Bank of Brazil in July 2009.

Preferred shares do not carry voting rights and are entitled to the following payments:

Class A Preferred Shares:
i) Priority to receive a non-cumulative, preferred fixed dividend of six percent (6%) p.a.,
calculated over the quotient resulting from the division of capital by the number of shares
composing it;

ii) Right to take part, after the payment to Class B Common and Preferred Shares of a
dividend equal to that paid to those shares, in the distribution of any other dividends or
bonuses in cash distributed by the Bank, under equal conditions with Class B Common and
Preferred Shares, adding ten percent (10%) over the amount paid to those shares;                                                                                                                          106




   FINANCIAL
   S T AT E M E N T S             ´09
                                          FS’09

      iii) Interest in capital increases deriving from the capitalization of reserves, under equal
      conditions of Class B Common and Preferred Shares;

      iv) Priority in capital reimbursement, without premium; and

      v) Interest on capital may be attributed to Mandatory Dividend, this composing Dividends
      Paid by the Bank.

      Class B Preferred Shares:
      i) Interest in capital increases deriving from the capitalization of reserves, under equal
      conditions of Class A Common and Preferred Shares;

      ii) Priority in capital reimbursement, without premium; and

      iii) Interest on capital may be attributed to Mandatory Dividend, this composing Dividends
      Paid by the Bank.

      (b) Allocation of Income
      Net Income for the year, adjusted in accordance with Law 6,404/76, will have the following
      allocations: (i) 5% to the Legal Reserve, which will not exceed 20% of Capital, (ii) 25% to
      the Statutory Reserve, and (iii) mandatory minimum dividends up to the limit of 25% of
      adjusted net income. The remaining net income will be allocated as decided in the
      Shareholders´ Meeting.

      The Statutory Reserve is intended to ensure funds for investments in the information
      technology area, and is limited to 70% of paid-up capital.

      In March 2009, the Extraordinary Shareholders’ Meeting approved the proposal for the
      distribution of additional dividends for 2009, in the percentage equivalent to 15% of the
      Adjusted Net Income, totaling 40%.

      As permitted by Law no. 9,249/95, Banrisul’s management paid interest on capital in the
      amount of R$179,201 thousand referring to the period from January to December 2009, to
      be credited to dividends, net of withholding income tax.

      The payment of this interest on capital resulted in a tax benefit for the Bank in the amount
      of R$75,610 thousand (2008 – R$63,982 thousand) (Note 22).




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The payment of interest on capital and dividends is represented as follows:

                                                                                                                                     In Thousands of Reais
                                                                                                                                        2009         2008

Net Income ...............................................................................................................         541,096      590,873
Adjustment
  - Legal Reserve ..............................................................................................................   (27,055)     (29,544)
Calculation Basis of Dividends ..................................................................................                  514,041      561,329
  Minimum Mandatory Dividend 25% .........................................................................                         128,510      140,332
  Complementary Dividend 15% (10% for 2008) ........................................................                                77,106       56,133
Total Dividends .........................................................................................................          205,616      196,465
A) Interest on Capital ...............................................................................................             179,201      157,937
Paid
  - Common Shares (R$462.11706 per thousand shares) ........................................                                        94,754       84,455
  - Preferred Shares Class A (R$470.18458 per thousand shares) ..........................                                            1,813        1,636
  - Preferred Shares Class B (R$462.11706 per thousand shares) ..........................                                           92,458       82,407
  - Income Tax Withheld at Source ...............................................................................                   (9,824)     (10,561)
B) Dividends Provisioned .........................................................................................                  26,415       38,528
  - Common Share (R$64.52758 per thousand shares) .............................................                                     13,231       19,298
  - Preferred Shares Class A (R$70.98034 per thousand shares) ...........................                                              273          400
  - Preferred Shares Class B (R$64.52758 per thousand shares) ............................                                          12,911       18,830
Total Interest on Capital and Dividends (A+B) ..........................................................                           205,616      196,465



NOTE 21           Commitments, Guarantees and Other

(a) On April 22, 2004, State Law 12,069, amended by Law 12,585 of August 29, 2006, was
approved, under which the Bank must make available, when required, to Rio Grande do
Sul State up to 85% of the escrow deposits made by third parties with the Bank (except for
those in which the litigant is a municipality). The remaining amount not available is recorded
in a reserve fund to ensure the refund of said escrow deposits. As of December 31, 2009,
the amount of escrow deposits made by third parties with the Bank, adjusted through the
balance sheet date by the TR (managed prime rate) variation plus interest of 6.17% p.a.,
totaled R$6,163,636 thousand (2008 – R$4,694,411 thousand), of which R$2,043,000 thousand
(2008 – R$2,043,000 thousand) was transferred to the State upon its request and written
off from the respective equity accounts. The remaining balance, which makes up the
aforementioned fund managed by Banrisul, is recorded in Other Payables - Financial and
Development Funds (Note 13).

(b) Sureties and guarantees granted to customers amount to R$579,811 thousand (2008 –
R$525,713 thousand), and are subject to financial charges and backed by the beneficiaries’
sureties.

(c) The Bank is responsible for the custody of 367,837 thousand securities of customers
(2008 – 311,254 thousand).

(d) The Bank has co-obligations in import credits in the amount of R$55,860 thousand (2008
– R$53,083 thousand).

(e) The Bank manages various funds and portfolios, which have the following net assets:
                                                                                                                                                             108




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  S TAT E M E N T S         ´09
                                                                                FS’09
                                                                                                                                             In Thousands of Reais
                                                                                                                              Banrisul         Banrisul Consolidated
                                                                                                                  2009          2008         2009              2008

      Investment funds (*) ........................................................................          4,813,088    4,215,003      4,990,717    4,327,703
      Investment funds in investment fund quotas ............................                                   85,623       56,831         85,623       56,831
      Fund to Guarantee the Liquidity of Rio Grande do Sul
      State Debt Securities ......................................................................             936,447    1,470,342        936,447    1,470,342
      Managed portfolios .........................................................................             415,939      353,391        431,739      353,391
      Credit Rights Investment Fund ......................................................                      24,140       64,144         24,140       64,144
       Investment Clubs ............................................................................                  -            -           433             -
      Total ............................................................................................     6,275,237    6,159,711      6,469,099    6,272,411

      (*) The investments fund portfolios consist basically of fixed-rate and variable rate government bonds, and their
      carrying amounts already reflect mark-to-market adjustments at the balance sheet date.


      (f) The subsidiary Banrisul S.A. Administradora de Consórcios is responsible for the
      management of 108 consortium groups (96 in 2008), distributed among real estate,
      motorcycles, vehicles and tractors, gathering 20,189 active consortium members (18,863 in
      2008).

      (g) The Bank rents properties, manly used for branches, based on standard contracts which
      may be cancelled as its own criterion and include the right to opt for renewal and
      adjustment clauses. Total future minimum payments of not-cancelable rent as of December
      31, 2009 is R$89,464 thousand, of which R$30,169 thousand matures in up to one year,
      R$50,043 thousand from one to five years and R$9,252 thousand in more than five years.
      Payments for leases, recognized as expenses for the period, were R$43,545 thousand.

      NOTE 22            Income Tax and Social Contribution
      (a) Conciliation of Expenses/Revenue with Income Tax and Social Contribution

                                                                                                                                             In Thousands of Reais
                                                                                                                              Banrisul         Banrisul Consolidated
                                                                                                                  2009          2008         2009              2008
      Income f or the Period before Taxes and Profit Sharing .............                                    837,762       687,512        853,267       704,239
      Income Tax on Profit - Rate 25% .....................................................                  (209,441)    (171,878)      (213,317)     (176,060)
      Social Contribution on Profit - Rate 9% ........................................                               -     (17,183)          (922)      (18,365)
      Social Contribution on Profit - Rate 15% (*) .................................                         (125,664)     (74,488)      (126,453)      (75,628)
      Total Income Tax and Social Contribution
         calculated at Effective Rate ....................................................                   (335,105)    (263,549)      (340,692)     (270,053)
      Effect of the Increase of the CSLL rate on Credit Tax (*) .............                                        -      86,285               -       86,276
      Adjustment of Fine on Foreign Exchange Operations ................                                       (1,845)      (2,057)        (1,845)       (2,057)
      Profit Sharing ....................................................................................      17,750       11,990         17,750        11,990
      Interest on Capital ..........................................................................           75,610       63,982         75,610        63,982
      Equity in Subsidiaries and Foreing Exchange Adjustment on
      Branches ...........................................................................................     (4,276)      28,218        (15,286)       13,890
      Other Additions, Net of Exclusions ................................................                      (4,424)        5,063        (3,134)         9,371
      Recognition of Tax Credit from Prior Periods ...............................                                   -        3,409              -         3,409
      Total Income Tax and Social Contribution ..................................                            (252,290)     (66,659)      (267,597)      (83,192)

      (*) Law 11,727 as of June 23, 2 008, changed the Social Contribution on Net Income (CSLL) rate of the financial industry,
      increasing it from 9% to 15% as of May 2008.




109




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                                                                    FS’09
(b) Deferred Income Tax and Social Contribution
In December 2009, the Bank had Deferred Income Tax and Social Contribution Credits on
temporary differences as follows:

(b1) Tax credits
Tax credit balances, by origin and disbursements made, are as follows:


Banrisul                                                                                                                                  In Thousands of Reais
                                                                                                Balance on                                          Balance on
                                                                                                  31
                                                                                               12 / /2008    Recognition(*)         Realization    12 /31 /2009
Allowance for loan losses ..............................................................        463,689         194,003             225,322           432,370
Reserve for labor contingencies ...................................................              38,470          27,764              27,594            38,640
Reserve for tax contingencies .......................................................            62,624            7,607                172            70,059
Other temporary provisions ..........................................................            29,882          31,959               4,874            56,967
Total tax credits on tempor ary differences ................................                    594,665         261,333             257,962           598,036
Unrecorded credits .........................................................................        (23)               -                   -              (23)
Total tax credits r ecor ded ..........................................................         594,642         261,333             257,962           598,013
Deferred tax liabilities ...................................................................     (4,688)         (4,721)                  -            (9,409)
Tax credits, net of deferred liabilities ........................................               589,954         256,612             257,962           588,604

(*) Includes the effects of the changes in the Social Contribution on Net Income (CSLL) rate, as described in item (a).


Banrisul Consolidated                                                                                                                     In Thousands of Reais
                                                                                                Balance on                                          Balance on
                                                                                                  31
                                                                                               12 / /2008    Recognition(*)         Realization    12 /31 /2009
Allowance for loan losses ..............................................................        463,689         194,003             225,322           432,370
Reserve for labor contingencies ...................................................              43,615          29,568              29,453            43,730
Reserve for tax contingencies .......................................................            63,091            7,617                172            70,536
Other temporary provisions ..........................................................            29,882          31,959               4,874            56,967
Total tax credits on tempor ary differences ................................                    600,277         263,147             259,821           603,603
Unrecorded credits .........................................................................        (23)               -                   -              (23)
Total tax credits r ecor ded ..........................................................         600,254         263,147             259,821           603,580
Deferred tax liabilities ...................................................................     (4,692)         (4,813)                (65)           (9,440)
Tax credits, net of deferred liabilities ........................................               595,562         258,334             259,756           594,140

(*) Includes the effects of the increase in Social Contribution on Net Income (CSLL) rate, as described in item (a).


Expected realization of these receivables are as follows:

                                                                                                                                          In Thousands of Reais
                                                                                                                                     Banrisul Banrisul Consolidated
                                                                    Temporary Differences
  Year                                               Income Tax        Social Contribution                     Total          Total Recorded      Total Rec orded
 2010                                                 76,806                        46,084               122,890                  122,890              123,447
 2011                                                120,641                        72,385               193,026                  193,026              193,583
 2012                                                 95,087                        57,052               152,139                  152,139              152,696
 2013                                                 64,763                        38,858               103,621                  103,621              104,178
 2014                                                 13,983                         8,390                22,373                   22,373               22,930
 2015 to 2017                                          2,099                         1,260                 3,359                    3,359                5,029
 2018 to 2020                                            378                           227                   605                      605                1,717
 After 2020                                               15                             8                    23                       -,-                   -,-
 Total on 12/31/2009                                 373,772                       224,264               598,036                  598,013              603,580
 Total on 12/31/2008                                 371,665                       223,000               594,665                  594,642              600,254




                                                                                                                                                                      110




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  S T AT E M E N T S      ´09
                                                                              FS’09
      The total consolidated present value of tax credits is R$493,438 thousand, calculated based
      on the expected realization of temporary differences at average funding rate projected
      for the corresponding periods.
      (b2) Deferred Tax Liabilities
      The balance of the Reserve for Deferred Taxes and Contributions is represented by:
                                                                                                                                     In Thousands of Reais
                                                                                                                       Banrisul        Banrisul Consolidated
                                                                                                              2009       2008        2009              2008

      Excess Depreciation ........................................................................         (9,332)    (4,685)      (9,332)        (4,685)
      Available for Sale Securities ..........................................................                 (12)       (3)         (12)            (3)
      Adjustment to Fair Value of Trading Securities ...........................                               (65)         -         (96)            (4)
      Total ............................................................................................   (9,409)    (4,688)      (9,440)        (4,692)



      NOTE 23 Fundação Banrisul de Seguridade Social e Cabergs - Caixa de
      Assistência dos Empregados do Banco do Estado do Rio Grande do Sul
      Banrisul is the main sponsor of Fundação Banrisul de Seguridade Social (“Fundação
      Banrisul”), which is mainly engaged in supplementing the benefits covered and provided
      by the Social Security to the employees of the Bank, Banrisul Serviços, and Cabergs, and
      carrying out social security programs promoted by its sponsors.

      On July 6, 2009, a new retirement benefit plan named Banrisulprev was approved and has
      been offered to non members of the Benefit Plan I since then. This new variable contribution
      benefit plan became effective in November 2009. As a result of the implementation of
      this new plan, new members are no longer allowed to join the Benefit Plan I.

      To attain its objectives, Fundação Banrisul receives monthly contributions from its sponsors
      and participants, which are calculated based on the monthly compensation of employees
      and their beneficiaries. The Bank’s contribution amount of R$11,247 thousand (2008 -
      R$9,775 thousand) for the year, which, as of December 31, 2009, corresponds to 3.63%
      (2008 – 3.45%) of the monthly payroll of employees’ contribution salaries, was recorded in
      operating expenses.

      Benefit Plan I - In the defined benefit type, Benefit Plan I provides retirement and
      survivorship benefits, sick pay, inmate pension, funeral allowance and annual bonus.

      The active participant’s normal contribution corresponds to the monthly amount equivalent
      to the result of the application of the following fees:
      a) Fixed general percentage of 3% applicable to the contribution salary;
      b) First additional percentage of 2% applicable to the contribution salary surplus (if any)
      on half of the highest Social Security benefit salary; and
      c) Second additional percentage of 7% applicable to the contribution salary surplus (if any)
      on the highest Social Security benefit salary.
111




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Banrisul’s remaining portion of the contracted debt related to this plan in the amount of
R$58,648 thousand as of December 31, 2009 (2008 – R$61,349 thousand) is recorded in
Other payables (note 13). In addition to this debt, Banrisul pays interest of 6% per year
with final maturity in 2028, which is monthly adjusted based on the General Price Index –
Domestic Availability (IGP-DI).

Banrisulprev - In the variable contribution type, Banrisulprev provides benefits with defined
contribution characteristics, such as regular retirement, early retirement and funeral
allowance, and benefits with defined benefit characteristics, such as disability retirement,
proportional benefits, sick pays, annual bonus, minimum benefit and survivorship benefit.

The participant’s normal contribution is comprised of three portions:
a) Basic portion: 1% on the contribution salary;
b) Additional portion: may vary from 1% to 7.5% on the contribution salary portion that
exceeds 9 reference units; and
c) Variable portion: percentage applied on the contribution salary annually established by
the actuary to cover 50% of the costs of risk benefits and the plan’s administrative expenses.
In addition to the regular contribution, the participant may opt to make a contribution not
lower than 1 reference unit and not paid by the sponsor.

The Bank’s contributions are equal to the participants’ normal contributions.

Medical and dental care - Banrisul offers medical and dental care to its employees and
Fundação Banrisul’s retirees through Cabergs.

As of December 31, 2009, the actuarial appraisal of post-employment benefits related to
defined benefits and health care granted to its employees was as follows:
                                                                                                                         In Thousands of Reais
                                                                                                                      Medical
                                                                                           Benefit   Banrisulprev   and dental
                                                                                            Plan I           Plan        Care            Total
Present obligation of actuarial obligations ................................ (2,301,202)                  (669)     (107,882) (2,409,753)
Fair value of Fundação Banrisul’s a ssets ..................................... 2,491,893                  103        92,989 2,584,985
Gains /Losses and cost of unrecognized
   Gains /Losses and cost of unrecognized services ...................                    111,681          566        25,033        137,280
Actuarial assets (liabilities) ........................................................   302,372             -       10,140        312,512

The main actuarial assumptions used as of December 31, 2009 are as follows:
- Discount rate: 11.40% p.a.
- Expected return rate of pension plans’ assets:
         - Defined benefit plan: 12.36% p.a.
         - Variable contribution plan: 12.39% p.a.
         - Medical and dental care: 10.58% p.a.
- Future salary increase rate: 6.59% p.a.
- Increase in average costs: 7.64% p.a.
- Inflation: 4.50% p.a.
- Mortality table: AT – 2000.                                                                                                                    112




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  S T AT E M E N T S     ´09
                                           FS’09
      NOTE 24   Financial Instruments

      The main risks related to financial instruments are credit risks, market risks and liquidity
      risks, as follows:

      Credit risk - it is the possibility of the Bank incurring losses related to the nonperformance
      of a loan or financial obligation by the counterparty.

      Credit risk management in Banrisul is carried out through statistical models that allow
      continuous improvement of the credit granting process. Banrisul continuously performs
      adherence tests per period, monitoring credit portfolio shifts, customer and sector
      concentration and default levels.

      Market risk - it is directly related to the fluctuation of prices and rates, that is, to the
      fluctuation of the stock exchange, interest rate market and foreign exchange inside and
      outside Brazil that affects the prices of the assets and liabilities negotiated in the market.

      Liquidity risk - it is related to a mismatch between the cash flows of assets and liabilities,
      affecting the institution’s financial capacity to obtain funds to honor its obligations.

      The purpose of market and liquidity risk politicizes is to mitigate possible losses resulting
      from fluctuations in market price, currency and asset and liability interest rates and from
      cash flow mismatches. The Bank may use, among other choices, derivatives.

      Banrisul has not contracted operations known as “target forward swap” or any other
      leveraged derivative because its policies do not provide for operations whose objective is
      not to hedge its assets and liability positions.

      Except for the “swap” agreements referred to in Note 5(d), Banrisul has deemed its
      exposures to the risks mentioned above as reasonable and has not contracted new
      operations involving Derivative Financial Instruments.

      Sensitivity analysis - Although swap operations in the Bank’s portfolio and underlying
      transactions are subject to floating rates equivalent to those prevailing in the market, in
      compliance with CVM Resolution 475/08, the possible impacts on cash flows and on gains
      compared to the market for similar transactions are shown below.

      The impacts of financial exposures of the Banking portfolio (especially for interest rate
      and foreign exchange factors) shown in the following chart is not necessarily and indication
      of potential loss for the Bank, since these operations are funded by deposits, which are a
      natural hedge for possible interest rate fluctuations. The Bank’s intention is to hold these
      operations to maturity and use them to hedge transactions conducted with customers.


113




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The chart below shows the possible impacts of derivatives (Banking portfolio) exposures
on cash flows and hedged instruments as of December 31, 2009, under three different
scenarios (sensitivity analysis):

                                                                                                                          In Thousand of Reais
Risk Factors                                                                                                      12/31/2009
                                                                                                                   Scenarios
                                                                                                             1            2                 3
Derivatives - Swap
Exposures subject to interest rate variations ...............................                         (157,719)   (182,334)       (206,504)
Exposures subject to foreign exchange variations ........................                              (29,785)    (32,419)        (36,343)

Hedged Financial Instrument (1)
Exposures subject to interest rate variations ...............................                          179,338     252,397          368,859
Exposures subject to foreign exchange variations ........................                               52,533      57,291            63,758
Ne t Value ........................................................................................      44,367      94,935          189,770


(1) Adjusting a financial instrument consists of obtaining the gains that fixed-rate securities
will have above market rates, considering the scenarios.

Scenario 1: based on market information (BM&FBovespa, Anbima, etc) a 50 base-point
            stress test was applied on foreign exchange variation and interest rate.

Scenario 2: a 25% stress test was applied to the respective price curves (interest rate,
            foreign exchange) based on the market as of December 31, 2009; the main risk
            refers to a downturn scenario for interest rates and an upward trend in foreign
            exchange rate.

Scenario 3: a 50% stress test was applied to the respective price curves (interest rate and,
            foreign exchange rate) based on the market as of December 31, 2009; the
            main risk refers to a downturn scenario for interest rates and an upward trend
            in foreign exchange rate.



NOTE 25            Transactions with Related Parties

Banrisul’s commercial relations with the Rio Grande do Sul State Government and its
subsidiaries, Companhia Estadual de Energia Elétrica (CEEE), Companhia Rio-Grandense
de Saneamento (CORSAN), Companhia de Gás do Rio Grande do Sul (SULGÁS), Centrais de
Abastecimento do Rio Grande do Sul S.A. (CEASA), Companhia Estadual de Silos e Armazéns
(CESA), Companhia Rio-Grandense de Artes Gráficas (CORAG), Companhia Rio-Grandense
de Mineração (CRM) and Companhia de Processamento de Dados do Estado do Rio Grande
do Sul (PROCERGS), are described below:

Rio Grande do Sul State Government - On June 29, 2007, Cooperation Agreement 1959/
2007 was entered into between Banrisul and Rio Grande do Sul State Government, under                                                             114




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  S T AT E M E N T S       ´09
                                            FS’09
      which Banrisul will provide to the Government, on an exclusive basis and for a five-year
      period, banking services related to the payment of active and inactive servants, lifetime
      and special pensioners of the Executive Branch (Direct Administration), and pension plan
      pensioners (Social Security of the Rio Grande do Sul State – IPERGS) and the Government
      gives the Bank the right to grant payroll loans. In view of the reciprocity of services provided,
      under this Agreement Banrisul releases the Rio Grande do Sul State Government from
      costs related to the provision of banking services, such as the collection of revenue and
      state taxes, debt to bank account, FGTS (severance pay fund) statement and mortgage
      loan collection services.

      The Bank also provides services related to the financial transfers made by the government
      departments of amounts related to social programs and updates information related to
      inactive servants and holders of special or lifetime pension plans of the Direct
      Administration. These services are not paid.

      The Bank also pays the suppliers of the Public Finance System and processes changes
      related to the Cash Management Integrated System (SIAC), which is responsible for
      centralizing in one bank account the cash and cash equivalents of the Direct and Indirect
      State Administration and its subsidiaries. These services are not paid.

      The Bank provides other services to foundations and government agencies, such as payment
      services through payment forms and the supply of meal and fuel tickets. For the year
      ended December 31, 2009, these services generated income in the amount of R$7,651
      thousand. The Bank offers a solution for the management of e-commerce through the
      Compras Pregão On Line portal. This service is not paid.

      The Bank purchased FCVS credit rights, as described in note 06, and receivables assignment
      agreements in the amount of R$457,576 thousand. These receivables were purchased
      with negative goodwill and their index was changed to Selic through a swap agreement, as
      described in note 05.

      For the year ended December 31, 2009, the Bank’s lease agreements on the State
      Government ’s properties generated expenses in the amount of R$1,215 thousand.

      Also, the Bank has with the State Government an agreement whereby the State
      Government assigned 12 employees from the dissolved Caixa Econômica Estadual to the
      Bank and received 11 employees to work in Government departments and foundations.
      These employee-related costs are refunded by the parties.

      Companhia Estadual de Energia Elétrica (CEEE) - The Bank is responsible for the provision
      of banking services related to personnel payment, including payroll loan operations. The
      payment of consumption accounts issued by CEEE and the supply of meal and fuel tickets
115   is also the responsibility of the Bank, which for the year ended December 31, 2009 was




                                                                                    FINANCIAL
                                                                                    S TA T E M E N TS   ´09
                                    FS’09
paid R$3,605 thousand to perform these services. The Bank offers a solution for the
management of e-commerce through the Compras Pregão On Line portal.

Companhia Riograndense de Saneamento (CORSAN) - The Bank is responsible for the
provision of banking services related to the payment of personnel, including payroll loan
operations. The payment of consumption accounts issued by Corsan and the supply of
meal and fuel tickets is also the responsibility of the Bank, which for the year ended
December 31, 2009 was paid R$3,387 thousand to perform these services. The Bank offers
a solutions fot the management of e-commerce through the Compras Pregão On Line
portal.

The Bank intermediates the implementation of the financial flow expected from the
agreements entered into by this company and the National Bank for Economic and Social
Development (BNDES). There are no guarantees pledged and/or compensation related to
these operations.

SULGÁS, CEASA, CESA, CORAG, CRM and PROCERGS - The Bank is responsible for the
provision of banking services related to the payment of personnel and has an agreement
with SULGÁS, CEASA and CESA for payroll loan operations. Services related to the e-payment
issued by these Companies and the supply of meal and fuel tickets is also the responsibility
of the Bank, which for the year ended December 31, 2009 was paid R$262,000 to perform
these services. The Bank offers a solution for the management of e-commerce through
the Compras Pregão On Line portal.

SULGÁS has investments whose yield is indexed to the CDI variation. The Bank
intermediates the implementation of the financial flow expected from the agreements
entered into by this company and the National Bank for Economic and Social Development
(BNDES). There are no guarantees pledged and/or compensation related to these
operations.

CaixaRS Agência de Fomento - The Bank is responsible for providing banking services
related to the payment of personnel including payroll loan operations. The payment of
collection bills issued by CaixaRS and the supply of meal and fuel tickets is also the
responsibility of the Bank, which for the year ended December 31, 2009 was paid R$44
thousand to perform these services. The Bank also manages purchases through the Compras
Pregão On Line portal.

Also, the Bank has with an agreement whereby CaixaRS received 9 employees from
Banrisul. These employee-related costs are refunded by the parties.

Banco Regional de Desenvolvimento do Extremo Sul (BRDE)                                   -
The Bank is responsible for providing banking services related to the payment of personnel,
                                                                                               116




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                                                                     FS’09
      including payroll loan operations, for employees working in the State of Rio Grande do
      Sul, and is also responsible for collection services.

      Fundação Banrisul de Seguridade Social - As described in Note 23, the Bank has debt
      contracted in March 31, 1998 related to the remaining portion of the actuarial deficit,
      amounting to R$58,648 million. This deficit is paid plus interest of 6% p.a. and restated by
      the General Price Index-Internal Availability (IGP-DI), through monthly updates, with
      deadline in 2028.

      The Bank is responsible for providing banking services related to the payment of personnel as
      well as retirement and pension payments to beneficiaries registered at Fundação Banrisul. The
      Fundação also has an exclusive investment fund managed by the Bank for which, in the year
      ended December 31, 2009, the Bank received R$350,000 as income from services rendered.
      Fundação Banrisul has investments whose yield is indexed to the CDI variation.

      The Bank has leased properties belonging to the Fundação Banrisul, which generated at
      the year ended December 31, 2009, expenses in the amount of R$5,449 million.

      All paid transactions were hired at rates compatible with those paid to third parties existing
      at the dates of such transactions.

      Transactions with related parties are as follows:

      Banrisul                                                                                                                          In Thousands of Reais
                                                                                                          Assets (Liabilities)              Income (Expense)
                                                                                                       2009             2008            2009            2008
      Derivatives ..................................................................................         104,247     78,628      23,945       (17,548)
        State of Rio Grande do Sul Government ..................................                             104,247     78,628       23,945      (17,548)
      Collection Services .....................................................................                5,072       5,072           -             -
        State of Rio Grande do Sul Government ..................................                               5,072       5,072           -             -
      Other Credits ..............................................................................            10,544       5,204       5,249         4,373
        State of Rio Grande do Sul Government ..................................                               5,621           -            -            -
        Subsidiaries ..................................................................................        4,923       5,204       5,249         4,373
      Demand Deposits ....................................................................... (163,398)                (244,383)           -             -
        State of Rio Grande do Sul Government .................................. (156,309)                             (238,799)           -             -
        Subsidiaries ..................................................................................       (7,089)    (5,584)           -             -
      Time Deposits ............................................................................. (181,610)            (164,111)    (10,529)      (12,546)
        Subsidiaries .................................................................................. (181,610)      (164,111)    (10,529)      (12,546)
      Money Market Funding .............................................................. (999,841) (1,526,311)                    (178,246)     (218,921)
        State of Rio Grande do Sul Government (a) ............................. (936,445) (1,470,342)                              (172,705)     (212,421)
        Subsidiaries ..................................................................................      (63,396)   (55,969)     (5,541)       (6,500)
      Other Payables ............................................................................ (103,013)            (109,477)    (13,306)      (12,101)
        State of Rio Grande do Sul Government ..................................                             (15,182)   (21,971)     (1,215)       (1,029)
        Banrisul foundation ....................................................................             (59,108)   (61,406)    (10,655)       (9,749)
        Subsidiaries ..................................................................................      (28,723)   (26,100)     (1,436)       (1,323)
      Total ............................................................................................ (1,327,999) (1,955,378)   (172,887)     (256,743)

       (a) These funds receive 100% of the CDI variation.


117




                                                                                                                                    FINANCIAL
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                                                                             FS’09

Banrisul Consolidated                                                                                                                                 In Thousands of Reais
                                                                                                                          Assets (Liabilities)            Income (Expense)
                                                                                                                      2009              2008          2009           2008
Cash ............................................................................................      19,864      18,392                            1,800         2,187
  State of Rio Grande do Sul Government ..................................                             19,864      18,392                            1,800         2,187
Derivatives ..................................................................................        104,247      78,628                          23,945       (17,548)
  State of Rio Grande do Sul Government ..................................                            104,247      78,628                          23,945       (17,548)
Derivatives ..................................................................................           5,072       5,072                                -             -
  State of Rio Grande do Sul Government ..................................                               5,072       5,072                                -             -
Other Credits ..............................................................................           12,405        5,905                             787           765
  State of Rio Grande do Sul Government ..................................                             12,405        5,905                             787           765
Demand Deposits ....................................................................... (156,309)                (238,799)                                -             -
  State of Rio Grande do Sul Government .................................. (156,309)                             (238,799)                                -             -
Money Market Funding .............................................................. (936,445) (1,470,342)                                        (172,705)     (212,421)
  State of Rio Grande do Sul Government .................................. (936,445) (1,470,342)                                                 (172,705)     (212,421)
Other Payables ............................................................................           (74,290)    (83,377)                        (11,870)      (10,778)
  State of Rio Grande do Sul Government ..................................                            (15,182)    (21,971)                         (1,215)       (1,029)
  Banrisul Foundation ...................................................................             (59,108)    (61,406)                        (10,655)       (9,749)
Total ............................................................................................ (1,025,456) (1,684,521)                       (158,043)     (237,795)


(a) These funds receive 100% of the CDI variation.

Remuneration of the Senior Management

Yearly, at the General Shareholders’ Meeting, it is defined:

a) The total annual remuneration of the Management, the members of the Board, the
members of the Audit Committee and members of the Audit Committee as stated in the
Company’s By-Laws; and

b) The allowance to cover Complementary Pension Plans Additional on behalf of the Senior
Management, included in the Private Pension Plan for the Bank and its subsidiaries’
Management and Employees.

In 2009, it was fixed the maximum annual individual amount of R$269,000 thousand as
remuneration and bonuses paid to the members of the Board of Administration, Board of
Executive Officers, Fiscal Council and Audit Committee.


Short Term Benefits paid to Senior Management
                                                                                                                                                      In Thousands of Reais
                                                                                                                                                     2009             2008
Salaries ....................................................................................................................................      2,779            1,897
Bonuses ....................................................................................................................................          59               50
Social Security .........................................................................................................................            642              524
Total ................................................................................................................................             3,480            2,471


Banrisul pays in full defined benefit pension plan to administrators who belong to the
staff.
                                                                                                                                                                              118




  FINANCIAL
  S T AT E M E N T S          ´09
                                                                       FS’09
                                                                                                                                    In Thousands of Reais
      Post-Employment Benefits                                                                                                     2009             2008
      Defined Contribution Pension Plan .....................................................................................        17               14


      The Bank has contracted liability insurance to Officers and Councils Members, having
      disbursed in the year of 2009 the amount of R$482,000, validity for the year 2010.

      Banrisul does not offer any long-term benefits, termination of employment contracts or
      stock-based compensation for its Senior Management.

      Additional information
      1) According to existing legislation, financial institutions may not grant loans or advances
      to:

      a) Directors and members of advisory, administrative or fiscal councils and the like, as well
      as their spouses and relatives up to the 2nd degree;

      b) Individuals or entities that participate in its Equity, with more than 10%; and

      c) legal entities whose capital involved, with more than 10%, the very financial institution,
      any directors or officers of the institution as well as their spouses and relatives up to the
      2 nd degree.

      Thus, it is not made by the Bank loans or advances to any subsidiary, members of the Board
      or the Executive Board and their families.

      2) Shareholding
      Members of the Board, the Board of Directors, the Fiscal Council and Audit Committee had
      together the following shareholdings in the Bank as of December 31, 2009.

                                                       SHARES                                                     AMOUNT


                                              Voting Shares ...............................                           12
                                              Common Shares ..........................                               157
                                              TOTAL SHARES ...............................                           169




      NOTE 26           Autorization for Completion of the Financial Statements
      Banrisul’s Board of Executive Officers authorized the completion of these financial
      statements on February 03, 2010, which consider subsequent events occurred to this date
      that might affect these financial statements



119




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                                                                                                                                S TA T E M E N TS   ´09
                                     FS’09
                               GOVERNMENT OF
                           RIO GRANDE DO SUL STATE
                                 Secretary of the Treasury
                           Banco do Estado do Rio Grande do Sul



                                 Board of Directors
                            FERNANDO GUERREIRO DE LEMOS
                                       CEO



                               RUBENS SALVADOR BORDINI
                                    Vice-President



                           CARLOS TADEU AGRIFOGLIO VIANNA
                               LUIZ GONZAGA VERAS MOTA
                                   LUIZ VALDIR ANDRES
                             PAULO ROBERTO GARCIA FRANZ
                                RICARDO RICHINITI HINGEL
                                    URBANO SCHMITT
                                           Officers




                              Conselho de Administração
                                       RICARDO ENGLERT
                                           Chairman
                                 FERNANDO GUERREIRO DE LEMOS
                                        Vice-Chairman
                                          ARIO ZIMMERMANN
                                         DÍLIO SÉRGIO PENEDO
                                       JOÃO VERNER JUENEMANN
                                               JOÃO ZANI
                                      MANOEL ANDRÉ DA ROCHA
                                      MATEUS AFFONSO BANDEIRA
                                      RUBENS SALVADOR BORDINI
                                       Board Members




                                   LUIZ CARLOS MORLIN
                                   Contador CRCRS 51.124          120




FINANCIAL
S T AT E M E N T S   ´09
                 Reports




FINANCIAL
           ´09
S T ATEMENTS
                                    FS’09
Summary of the Audit Committee
Report – 2009
I. Institutional and Statutory Provisions – The Audit Committee, as an statutory body for
Banco do Estado do Rio Grande do Sul S/A, , created by the Extraordinary General Meeting
held on April 29, 2004, is formed by Mr. Ario Zimmermann, Mr. Bruno Nubens Barbosa
Miragem and Mr. Leopoldo Henrique Krieger Schneider, all independent members, elected
by the Board of Directors on August 05, 2009 and took office on August 19, 2009, with term
of Office until the first meeting of the Board of Directors to be held after the Annual
General Meeting of 2010. The Audit Committee’s Internal Regulations are available on:
ht tp://www.banrisul.com.br/bob/data/RegimentoInterno.pdf.
II. Duties and Responsibilities – The Audit Committee has the responsibility of supervising
the compliance with regulatory and legal requirements, the integrity and quality of the
financial statements of the institution and its subsidiaries, the efficiency and effectiveness
of the independent audit and internal audit performance. It is also responsible for the
permanent follow-up on the quality of the internal controls and risk management.
Management is responsible for the elaboration of the financial statements of the
companies that make part of Grupo Banrisul (Banrisul Group), in compliance with the
guidelines focused on ensuring the quality of the processes related to the financial
information, and to the control and risk management activities.
It is incumbent upon Deloitte Touche Tohmatsu Auditores Independentes, the external
audit company responsible for the financial statements analysis, to issue an opinion on
whether they adequately represent the equity and financial situation of the group, pursuant
to the fundamental principles of accounting, the Brazilian corporate legislation and the
rules of the Securities and Exchange Commission of Brazil – CVM, the National Monetary
Council and the Brazilian Central Bank.
III. Work Programming - In view of the closure of the mandate of the Audit Committee (on
the first meeting of the Board of Directors after the Annual General Meeting of 2009), it
was presented the overall work plan, with dates and meeting participants, only for the
first six months of 2009, as follows: 1) monthly meetings with the Bank’s CEO; Vice-
President; with Financial, Commercial, Distribution and Credit Directors; with Information
Technology, Accounting, Financial, Credit; Credit Policy and Risk Management, Human
Resources, Credit Recovery Units; with the Internal Audit and Bank Management
Committee; 2) quarterly meetings with the Fiscal Council, with Third-party Management
Director, with subsidiaries (Banrisul S/A Corretora de Valores Mobiliários e Câmbio, Banrisul
S/A Administradora de Consórcios e Banrisul Armazéns Gerais S/A), with Caixa de
Assistência dos Funcionários do Banrisul – Cabergs and Fundação Banrisul de Seguridade
Social, and also, with the independent auditors. As the current members of the Audit
Committee took office on August 19, 2009, with term of Office until the first meeting of
the Board of Directors to be held after the Annual General Meeting of 2010, was prepared
a work plan, only for the period between September and December of 2009 (Minutes of
the Meeting no. 226), with the following time schedule has been defined: a) systematic
meetings with CEO and Executive Officers; b) monthly meetings with independent auditors,
with the Legal Advisory, the Controllership, and with Accounting and Risk Management             122




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      Units; c) quarterly meetings with the Fiscal Council, with independent auditors, with
      subsidiaries (Banrisul S/A Corretora de Valores Mobiliários e Câmbio, Banrisul S/A
      Administradora de Consórcios e Banrisul Armazéns Gerais S/A), and also, with Fundação Banrisul
      de Seguridade Social and Caixa de Assistência dos Funcionários do Banrisul – Cabergs.
      IV. Activities Schedule – During the 2nd half of 2009, the Audit Committee held 28 (twenty
      eight) meetings: 23 (twenty three) until December 31, 2009, and other between the closing
      date of the semester and the issue of the Report of the Audit Committee, in which it
      discussed, in the scope of its authority, the most different subjects, as described in the
      minutes of the meetings. In these meetings, the Committee was supported by the analysis
      of the accounting data, managerial reports, supplementary information and meetings
      held with the presidency and executive officers of the institution, with executives from
      different levels of the organization, and with the executive officers from the subsidiaries.
      It has also obtained reports, documents and information from the executive managing
      directors of several units of the Bank. It has, likewise, requested the attendance, when
      necessary, of the professionals of or the responsible for the respective area of operation,
      as well as of the independent auditors.
      During the year of 2009, the Audit Committee held 47 (forty seven) meetings.
      V. Internal Audit: The Internal Audit, linked to the CEO, has, among its objectives, to
      safeguard of the assets and to assure the compliance with the policies, plans, procedures
      and laws, being responsible for assisting the Audit Committee and the independent
      auditors. As reported in the minutes of the meetings of this Committee, the teams
      responsible for the execution of the tasks related to the operational, administrative and
      systems areas have periodically discussed the conclusions reported.
      Considering the reports made available by the Internal Audit and the answers produced
      by the respective areas, the Audit Committee believes to have had reasonable knowledge
      of each and every one of the subjects under analysis.
      In January 18, 2010, the Audit Committee approved the work plan for the Internal Audit for
      2010.
      VI. External Audit: The Audit Committee requested the work planning for 2010, which will
      shortly be examined and deliberated. The report on the evaluation of the accounting and
      internal control systems presented by the external audit company, along with the
      recommendations made, has been discussed with the Committee, which has followed
      with the Internal Audit the implementation of the actions suggested for each unit,
      throughout the year. Due to the permanent supervision of this work, the Committee
      believes that the work developed was adequate to Banrisul’s needs, and that independent
      auditors performed, during the year, the tasks entrusted to it in accordance with the
      contract. Those tasks hav been supervised throughout the year, with the guarantee of
      unrestricted access to the institution’s data, with a view to ensure total freedom in the
      performance of the contract. There is no evidence of any fact or circumstance that might have
      impaired the adoption of an independent posture, or the development of the auditors’ work.
      VII. Risk Management – The Committee has followed the implementation of an adequate
      dimensioning of the civil and labor contingencies, with a view to establish the provisions
      necessary to their coverage in a correspondent level.
123   During this half, the Audit Committee has also supervised the development of the IT




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      activities. This process has been particularly focused on the development of IT security
      programs with a view to prevent electronic fraud practices to the clients and to the Bank
      itself, and to protect the confidentiality of the operations performed by the Institution. It
      was informed of the opening of the bidding process to hire specialized company to implant
      a risk management system at the Bank.
      VIII. Error and Fraud Communication Channel – The Audit Committee did not any receive
      denunciations regarding to the existence or the evidence of error or fraud, for the effects
      of article 8 of its Internal Regulation. Any denunciations received were addressed to the
      Ombudsman to adopt the necessary measures.
      IX. Capital Market – The Audit Committee has supervised, in the second half of 2009, the
      activities of the Investor Relations area, recommending the adoption of measures deemed
      suitable.
      X. Continued Education – The Audit Committee members have participated, during the
      second six months of 2009, in 10th Brazilian Conference of Corporate Governance, promoted
      by the Brazilian Institute of Corporate Governance - IBGC in Sao Paulo, in order to update
      and expand knowledge in the area.
      XIII. Conclusion - Considering the existing internal control systems, the scope, the
      thoroughness and the quality of the work performed by the internal and external audits,
      as well as the issue of the independent auditors’ opinion, without remarks, on February
      03, 2010, along with the set of recommendations of the Audit Committee, described in the
      respective minutes of the meetings, we recommend, to the Board of Directors, the approval
      of the audited financial statements, related to the year ended on December 31, 2009.


                                   Porto Alegre, February 03, 2010.



                                          Ario Zimmermann

                                   Bruno Nubens Barbosa Miragem

                                Leopoldo Henrique Krieger Schneider




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Opinion of the fiscal council


As members of the Fiscal Council of Banco do Estado do Rio Grande do Sul S.A. and in the
exercise of the responsibilities conferred to us by Article 163, items II and VII of Law 6,404
dated December 15, 1976, and by the provisions of the Company´s Bylaws, we have
examined the Management Report and the Financial Statements, which comprise the
Balance Sheet, Statement of Income for the year, Statements of Changes in Shareholders’
Equity, Cash Flow, Statement of Value Added, Notes to the Financial Statements and other
statements for the year ended in December 31, 2009. Based on our examinations, on
Summary of the Audit Committee Report and on the Opinion of the Independent Auditors,
it is our opinion that the statements cited above should be approved.

                              Porto Alegre, February 05, 2010.




                                  Claudio Morais Machado
                                         Chairman
                                    Ronei Xavier Janovik
                                      Vice-Chairman



                                         Members
                                      Irno Luiz Bassani
                                       Rubens Lahude




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      Independent Auditor´s Report

      To the Management and Shareholders of
      Banco do Estado do Rio Grande do Sul S.A.
      Porto Alegre - RS


      1. We have audited the accompanying individual (Bank) and consolidated balance sheets
         of Banco do Estado do Rio Grande do Sul S.A. (“Bank”) and subsidiaries as of December
         31, 2009 and 2008, and the related statements of income, changes in shareholders’
         equity (Bank), cash flows and value added for the years then ended and the six-month
         period ended December 31, 2009, all expressed in Brazilian reais and prepared under
         the responsibility of the Bank’s management. Our responsibility is to express an opinion
         on these financial statements.

      2. Our audits were conducted in accordance with auditing standards in Brazil and
         comprised: (a) planning of the work, taking into consideration the significance of the
         balances, volume of transactions, and the accounting and internal control systems of
         the Bank and its subsidiaries; (b) checking, on a test basis, the evidence and records
         that support the amounts and accounting information disclosed; and (c) evaluating
         the significant accounting practices and estimates adopted by the Management of the
         Bank and its subsidiaries, as well as the presentation of the financial statements taken
         as a whole.

      3. In our opinion, the financial statements referred to in paragraph 1 present fairly, in all
         material respects, the individual and consolidated financial positions of Banco do Estado
         do Rio Grande do Sul S.A. and subsidiaries as of December 31, 2009 and 2008, and the
         results of their operations, the changes in their shareholders’ equity (Bank), their cash
         flows, and the values added in its operations for the years then ended and the six-month
         period ended December 31, 2009, in conformity with Brazilian accounting practices.

      4. The accompanying financial statements have been translated into English for the
         convenience of readers outside Brazil.

                                                                  Porto Alegre, February 3, 2010.


      DELOITTE TOUCHE TOHMATSU Independent Auditors
      CRC nº. 2 SP 11.609/O-8/F/RS
      Fernando Carrasco
      Engagement Partner
126   CRC nº. 1 SP 157.760/T/RS




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