Brazil

AGENDA

• Brazil at a glance

• Business opportunities

• Trade

• Financing options

• Global bank capabilities

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Brazil at a Glance

Growth: 2.9%*Y-o-Y Market Price

GDPOver 2.0 trillion*

Inflation: 6.6%**Nominal InterestRate10.50%**

Source: Citibank Brazil – Economic Department – January 2012•2011•2011

5th largest population worldwide, 191 million

8.7 million square Km, nearly half of South America territory

World’s 6th largest economy, GDP over US$2.0 trillion (2011)

Second largest aircraft producer

About 3,7 million vehicles produced in 2011 (6th largest industry)

First exporter: orange juice, sugar, coffee, beef …

Second exporter: soybeans, poultry …

3rd Largest Stock Exchange

Energy self sufficient (Oil, Hydropower and Green Energy)

Investment Grade since 2008

Solid banking system (Avg Brazilian Bank Capital Adequacy: 17%)

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Brazil – Background

• Brazil is a federal republic comprised of 26 states and the Federal District. Each state has its own constitution with a governor and state legislature. The States are divided into municipalities which have some degree of autonomy and these in turn are divided into districts.

• Brazil’s status as a world economic phenomenon is relatively recent. Between 1950 and 1980 exports reached US$23 billion (of which approximately 55% were manufactured goods) and Sao Paulo developed into one of the world’s largest manufacturing centers. Brazil’s GDP increased during 2010 by 7.5% reaching R$3.57 trillion (approximately US$2.14 trillion at the 12/31/2010 exchange rate).

• Brazilian middle class has grown significantly over the past 5 years, rising to 50% from 40% of the total population. In nominal terms this represents an increase of 34%. GDP per capita reached more than US$10,000 during 2010. Consistent economic growth and governmental policies have boosted a solid enlargement of a middle class avid for durable goods and consumer products. However, many of Brazil’s sectors are still highly guarded with protectionist import taxes.

• Government policy is focused on stimulating business activities for rapid industrialization and economic growth. This policy includes some protective measures for domestic industries considered to be of strategic importance as well as monetary policies designed to keep inflation in check and the availability of foreign exchange.

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Economic Scenario – Points for consideration

• Fundamentals Backs Activity Slowdown Ahead

– 2Q11 GDP growth forecast to 1.0% QoQ (from 1.1%previously), but maintain annual growth estimate of around 3.8%. This slowdown outlook is backed by several fundamentals (smaller monetary, fiscal and credit stimulus) and likely worse performances of agriculture sector in 3Q11 and 4Q11.

• Inflation should continue low in the near term helped by recent downward trend in commodities prices.

– Inflation has been under control over the past 10 years. CPI inflation forecasts at around the mid-point target (4.5%) for 2012, at 4.4% and at 5.3% for 2013*. In the near term, the descending trend in commodity prices, especially food, should keep CPI inflation at a relatively low level.

• Commodity still supporting a favorable external outlook

– Despite the recent drop in commodity prices, their still elevated level is more than enough to guarantee a solid trade surplus and a smaller current account deficit; Apart from that, capital inflows continue to surpass the current account gap, providing room for increasing international reserves and appreciate further BRL

• Drivers of domestic demand still present

– Unemployment rate at record lows and formal job creation still strong

– Real labor income growing

– Credit growing at a sustainable rate

*Data published by the Brazil Central Bank, Inflation report from March 2012

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F/X Market at a glance – part 1

•According to local regulation, the Brazilian Foreign Exchange (“FX”) regime does not permit free convertibility of the currency. Therefore, all FX transactions must follow Bacen's regulations and must be formalized through a FX contract and registered into Bacen’s system ,“Sisbacen”. Banks are responsible for checking transactions to ensure compliance. This may include documenting files, such as FX contracts and underlying documents, and verifying tax related aspects of FX transactions.

•The Central Bank of Brazil, “Bacen”, regulates all currency flows in and out of the country. Among other functions, Bacen is responsible for implementing the foreign exchange policy and supervising financial institutions.

 •Although most of the FX deals are settled in up to 2 business days, full-deliverable forward FX transactions are also permitted up to a maximum tenor of 360 days. For some specific, underlying transactions, longer tenors may be necessary.

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F/X Market at a glance – part 2

•FX Brazilian regulation is very strict. The FX contract is signed by legal representatives from the client, the bank, and the broker (when applicable). It is one of the main documentations regarding FX transactions. Additional documentation is required in order to prove the origin of the funds, the economic grounds of the transaction, and the type and nature of the transaction. All of the following FX contracts have to be registered within Sisbacen:

 Type 1 = Export of goods and services.Type 2 = Import of goods (please refer to Type 4).Type 3 = Inflow from financial-related deals.Type 4 = Outflow from financial-related deals and financed import of goods registered within Sisbacen.

BUSINESS OPPORTUNITIES

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• Agribusiness and Manufacturing: Brazil is today a world leader in the production of foods and minerals. Industries such as steel, aluminum, automobile, wood pulp, chemical and textile are highly developed.

• Infrastructure: With the world cup (2014) and the Olympic games (2016) Brazil will invest heavily in transportation, telecommunications, Real Estate (including construction of stadiums and airports), hotels, etc. Brazil is already privatizing public airports to boost investment and improve management.

•Oil Industry – Pre Salt Field: With the discovery of pre-salt oil reserves in Brazil, Petrobras, its contractors and the Brazilian government are expected to invest heavily in infrastructure, equipment and technology benefiting many industry segments in Brazil

Business Outlook

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Pre-salt

PAC – Economic Growth Acceleration Program . Focused on:

Olympic Games 2016

Brazil – Investment Outlook

Expected investments over BRL 100 billion.

It is estimated that the pre-salt layer contains the equivalent of

close to 1,6 trillion cubic meters of gas and oil. This number exceeds in 5 times Brazil’s actual reserves

World Cup 2014

Approximately 3,6 millions job positions will be created

Expected investments on infrastructure and services, over BRL 30 billions.

Power and Energy ~ R$270 billions

Urban and Social ~ R$170 billions

Logistics Infrastructure ~ R$60 billions

* BRL - Billion

Equivalent to Brazil becoming one of the top six countries in oil reserves in the world.

Economics – Investment Outlook

6.2 7.1 7.6

0.4 0.6 0.6

4.1 4.2 4.5

2.1 2.5 2.7

2.32.6 2.6

1.3 2.6 2.9

2001-2007 avg 2008-2011 avg 2012 f

Oil & Gas Mining Manufacturing

Infrastructure Residential Construction Others

Approximately 500 thousand job position will be created.

Investments on O&G up to 2020 to exceed USD 400 bi (Petrobras alone over 120 USD Bi)

TRADE

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Brazil – Highlights

Source: Brazilian American Chamber of Commerce of Florida

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U.S.Top Trading Partners Total Trade, Exports, Imports YTD December 2011

Data are goods only, on a Census Basis,

in billions of dollars, unrevised.

*Data from the United States Census Bureau

Rank CountryExports (Year-to-

Date)

Imports (Year-to-

Date)

Total Trade (Year-to-

Date)

Percent of Total Trade

--- Total, All Countries 1,480.7 2,207.0 3,687.6 100.0%

--- Total, Top 15 Countries 1,015.8 1,596.1 2,611.9 70.8%

1 Canada

280.9 316.5 597.4 16.2%

2 China

103.9 399.3 503.2 13.6%

3 Mexico

197.5 263.1 460.6 12.5%

4 Japan

66.2 128.8 195.0 5.3%

5 Germany

49.1 98.4 147.5 4.0%

6 United Kingdom

56.0 51.2 107.1 2.9%

7 Korea, South

43.5 56.6 100.1 2.7%

8 Brazil

42.9 31.4 74.3 2.0%

9 France

27.8 40.0 67.8 1.8%

10 Taiwan

25.9 41.3 67.2 1.8%

11 Netherlands

42.8 23.5 66.3 1.8%

12 Saudi Arabia

13.8 47.5 61.3 1.7%

13 India

21.6 36.2 57.8 1.6%

14 Venezuela

12.4 43.3 55.6 1.5%

15 Singapore

31.4 19.1 50.5 1.4%

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Methods of payment

1. Cash advance: the seller receives cash from the buyer prior to shipment.

2. Open account: goods are shipped to the buyer and payment is made on terms negotiated in advance with the seller.

3. On consignment: the seller ships goods to the buyer but retains ownership. Payment is made if and when the buyer sells the goods.

4. Documentary collections: the goods are shipped to the buyer. Goods are shipped to the buyer. The seller’s draft and documents covering the shipment are presented through the buyer’s bank for payment.

5. Letter of credit: the seller will not ship without a bank’s assurance of payment. • Some advantages to the seller:

• The seller may rely on a bank’s creditworthiness rather that the buyer’s. The seller is more confident when it has a bank’s commitment to pay upon presentation of complying documents.

• The seller may be able to obtain financing for the purchase of manufacture of goods

that will be shipped under the letter of credit.

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Trade Finance Services To Grow Your Business

Minimize risk no matter where you do business, with foreign exchange and trade services designed for all ranges of business from small and mid-sized importers/exporters to large

corporations.

Letters of Credit — used if you have negotiated a contract and need to substitute Citibank’s creditworthiness for your

own so you can:

Secure the delivery of goods or fulfill a contractual or financial obligation

Facilitate shipments and payment allowing transactions to proceed quickly and efficiently

Documentary Collections — used when you don’t need a formal Letter of Credit, but you want the added protection of

having Citibank act as the 3rd party document handling entity.

Improve management of export receivables so you can track outstanding collections and payments and streamline

reconciliation

Centralize the processing of import payables to better manage cash out flows.

Trade Services Online

• Access to Trade Services through CitiDirect® Online Banking

• Issue, amend, advise and create reports on Letters of Credit

• Initiate Export Documentary Collection transactions

• Review, track, and settle Import Documentary Collections

FINANCING OPTIONS

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Loan Optimization Solutions To Keep Your Business Moving Forward*

*

Lines of Credit– Fund your working capital and other short term borrowing needs

through a renewable facility where credit again becomes available as the loan is repaid

– Draw on the line of credit any time there is a need - interest is not charged on the portion of the line that remains unused

– The line can be directly linked to a CitiBusiness Checking account to allow online draw down and pay down to better manage cash flow

•Business Checking Plus – Ensure overdraft and uncollected funds protection on your business

checking account

•Term Loans– Finance permanent working capital or large capital expenditures and

long-term business expansion

– Enjoy flexible loan terms including length of loan, monthly repayment, option for an initial revolving period

– Benefit from competitive interest rates whether floating or fixed

•Commercial Mortgages– Purchase or refinance commercial real estate properties that are at

least 51% occupied by the borrower as the primary place of business

– Finance renovations or improvements to business owned properties

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* Fees and conditions apply to certain of these products and services. Please contact your Citibank representative for the specific terms that apply to each

product and service. All commercial loans and lines of credit are made by Citibank, N.A., an equal opportunity lender, and are subject to credit approval.

SBA Loans– Enjoy longer term financing with lower down payment and

collateral requirements– Purchase, construct, or expand a real estate facility (51%

owner occupied)– Expand or acquire a business, finance long term working

capital, or purchase equipment

Exim Loans– EXIM supported loans for the exporter of US made goods– EXIM supported loans for the importer of US made goods.

Export Loan Programs offered by Citibank (subject to program guidelines)

Loan programs for U.S. exporters*

Working Capital Guarantee Program (EXIM bank)

One year line of credit backed by export related A/Rs and inventory, subject to program guidelines. Importing countries need to be listed by EXIM. Program requirements include review of financial statements, history of export activity, field audits. Fees are negotiable (facility fee + interest). Lines can be used to fund working capital, letters of credit or to front the manufacturing of a product based on sales contract.

SBA (Small Business Administration) Export Working Capital Program

The program is primarily for Small and Medium-Sized businesses that are currently exporting or thinking of exporting overseas. Facility have a non-negotiable 1 year term, a cap of $5MM USD and products don’t need to be manufactured in the U.S. Fee structure: facility fee of 25 or 35 business points, depending on the loan amount (to be paid to SBA) and interest.

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* Fees and conditions apply to certain of these products and services. Please contact your Citibank representative for the specific terms that apply to each product and service. All

commercial loans and lines of credit are made by Citibank, N.A., an equal opportunity lender, and are subject to credit approval

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Export Loan Programs offered by Citibank (subject to program guidelines)

Loan program for importers of US goods*

EXIM Programs

FIBC: (Financial Institutions Buyer Credit)

Allows Citi to lend to a foreign buyer of US goods and services on a short-term basis (1 year term), backed by insurance. Usually lines are for $1MM USD to 10MM USD and payment terms may be of 90 to 260 days without a down payment. Fee structure: insurance of $2,500 USD, adjusted depending on the amount of the loan; country exposure, applicable interest rate.

Medium and Long Term Guarantee Programs

Term loans for the purchase of large ticket items, new and refurbished equipment originated in the U.S. Medium term: 2-5 years, 7 on exceptional basis; Long Term up to 10 years. Buyers can finance up to 85% of the purchase price or the US content, whichever is less (transactions over $10MM have to be approved by EXIM). Fee structure: 15% down payment, country exposure fee, commitment fee in case you don’t use the entire amount of the loan within 60 days and applicable interest rate.

* Fees and conditions apply to certain of these products and services. Please contact your Citibank representative for the specific terms that apply to each product and service. All

commercial loans and lines of credit are made by Citibank, N.A., an equal opportunity lender, and are subject to credit approval

GLOBAL BANK CAPABILITIES

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The Strength of CitiCiti is committed to helping our clients and customers find strategies that will drive

their financial success in today’s global economy.

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Source: Citigroup Inc., Form 10-Q, 2Q 2010Citi, Institutional Clients Group & Citi Private Bank, 1Q 2010 Update

Financial Strength

● Citigroup 3Q’10 Net Income: $2.2 Billion – 3rd consecutivequarterly operating profit

● Total 2010 Citigroup Net Income, through 3Q: $9.3 Billion

● Citigroup 3Q’10 Revenues: $20.7 Billion

● Citigroup 3Q’10 Expenses: $11.5 Billion

● 3Q’10 Net Credit Losses for Citigroup: $7.7 Billion – a decline forthe 5th consecutive quarter

● Citicorp 3Q’10 Revenues: $16.3 Billion, Net Income of $3.5 Billion

● Citi Holdings 3Q’10 Revenues: $3.9 Billion, Net Loss of $1.1 Billion

Stability and Experience

● Roots Date Back to 1812

● About 270,000 Employees

● Over 200 Million Customer Accounts

● Bankers Have Over 10 Years of Experienceon Average

● Citi Currently Banks 95% of the Fortune 500 Companies and 85% of the Global Fortune1000 Companies

Source: Citigroup Inc.’s Q3 Earnings Release, October 18, 2010.

Citibank’s Value Proposition

Business Model “Outbound & Inbound”

Outbound (From the US to International Markets):

• International Account Opening

• Global Cash Management Services

• Credit Lines

• FX and Trade

Inbound (From International Markets Into the US):

• Account Opening / Deposits

• Cash Management

• Credit Lines

• FX and Trade

The USInternationa

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Business Model Objective: Improve Delivery of International Banking Capabilities to Commercial Banking Clients.

International Sector Team in the US

Greater China India / APACEMEA LATAM

CONFIDENTIAL - Internal Use Only

Citi presence in Brazil

• Investing in Brazil for 95 years

• Directly serving 400 thousand customer accounts

• Roughly 7 million credit cards issued

• 7.000 employees

• In 2010:– Citibank branches: 103– Credicard stores: 101

Global Cash Management: local Checking Accounts; Payments & Collection tools; International Checking Accounts; Short-Term ; Liquidity Management

• F/X and Risk Management: F/X; NDFs; Derivatives; Hedging Transactions

• Investments: Export Notes; CDB (CD); Brazilian Government Notes; Structured Notes etc..

• Lending: Working Capital Loans; Foreign Currency Loans; BNDES loans;

• Trade Finance: Export Finance; Import Finance; Letters of Credit; Trade Services

• Structured Financing: Project Finance; Acquisition Finance; Syndications

• Investment Banking: Merger and Acquisition advisor; Equity Capital Markets

• Capital Markets: Commercial Papers, Local Debentures; Promissory Notes; International Debt Capital Markets

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Thank you!For more information

• Citi in Brazil: www.citi.com.br

• Citi worldwide: www.citigroup.com

Juliana B FarahSenior Vice PresidentCommercial BankingInternational Banking Sectorph. 305 599 5434juliana.farah@citi.com

(C) Citigroup Inc. CitiDirect, and Citibank with the Arc Design are service marks of Citigroup Inc.