FITCH TAKES VARIOUS ACTIONS ON FINANCIAL INSTITUTIONS FOLLOWING BRAZILIAN SOVEREIGN DOWNGRADE

FITCH TAKES VARIOUS ACTIONS ON FINANCIAL INSTITUTIONS FOLLOWING BRAZILIAN SOVEREIGN DOWNGRADE Fitch Ratings-New York/Rio de Janeiro-11 May 2016: Fitch Ratings has taken various rating actions on the following financial institutions (FIs): Banks rated above the sovereign driven either by institutional support or by their strong intrinsic credit profiles: Banco Bradesco S.A.(Bradesco) Banco Santander (Brasil) S.A. (SanBra) Itau Unibanco Holding S.A. (IUH) Itau Unibanco S.A. (IU) Banco ABC Brasil S.A. (ABC Brasil) Federal government owned banks: Banco da Amazonia S.A. (BdA) Banco do Brasil S.A. (BdB) Banco do Nordeste do Brasil S.A. (BNB) Banco Nacional de Desenvolvimento Economico e Social (BNDES) Caixa Economica Federal (Caixa) Medium sized banks: Banco BMG S.A. (BMG) Banco Daycoval S.A. (Daycoval) Banco Industrial do Brasil S.A. (BIB) Banco Pine S.A.(Pine) Banco Safra S.A. (Safra) Banco Votorantim S.A.(BV) Regional government owned FIs: Agencia de Fomento do Estado do Rio de Janeiro S.A. (AgeRio) Agencia de Fomento do Parana (FP) Banco do Estado do Rio Grande do Sul S.A. (Banrisul) Banestes S.A. - Banco do Estado do Espirito Santo (Banestes) BRB - Banco de Brasilia S.A. (BRB) Desenvolve SP - Agencia de Fomento do Estado de Sao Paulo (Desenvolve SP) KEY RATING DRIVERS The rating actions follow Fitch's recent downgrade of Brazil's sovereign rating to 'BB' from 'BB +'/Negative Outlook and the revision of the Country Ceiling to 'BB+' from 'BBB-' (see 'Fitch Downgrades Brazil to 'BB'; Outlook Negative' at 'www.fitchratings.com'), and the consequent rating action on Brazil's sub-national governments (see 'Fitch Downgrades Six Brazilian Subnationals; Outlook Negative' at 'www.fitchratings.com'). These actions also reflect factors

considered in Fitch's negative sector outlook for the Brazilian banking industry (see '2016 Outlook: Brazilian Banks' dated Jan. 20, 2016). In Fitch's view, Brazilian financial institutions remain under significant pressure from ongoing operating environment challenges that exacerbate downside risks to asset quality and profitability. Fitch expects non-performing loans to continue to rise in the coming quarters and loan loss reserve charges to remain a significant burden on financial institutions' bottom line results, which will continue to be pressured by slowing loan growth. This view is underpinned by the rise in unemployment, and significant challenges faced by corporates with respect to their liquidity and debt payment capacity, as well as an uncertain political environment that is preventing a recovery in investor confidence. Banks Rated Above the Sovereign The Viability Ratings (VRs) of Bradesco, IU and IUH were downgraded to 'bb+' from 'bbb-', and remain one notch above Brazil's sovereign rating, due to their very strong credit profile. These VRs reflect the banks' adequate loss absorption capacity, high liquidity and stable and diversified funding. Fitch believes that both entities will be able to withstand a further deterioration in the operating environment. Since the Issuer Default Ratings (IDRs) of these banks are driven by their VRs, their Long-Term Foreign-Currency (LT FC) and Local-Currency (LC) IDRs have been downgraded to 'BB+' from 'BBB-', while their Short-Term (ST) IDRs have been downgraded to 'B' from 'F3'. Fitch has also revised these banks' Support Rating Floors (SRFs) to 'BB-' from 'BB', reflecting the sovereign's reduced capacity to support these banks. Their Support Ratings were affirmed at '3'. In turn, SanBra's and ABC Brasil's VRs have been downgraded to 'bb' from 'bb+'. While these banks maintain a good credit profile, Fitch does not believe that they can be rated above the sovereign on their own intrinsic merits. However, their IDRs are above their respective VRs, which reflects the expected institutional support from their respective parents, Banco Santander S.A. (Long-Term IDR 'A-'/Stable Outlook) and Arab Banking Corporation B.S.C. (Long-Term IDR 'BBB-'/Stable Outlook). SanBra's LT LC IDR was downgraded to 'BBB-' from 'BBB' (two notches above the sovereign), while its LT FC IDR was downgraded to 'BB+' from 'BBB-', since this is capped by Brazil's country ceiling of 'BB+'. In turn, ABC Brasil's LT FC and LC IDRs were affirmed at 'BB+', one notch above its VR, and its IDRs are one notch below its parent's IDRs and one notch above Brazil's sovereign FC IDR. SanBra's ST LC IDR was downgraded to 'F3' from 'F2' and its ST FC IDR was downgraded to 'B' from 'F3'. ABC Brasil's ST LC and FC IDRs were affirmed at 'B'. The SRs of both Sanbra and ABC were affirmed at '3'. Either because of their intrinsic strength (Bradesco, IU and IUH) or because of external support (SanBra and ABC Brasil), Fitch believes that these institutions would retain their capacity to service their obligations, even following a further stressed sovereign scenario -- considering higher inflation and interest rates. The Outlook on the Long-Term IDRs for all these issuers remains Negative, mirroring the Negative Outlook on the sovereign ratings. Federal Government Owned Banks The LT FC and LC IDRs of federal government owned banks were downgraded to 'BB' from 'BB +', and remain aligned with Brazil's sovereign ratings. Their IDRs are driven by expected support from the government, reflecting either majority or whole federal government ownership, their key

policy role in the implementation of government economic guidelines and, in the case of BdB and Caixa, their systemic importance. As state owned entities, these banks could be subject to political influence. The Outlook on these banks' Long-Term IDRs remains Negative, reflecting the sovereign's ratings. The ST LC and FC IDRs of all five federal government owned banks were affirmed at 'B'. Concurrently, their SRFs were revised to 'BB' from 'BB+', reflecting the sovereign's reduced capacity to support these banks. Their SRs were affirmed at '3'. Out of the five Fitch-rated federal government owned banks, BdB is the only one that has a VR. Fitch downgraded BdB's VR to 'bb' from 'bb+', reflecting the sovereign constraints and the significant correlation between the bank's credit profile and the operating environment, as evidenced by the decline in the bank's operating profitability and internal capital generation in 2015, as well as Fitch's expectations for loan impairment charges to continue to increase in the coming periods. Medium Sized Banks The IDRs on Safra, Daycoval and Pine are driven by their VRs. Safra and Daycoval's LT FC and LC IDRs were downgraded to 'BB' from 'BB+' and their VRs were downgraded to 'bb' from 'bb+', since Fitch does not consider that these banks can be rated above the sovereign rating. Pine's LT FC and LC IDRs were IDRs were downgraded to 'BB-' from 'BB' and its VR was downgraded to 'bb-' from 'bb', reflecting the downside risk to its credit profile from the ongoing deterioration in the operating environment. The Long-Term IDRs of Daycoval, Pine and Safra remain on Negative Outlook, mirroring the sovereign ratings. The ST LC and FC IDRs of all these three banks were affirmed at 'B'. Safra's SRF was affirmed at 'B+', and its SR was affirmed at '4'. The SRs for Daycoval and Pine were affirmed at '5'. The IDRs of BIB and BMG are also driven by their VRs. BIB's LT FC and LC IDRs were affirmed at 'BB' and its VR affirmed at 'bb', reflecting the fact that its key credit metrics remain broadly resilient to operating environment pressures. BIB's The Rating Outlook on the Long-Term IDRs remains Negative. BMG's LT FC and LC IDRs were affirmed at 'BB-' and the Outlook on these ratings revised to Negative from Stable. BMG's VR was affirmed at 'bb-'. Both banks' ST LC and FC IDRs were affirmed at 'B'. Their SRs were affirmed at '5'. BV's LT FC and LC IDRs are driven by expected support from its parent (BdB) and were downgraded to 'BB-' from 'BB', following the downgrade of BdB. The Outlook on these ratings remains Negative, mirroring the Outlook on BdB's ratings. BV's VR was affirmed at 'bb-'; SR affirmed at '3'; and ST LC and FC IDRs were affirmed at 'B'. The ratings on Banco Pan S.A. (Pan) and its subsidiaries: Brazilian Finance & Real Estate (BFRE), Brazilian Mortgages Companhia Hipotecaria (BM) and Brazilian Securities Companhia de Securitizacao (BS) -- which are ultimately driven by support from its co-shareholder Caixa -- will be reviewed when its other co-shareholder, Banco BTG Pactual S.A., is reviewed. Regional Government Owned Financial Institutions The IDRs of Banrisul, Banestes and BRB are driven by their VRs. Their VRs were affirmed at 'bb-'. The credit profiles of these three banks remain highly sensitive to further deterioration of the operating environment in their respective regions where they concentrate their operations. All three of these regional government owned commercial banks' LT FC and LT IDRs were affirmed at 'BB-'. Their Outlook remains Negative. Fitch also affirmed at 'B' the ST LC and FC IDRs for all three banks. Banrisul and Banestes' SR's were affirmed at '4' and BRB's SR was downgraded to '4' from '3', reflecting its parent's reduced support capacity.

The IDRs of all three development agencies, Desenvolve SP, AgeRio and FP, are driven by expected institutional support from their respective controlling states: Sao Paulo, Rio de Janeiro and Parana, and are equalized with the IDRs of their parents. Therefore, the downgrade of the LT FC and LC IDRs of the three development agencies, Desenvolve SP (to 'BB' from 'BB+'), AgeRio (to 'B+' from 'BB-') and FP (to 'BB' from 'BB+') mirrors the downgrade of the Long-Term IDRs of their respective parents and reflects their reduced capacity to provide support when needed. The Rating Outlook on the three development agencies' Long-Term IDRs remain Negative. All three development agencies' ST LC and FC IDRs were affirmed at 'B'. Desenvolve SP and FP's SRs were affirmed at '3' and AgeRio's SR was downgraded to '4' from '3', reflecting its parent's reduced support capacity. A link to a summary report that details all of the rating actions taken in this review is available below. RATING SENSITIVITIES The ratings and Outlooks for the financial institutions included in this release are sensitive to any further changes in Brazil's sovereign ratings. For those financial institutions whose IDRs are driven by support (government or institutional), any changes in the capacity or the willingness of their respective parents to support could lead to further changes in their SRs, and for those whose source of expected support is the government, any changes in the government's capacity or willingness to provide support could lead to further revisions of SRFs. For further specific sensitivities for of each issuer, please refer to their individual press releases and/or rating reports at www.fitchratings.com. Contact: Claudio Gallina (Primary: BNB; Secondary: BdB, BNDES and Caixa) Senior +55 11 4504-2216 Fitch Rating Brasil Ltda. Alameda Santos 700 Sao Paulo, SP, Brazil Eduardo Ribas (Primary: Bradesco, SanBra, Daycoval, Banestes, BRB; Secondary: IUH, IU, Safra, Pan, BFRE, BM, BS, ABC Brasil, BIB, Pine) +55 11 4504-2213 Esin Celasun (Primary: AgeRio, BdB, BNDES and Caixa; Secondary: BV) +55 21 4503-2626 Fitch Ratings Brasil Ltda. Praca XV de Novembro, 20-401 B, Rio de Janeiro, RJ, Brazil Robert Stoll (Primary: IUH, IU, BMG, Safra, BV, ABC Brasil, Pine; Secondary: Bradesco) +1-212-908-9155 Fitch Ratings, Inc.

33 Whitehall Street New York, NY 10004 Jean Lopes (Primary: BIB, Banrisul, Desenvolve SP; Secondary: BdA, BNB) +55 21 4503-2617 Fitch Ratings Brasil Ltda. Praca XV de Novembro, 20-401 B, Rio de Janeiro, RJ, Brazil Raphael Nascimento (Primary: BdA, Pan, BFRE, BM, BS; Secondary: Daycoval) Associate +55 11 3957-3664 Pedro Gomes (Primary: FP; Secondary: SanBra, BMG, Desenvolve SP) +55 11 4504-2604 Paulo Fugulin (Secondary Analyst: Agerio, FP, Banestes, BRB, Banrisul,) +55 11 4504-2206 Committee Chairperson Alejandro Garcia, CFA Managing +52 81 8399 9146 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Rating Action Report - Brazilian Banks - May 2016 https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=881693 Applicable Criteria Global Bank Rating Criteria (pub. 20 Mar 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501 Global Non-Bank Financial Institutions Rating Criteria (pub. 28 Apr 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865351 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/ UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD

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