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BASE PROSPECTUS
BANIF – BANCO INTERNACIONAL DO FUNCHAL, S.A. (incorporated with limited liability in Portugal)
as Issuer
BANIF FINANCE, LTD. (incorporated with limited liability in the Cayman Islands)
as Issuer
BANIF – BANCO INTERNACIONAL DO FUNCHAL, S.A.,
ACTING THROUGH ITS SUCURSAL FINANCEIRA EXTERIOR (EXTERNAL FINANCIAL BRANCH)
(incorporated with limited liability in Portugal) as Issuer and as Guarantor of Notes issued by Banif Finance, Ltd.
Euro 2,500,000,000
Euro Medium Term Note Programme
This Base Prospectus has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"), which is the
Luxembourg competent authority for the purpose of Directive 2003/71/EC (the "Prospectus Directive") and relevant implementing
measures in Luxembourg, as a base prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in Luxembourg for the purpose of giving information with regard to the issue of notes ("Notes") issued under the Euro Medium Term Note
Programme (the "Programme") described in this Base Prospectus during the period of twelve months after the date hereof. Applications
have been made for such Notes to be admitted during the period of twelve months after the date hereof to listing on the official list and to trading on the regulated market of the Luxembourg Stock Exchange (a regulated market for the purpose of Directive 2004/39/EC (the
Markets in Financial Instruments Directive)) (the "Regulated Market"). Pursuant to Article 245-A of the Codigo dos Valores Mobiliários
(the Portuguese Securities Code) and Regulation 1/2007 of the Comissão do Mercado de Valores Mobiliários (the Portuguese Securities Market Commission), as amended from time to time (the "Corporate Governance Regulation"), only companies which have their shares
admitted to trading in a regulated market must issue certain information regarding compliance with the corporate governance regime set out
in the Corporate Governance Regulation. Given the fact that Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior (External Financial Branch) ("Banif Madeira") is a full branch of Banif – Banco Internacional do Funchal, S.A.
("Banif") and Banif is not a company with shares admitted to trading in a regulated market, there is no such requirement for Banif and Banif
Madeira to comply with such corporate governance regime. The Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system or to be admitted to listing,
trading and/or quotation by such other or further competent authorities, stock exchange and/or quotation systems as may be agreed with the
Issuer.
The Notes of each Tranche will either be in dematerialised book-entry form (forma escritural) and are registered notes (nominativas) (in the
case of Notes integrated in and held through Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários S.A. ("Interbolsa"), hereinafter the Interbolsa Notes, as defined herein) or in bearer form. Bearer Notes will (unless
otherwise specified in the applicable Final Terms) initially be represented by a temporary global Note which will be exchangeable either for interests in a permanent global Note or for definitive Notes, as indicated in the applicable Final Terms, all as further described in "Form of
the Notes" below.
Notes will be issued in such denominations as may be specified in the relevant Final Terms, subject to compliance with all applicable legal
and/or regulatory requirements. Tranches of Notes may be rated or unrated. A rating is not a recommendation to buy, sell or hold securities
and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.
This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of the Prospectus Directive and for the purpose of giving
information with regard to the Issuer and the Notes, which, according to the particular nature of the Issuer and the Notes, is necessary to enable investors to make an informed assessment of the liabilities, financial position, profit and losses and prospects of the Issuer.
See "Risk Factors" below for a discussion of certain factors to be considered in connection with any investment in the Notes.
Arrangers
BANIF – BANCO DE INVESTIMENTO, S.A.
CAIXA – BANCO DE INVESTIMENTO, S.A.
CITI
Dealers
BANIF – BANCO DE INVESTIMENTO, S.A. BARCLAYS CAPITAL
BNP PARIBAS BofA MERRILL LYNCH
CAIXA – BANCO DE INVESTIMENTO, S.A. CITI
CREDIT SUISSE DEUTSCHE BANK
16 December 2009
- i -
TABLE OF CONTENTS
Page
SUMMARY OF THE PROGRAMME ........................................................................................................ 1
RISK FACTORS .......................................................................................................................................... 6
IMPORTANT NOTICES ........................................................................................................................... 14
INFORMATION INCORPORATED BY REFERENCE .......................................................................... 16
GENERAL DESCRIPTION OF THE PROGRAMME ............................................................................. 19
SUPPLEMENT TO THE BASE PROSPECTUS ...................................................................................... 20
FORMS OF THE NOTES .......................................................................................................................... 21
TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 25
FORM OF FINAL TERMS ........................................................................................................................ 61
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ............... 76
DESCRIPTION OF THE ISSUERS AND THE GUARANTOR .............................................................. 79
TAXATION ............................................................................................................................................. 121
SUBSCRIPTION AND SALE ................................................................................................................. 135
GENERAL INFORMATION .................................................................................................................. 139
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SUMMARY OF THE PROGRAMME
This summary must be read as an introduction to this Base Prospectus and any decision to invest in the
Notes should be based on a consideration of the Base Prospectus as a whole, including any information
incorporated by reference. Following the implementation of the Prospectus Directive (Directive
2003/71/EC) in each Member State of the European Economic Area, no civil liability will attach to the
Issuers or the Guarantor (the "Responsible Persons") in any such Member State solely on the basis of
this summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent
when read together with the other parts of this Base Prospectus, including any information
incorporated by reference. Where a claim relating to the information contained in this Base Prospectus
is brought before a court in a Member State of the European Economic Area, the plaintiff may, under
the national legislation of the Member States, be required to bear the costs of translating the Base
Prospectus before the legal proceedings are initiated.
The following summary does not purport to be complete and is qualified in its entirety by the remainder
of this Base Prospectus. Words and expressions defined in "Forms of the Notes" or "Terms and
Conditions of the Notes" below shall have the same meanings in this summary.
Issuers: Banif – Banco Internacional do Funchal, S.A., Banif Finance, Ltd.
and Banif – Banco Internacional do Funchal, S.A., acting through
its Sucursal Financeira Exterior (External Financial Branch)
Guarantor: Banif – Banco Internacional do Funchal, S.A., acting through its
Sucursal Financeira Exterior (External Financial Branch), as
Guarantor of Notes issued by Banif Finance
Substitute Guarantor: Banif – Banco Internacional do Funchal, S.A., acting through its
Sucursal Financeira Exterior (External Financial Branch) may be
substituted in its capacity as Guarantor by Banif-Banco
Internacional do Funchal, S.A.
Arrangers: Banif – Banco de Investimento, S.A., Caixa – Banco de
Investimento, S.A. and Citigroup Global Markets Limited
Dealers: Banif – Banco de Investimento, S.A., Barclays Bank PLC, BNP
Paribas, Caixa – Banco de Investimento, S.A., Citigroup Global
Markets Limited, Credit Suisse Securities (Europe) Limited,
Deutsche Bank AG, London Branch, Merrill Lynch International
and any other Dealer appointed from time to time by the Issuers and
the Guarantor either generally in respect of the Programme or in
relation to a particular Tranche of Notes.
Trustee: Citicorp Trustee Company Limited pursuant to a trust deed dated 28
October 2003 as supplemented by a supplemental trust deed dated
13 December 2004, a supplemental trust deed dated 5 July 2006, a
supplemental trust deed dated 31 July 2007, a supplemental trust
deed dated 8 August 2008 and a supplemental trust deed dated 16
December 2009 (the "Trust Deed") a copy of which will be
available for inspection (during normal office hours) at the specified
office of the Principal Paying Agent and at the registered office of
the Trustee.
Principal Paying Agent: Citibank, N.A. or, in the case of Interbolsa Notes, the Portuguese
Paying Agent.
Portuguese Paying Agent Citibank International plc, Sucursal em Portugal
Luxembourg Listing Agent: Dexia Banque Internationale à Luxembourg
Risk Factors: There are certain factors that may affect the Issuer's ability to fulfil
its obligations under Notes issued under the Programme. These are
set out under "Risk Factors" below and include risks relating to
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competition and other general banking risks, including credit risk
and exchange rate risk. In addition, there are certain factors which
are material for the purpose of assessing the market risks associated
with Notes issued under the Programme.
Holders of the Notes issued under the Programme are exposed to
several risks in relation to the Notes, for example risks of change in
currency exchange rates, liquidity risks, risk of early redemption,
risks of change in market interest rates, and risks of volatile market
price or indexes or underlying assets in the case of Index Linked
Notes and risks of deferral of interest payments having an adverse
effect on market price in the case of Subordinated Notes.
Admission to Listing and
Trading:
Applications have been made for Notes to be admitted during the
period of twelve months after the date hereof to listing on the
official list and to trading on the regulated market of the
Luxembourg Stock Exchange. The Programme also permits Notes
to be issued on the basis that they will not be admitted to listing,
trading and/or quotation by any competent authority, stock
exchange and/or quotation system or to be admitted to listing,
trading and/or quotation by such other or further competent
authorities, stock exchanges and/or quotation systems as may be
agreed with the Issuer.
Clearing Systems: The clearing systems operated by Euroclear and/or Clearstream
and/or (in the case of Interbolsa Notes only) Interbolsa, as specified
in the applicable Final Terms.
Initial Programme Amount: Up to Euro 2,500,000,000 (or its equivalent in other currencies)
aggregate principal amount of Notes outstanding and guaranteed at
any one time.
Issuance in Series: Notes will be issued in Series. Each Series may comprise one or
more Tranches issued on different issue dates. The Notes of each
Series will all be subject to identical terms, except that the issue
date and the amount of the first payment of interest may be different
in respect of different Tranches. The Notes of each Tranche will all
be subject to identical terms in all respects save that a Tranche may
comprise Notes of different denominations.
Final Terms or Drawdown
Prospectus:
Notes issued under the Programme may be issued either (1)
pursuant to this Base Prospectus and associated Final Terms or (2)
pursuant to a drawdown prospectus (each a "Drawdown
Prospectus") prepared in connection with a particular Tranche of
Notes.
For a Tranche of Notes which is the subject of Final Terms, those
Final Terms will, for the purposes of that Tranche only, supplement
the Terms and Conditions of the Notes and this Base Prospectus and
must be read in conjunction with this Base Prospectus. The terms
and conditions applicable to any particular Tranche of Notes which
is the subject of Final Terms are the Terms and Conditions of the
Notes as supplemented, amended and/or replaced to the extent
described in the relevant Final Terms.
The terms and conditions applicable to any particular Tranche of
Notes which is the subject of a Drawdown Prospectus will be the
Terms and Conditions of the Notes as supplemented, amended
and/or replaced to the extent described in the relevant Drawdown
Prospectus. In the case of a Tranche of Notes which is the subject of
a Drawdown Prospectus, each reference in this Base Prospectus to
- 3 -
information being specified or identified in the relevant Final Terms
shall be read and construed as a reference to such information being
specified or identified in the relevant Drawdown Prospectus.
Forms of Notes: The Notes (except for Interbolsa Notes) may only be issued in
bearer form. Each Tranche of Notes will initially be in the form of
either a Temporary Global Note or a Permanent Global Note, in
each case as specified in the relevant Final Terms. Each Global
Note which is not intended to be issued in new global note form (a
"Classic Global Note" or "CGN"), as specified in the relevant Final
Terms, will be deposited on or around the relevant issue date with a
depositary or a common depositary for Euroclear and/or
Clearstream, Luxembourg and/or any other relevant clearing system
and each Global Note which is intended to be issued in new global
note form (a "New Global Note" or "NGN"), as specified in the
relevant Final Terms, will be deposited on or around the relevant
issue date with a common safekeeper for Euroclear and/or
Clearstream, Luxembourg. Each Temporary Global Note will be
exchangeable for a Permanent Global Note or, if so specified in the
relevant Final Terms, for Definitive Notes. If the TEFRA D Rules
are specified in the relevant Final Terms as applicable, certification
as to non-U.S. beneficial ownership will be a condition precedent to
any exchange of an interest in a Temporary Global Note or receipt
of any payment of interest in respect of a Temporary Global Note.
Each Permanent Global Note will be exchangeable for Definitive
Notes in accordance with its terms. Definitive Notes will, if interest-
bearing, have Coupons attached and, if appropriate, a Talon for
further Coupons.
Interbolsa Notes will be issued in dematerialised book-entry form
(forma escritural) and are registered notes (nominativas), as further
described under "Form of the Notes". Interbolsa Notes may only be
transferred in accordance with the applicable procedures set out in
the Portuguese Securities Code and the regulations issued by the
Comissão do Mercado de Valores Mobiliários (the Portuguese
Securities Commission) and Interbolsa. No physical document of
title will be issued in respect of Interbolsa Notes, which are held
through Interbolsa.
Currencies: Notes may be denominated in any currency or currencies, subject to
compliance with all applicable legal and/or regulatory and/or central
bank requirements. Payments in respect of Notes may, subject to
such compliance, be made in and/or linked to, any currency or
currencies other than the currency in which such Notes are
denominated.
Dual Currency Notes: Payments (whether in respect of principal or interest and whether at
maturity or otherwise) in respect of Dual Currency Notes will be
made in such currencies, and based on such rates of exchange, as
the relevant Issuer and the relevant Dealer may agree (as indicated
in the applicable Final Terms). No Interbolsa Note will be a Dual
Currency Note.
Status of the Notes: Notes may be issued on a subordinated or unsubordinated basis, as
specified in the relevant Final Terms.
Status of the Guarantee: Notes issued by Banif Finance will be unconditionally and
irrevocably guaranteed by the Guarantor, on an unsubordinated or a
subordinated basis, as specified in the relevant Final Terms.
- 4 -
Issue Price: Notes may be issued at any price which is at par or at a discount to,
or premium over, par and either on a fully or partly paid basis, as
specified in the relevant Final Terms. The price and amount of
Notes to be issued under the Programme will be determined by the
Issuer, the Guarantor and the relevant Dealer(s) at the time of issue
in accordance with prevailing market conditions.
Maturities: Any maturity, subject, in relation to specific currencies, to
compliance with all applicable legal and/or regulatory and/or central
bank requirements.
Where Notes have a maturity of less than one year and either (a) the
issue proceeds are received by the relevant Issuer in the United
Kingdom or (b) the activity of issuing the Notes is carried on from
an establishment maintained by the relevant Issuer in the United
Kingdom, such Notes must: (i) have a minimum redemption value
of £100,000 (or its equivalent in other currencies) and be issued
only to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or who it is reasonable to
expect will acquire, hold, manage or dispose of investments (as
principal or agent) for the purposes of their businesses; or (ii) be
issued in other circumstances which do not constitute a
contravention of section 19 of the FSMA by the relevant Issuer.
Redemption: Notes may be redeemable at par or at such other Redemption
Amount (detailed in a formula, index or otherwise) as may be
specified in the relevant Final Terms. Notes may also be
redeemable in two or more instalments on such dates and in such
manner as may be specified in the relevant Final Terms.
Optional Redemption: Notes may be redeemed before their stated maturity at the option of
the relevant Issuer (either in whole or in part) and/or the
Noteholders to the extent (if at all) specified in the relevant Final
Terms.
Tax Redemption: Early redemption will be permitted for tax reasons as described in
Condition 10(b) (Redemption and Purchase – Redemption for tax
reasons).
Redemption due to Own Funds
Non-Qualification Event:
Early redemption will be permitted upon the occurrence of an Own
Funds Non-Qualification Event as described in Condition 10(f)
(Redemption due to Own Funds Non-Qualification Event).
Interest: Notes may be interest-bearing or non-interest bearing. Interest (if
any) may accrue at a fixed rate or a floating rate or other variable
rate or be index-linked and the method of calculating interest may
vary between the issue date and the maturity date of the relevant
Series.
Denominations: Notes issued by Banif Finance which are to be admitted to trading
on the regulated market of the Luxembourg Stock Exchange and/or
admitted to listing, trading and/or quotation by any other listing
authority, stock exchange and/or quotation system situated or
operating in a member state of the European Union, in each case in
circumstances which require the publication of a prospectus under
the Prospectus Directive and the implementing measures in the
relevant member state, may not (a) have a minimum denomination
of less than EUR 1,000 (or nearly equivalent in another currency),
or (b) carry the right to acquire shares (or transferable securities
equivalent to shares) issued by Banif Finance or by any entity to
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whose group Banif Finance belongs. Notes which have a maturity
of less than one year will have a minimum redemption value of
£100,000 (or its equivalent in other currencies). Subject thereto,
Notes will be issued in such denominations as may be specified in
the relevant Final Terms, subject to compliance with all applicable
legal and/or regulatory and/or central bank requirements.
Negative Pledge: The Notes will have the benefit of a negative pledge as described in
Condition 5 (Negative Pledge).
Cross Default: The Notes will have the benefit of a cross default as described in
Condition 13 (Events of Default).
Taxation: All payments in respect of Notes will be made free and clear of
withholding taxes of the country of incorporation of the relevant
Issuer, or if applicable, the Guarantor, or if different, the country of
tax residence of the Issuer, or if applicable, the Guarantor, as the
case may be, unless the withholding is required by law. In that
event, the Issuer or the Guarantor, as the case may be, will (subject
as provided in Condition 12 (Taxation)) pay such additional
amounts as will result in the Noteholders receiving such amounts as
they would have received in respect of such Notes had no such
withholding been required.
For a description of the requirements to qualify for the withholding
tax exemption in relation to any payments of interest to the
Noteholders by Banif-Banco Internacional do Funchal, S.A., as
Issuer and Banif-Banco Internacional do Funchal, S.A., acting
through its Sucursal Financeira Exterior (External Financial
Branch) as Issuer or Guarantor, see "Taxation – Notes issued by
Banif" and "Taxation – Notes issued or guaranteed by Banif
Madeira" below.
Governing Law: The Notes (other than Interbolsa Notes) will be governed by, and
construed in accordance with English law except for the
subordination provisions set out in Conditions 4(c) and 4(d), which
will be governed by, and construed in accordance with, Portuguese
law. Interbolsa Notes will be governed by and construed in
accordance with Portuguese law.
Enforcement of Notes in Global
Form:
In the case of Global Notes, individual investors' rights against the
relevant Issuer will be governed by the Trust Deed, a copy of which
will be available for inspection (during normal office hours) at the
specified office of the Principal Paying Agent and at the registered
office of the Trustee.
Ratings: Notes issued pursuant to the Programme may be rated or unrated.
Where an issue of Notes is rated, its rating will not necessarily be
the same as the rating applicable to the Programme. A security
rating is not a recommendation to buy, sell or hold securities and
may be subject to suspension, reduction or withdrawal at any time
by the assigning rating agency.
Selling Restrictions: For a description of certain restrictions on offers, sales and
deliveries of Notes and on the distribution of offering material in
the United States of America, the United Kingdom, Portugal, the
European Economic Arena, the Cayman Islands and Japan, see
"Subscription and Sale" below.
- 6 -
RISK FACTORS
Prospective investors in the Notes should consider carefully, among other things and in light of their
financial circumstances and investment objectives, all of the information in this Base Prospectus
(including the information that has been incorporated by reference herein) and, in particular, the risk
factors set forth below which each Issuer and the Guarantor believes represent, or may represent, the
factors known to it which may affect its ability to fulfil its obligations under the Notes. Words and
expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this Base
Prospectus have the same meanings in this section. Investing in the Notes involves certain risks.
Prospective investors should consider, among other things, the following:
Each Issuer and the Guarantor believes that the following factors may affect its ability to fulfil its
obligations under Notes issued under the Programme. All of these factors are contingencies which may or
may not occur and neither each Issuer nor the Guarantor is in a position to express a view on the
likelihood of any such contingency occurring.
Factors which each Issuer and the Guarantor believe may be material for the purpose of assessing the
market risks associated with Notes issued under the Programme are also described below.
Each Issuer and the Guarantor believes that the factors described below represent the principal risks
inherent in investing in Notes issued under the Programme, each Issuer may be unable to pay interest,
principal or other amounts on or in connection with any Notes for other reasons and the Issuer does not
represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective
investors should also read the detailed information set out elsewhere in this Base Prospectus (including
any documents deemed to be incorporated by reference herein) and reach their own views prior to
making any investment decision.
Factors that may affect the Issuer's ability to fulfil its obligations under Notes issued under the
Programme
Risk Factors relating to Banif
As a result of its business activities, Banif is exposed to a variety of risks, the most significant of which
are credit risk, market risk, operational risk and liquidity risk. Failure to control these risks may result in a
material adverse effect on Banif's financial condition and results of operations.
Economic Activity
As a bank whose core business is in Portugal, Banif's performance is influenced by the level and cyclical
nature of business activity in this country, which is in turn affected by both domestic and international
economic and political events. To a lesser extent, Banif's performance, results of operations and financial
condition are also affected by the economic conditions and levels of economic activity in other countries
where the bank operates, such as Brazil and the United States of America. Structural changes in the
economy of any of these countries, particularly Portugal, may have a material effect on Banif's financial
condition and results of operations.
Credit Risk
Risks arising from changes in credit quality and the recoverability of loans and amounts due from
borrowers and counterparties are inherent to a wide range of Banif's business. Adverse changes in the
credit quality of Banif's borrowers and counterparties or a general deterioration in Portuguese or global
economic conditions, or arising from system skills in financial systems, could affect the recoverability
and value of its assets and require an increase in Banif's provision for bad and doubtful debts and other
provisions, and accordingly would have a material adverse effect on Banif's financial condition and
results of operations, including the value of its debt securities in issue.
Market Risk
Market risk is inherent to adverse changes in the overall valuation of the trading assets, and arises
primarily from movements of trading and non-trading market parameters. The major market risks to
which Banif is exposed are interest rate, foreign exchange, bond and equity price risks. Movements in
interest rate levels, yield curves and spreads may affect the value of assets and liabilities denominated in
- 7 -
foreign currencies and may affect income from foreign exchange trading. The performance of financial
markets may decrease the value of Banif's investment and trading portfolios. Banif has implemented risk
assessment and management methods to mitigate and control these and other market risks which may
affect Banif and exposures are constantly assessed and monitored. In any case, it is difficult to predict
with accuracy changes in economic or market conditions and to anticipate the effects that such changes
could have on Banif's financial condition and results of operations.
Liquidity Risk
Liquidity is a component of market risk. A lack of liquidity can arise due to a lack of volume, legal
restrictions or a one-way market. Liquidity risk, which is also referred to as funding risk, is the inability
of a bank such as Banif to anticipate and provide for unforeseen events, decreases or changes in funding
sources with consequences on Banif's ability to meet its obligations when they fall due.
Operational Risk
Operational risk corresponds to the risk of losses due to inadequate or failed internal process, or due to a
fraud, errors by employees, failure to document transactions properly or to obtain proper internal
authorisation, failure to comply with regulatory requirements and conduct of business rules, equipment
failures, natural disasters or the failure of external systems, for example, those of Banif's suppliers or
counterparties. Banif's businesses are dependent on its ability to process a very large number of
transactions efficiently and accurately. Banif cannot provide assurances that such failures or interruptions
will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures
or interruptions could have a material adverse effect on Banif's financial condition and results of
operations.
Regulatory Compliance Risk
Banif is subject to extensive supervisory and regulatory regimes by the European Central Bank and the
Bank of Portugal, mainly relating to liquidity levels, solvency and provisioning. Regulatory compliance
risk arises from a failure or inability to comply fully with the laws, regulations or codes applicable
specifically to the financial services industry. Non-compliance could lead to fines, public reprimand,
damage to reputation, enforced suspension of operations or, in extreme cases, withdrawal of authorisation
to operate. Changes in regulation and supervision are not predictable and are beyond Banif's control and
could materially affect its business, the products and services offered or the value of its assets.
International Financial Reporting Standards
According to Regulation nr. 1606/2002 of the European Council and Parliament, companies having
securities admitted to trading on a regulated market of any Member State should adopt the International
Financial Reporting Standards ("IFRS") as from 1st January, 2005. This obligation must be observed in
the preparation and presentation of the consolidated Banif's future financial statements.
Banif has adopted IFRS for reporting periods beginning 1 January 2005 and thereafter. These standards
are, in a number of ways, different from existing generally accepted accounting principles in Portugal and
their implementation may have a significant effect on the presentation of Banif's future financial
statements.
Unforeseen events
Unforeseen events like severe natural catastrophes, terrorist attacks or other states of emergency can lead
to an abrupt interruption of the Banif's operations, which can cause substantial losses. Such losses can
relate to property, financial assets, trading positions and to key employees. Such unforeseen events can
also lead to additional costs (such as relocation of employees affected) and increase Banif's costs (such as
insurance premiums). Such events may also make insurance coverage for certain risks unavailable and
thus increase Banif's risk.
Risk Factors Relating to Banif Madeira
Banif Madeira is a full branch of Banif. As such its risk factors are the same as stated above for Banif.
- 8 -
Risk Factors Relating to Banif Finance
Banif Finance is a funding vehicle of Banif. As such it raises funds to Banif by way of intra-group loans.
In the event that Banif fails to make a payment under an intra-group loan, Banif Finance may not be able
to meet its payment obligations under the issued Notes.
Factors which are material for the purpose of assessing the market risks associated with Notes
issued under the Programme
Notes may not be a suitable investment for all investors
Each potential investor in any Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes,
the merits and risks of investing in the relevant Notes and the information contained or
incorporated by reference in this Base Prospectus or any applicable supplement or any applicable
Final Terms;
• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the relevant Notes and the impact such investment
will have on its overall investment portfolio;
• have sufficient financial resources and liquidity to bear all of the risks of an investment in the
relevant Notes, including where principal or interest is payable in one or more currencies, or
where the currency for principal or interest payments is different from the potential investor's
currency;
• understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any
relevant indices and financial markets; and
• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks.
Some Notes are complex financial instruments and such instruments may be purchased as a way to reduce
risk or enhance yield with an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in Notes which are complex financial instruments unless
it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes will
perform under changing conditions, the resulting effects on the value of such Notes and the impact this
investment will have on the potential investor's overall investment portfolio.
No reliance
A prospective purchaser may not rely on the Issuers, the Dealers, the Trustee, the Agents or any of their
affiliates in connection with its determination as to the legality of an acquisition of the Notes by such
prospective purchaser or as to other matters referred to above except to the extent otherwise imposed by
law, regulations, guidelines or codes issued by regulatory authority.
Risks related to the structure of a particular issue of Notes
A wide range of Notes may be issued under the Programme. A number of these Notes may have features
which contain particular risks for potential investors. Set out below is a description of certain such
features:
Notes subject to optional redemption by the Issuer
An optional redemption feature is likely to limit the market value of Notes. During any period when each
Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially
above the price at which they can be redeemed. This also may be true prior to any redemption period.
- 9 -
Each Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on
the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at
an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to
do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other
investments available at that time.
Partly-paid Notes
Each Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay
any subsequent instalment could result in an investor losing all of its investment.
Variable Rate Notes with a multiplier or other leverage factor
Notes with variable interest rates can be volatile investments. If they are structured to include multipliers
or other leverage factors, or caps or floors, or any combination of those features or other similar related
features, their market values may be even more volatile than those for securities that do not include those
features.
Fixed/Floating Rate Notes
Fixed/Floating Rate Notes may bear interest at a rate that each Issuer may elect to convert from a fixed
rate to a floating rate, or from a floating rate to a fixed rate. Each Issuer's ability to convert the interest
rate will affect the secondary market and the market value of such Notes since each Issuer may be
expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If each Issuer
converts from a fixed rate to a floating rate, the spread on the Fixed/Floating Rate Notes may be less
favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference
rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If each
Issuer converts from a floating rate to a fixed rate, the fixed rate may be lower than the prevailing rates on
its Notes.
Index Linked Notes and Dual Currency Notes
Each Issuer may issue Notes with principal or interest determined by reference to an index or formula, to
changes in the prices of securities or commodities (or a basket of securities or commodities, as the case
may be), to movements in currency exchange rates or other factors (each, a "Relevant Factor"). In
addition, each Issuer may issue Notes with principal or interest payable in one or more currencies, which
may be different from the currency in which the Notes are denominated or the currency in which any
potential investor conducts its business or activities or resides. Potential investors should be aware that:
• the market price of such Notes may be volatile;
• they may receive little or no interest;
• payment of principal or interest may occur at a different time or in a different currency than
expected;
• the amount of principal payable at redemption may be less than the nominal amount of such
Notes or even zero;
• a Relevant Factor may be subject to significant fluctuations that may not correlate with changes
in interest rates, currencies or other indices;
• if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or
contains some other leverage factor, the effect of changes in the Relevant Factor on principal or
interest payable likely will be magnified; and
• the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the
average level is consistent with their expectations. In general, the earlier the change in the
Relevant Factor, the greater the effect on yield.
The historical performance of an index should not be viewed as an indication of the future performance of
such Index Linked Notes. Accordingly, any potential investor should consult its own financial and legal
- 10 -
advisers about the risks entailed by an investment in Index Linked Notes and the suitability of such Notes
in light of the particular circumstances.
Notes issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium to their nominal amount tend
to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-
bearing securities. Generally, the longer the remaining term of the securities, the greater the price
volatility as compared to conventional interest-bearing securities with comparable maturities.
Each Issuer's obligations under Subordinated Notes are subordinated
Each Issuer's obligations under Dated and Undated Subordinated Notes will be unsecured and
subordinated and will rank junior in priority to the claims of Senior Creditors and Prior Creditors,
respectively (as defined in "Terms and Conditions of the Notes" herein). Although Dated and Undated
Subordinated Notes may pay a higher rate of interest than the comparable Notes which are not
subordinated, there is a real risk that an investor in Dated and Undated Subordinated Notes will lose all or
some of its investment should any Issuer become insolvent.
Upon certain conditions, interest may not be due on Undated Subordinated Notes with Conditional
Interest
The holders of Undated Subordinated Notes with Conditional Interest shall only have the right to receive
interest if it is freely resolved upon by the board of directors of Banif and subject to the Limitations on
Payment of Interest.
Accordingly, pursuant to the Conditions of the Undated Subordinated Notes with Conditional Interest, if
the board of directors of Banif does not approve the payment of interest on an Interest Payment Date or if
the requirements specified in Condition 4(c)(iii) below in relation to the amount of Distributable Funds
(which may be affected by legal and statutory changes) and the compliance by Banif with own funds
requirements are not met, interest on the Undated Subordinated Notes with Conditional Interest shall not
be due and the holders of Undated Subordinated Notes with Conditional Interest will not have any right to
receive interest on such Interest Payment Date in respect of the relevant Interest Period.
The possibility of interest not being due on Undated Subordinated Notes with Conditional Interest is
likely to have an adverse effect on the market value of the Undated Subordinated Notes with Conditional
Interest. Additionally, and as a result thereof, the market value of the Undated Subordinated Notes with
Conditional Interest may be subject to greater volatility than the market value of other debt securities
issued at discount or with non conditional interest and may be generally more sensitive to adverse
changes in the financial condition of Banif.
Risks related to Notes generally
Set out below is a brief description of certain risks relating to the Notes generally:
Modification and Waivers
The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to
consider matters affecting their interests generally. These provisions permit defined majorities to bind all
Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders
who voted in a manner contrary to the majority.
EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is
required to provide to the tax authorities of another Member State details of payments of interest (or other
similar income) paid by a person within its jurisdiction to, or collected by such a person for, an individual
resident or certain limited types of entity established in that other Member State. However, for a
transitional period, Belgium, Luxembourg and Austria may instead apply a withholding system in relation
to such payments, deducting tax at rates rising over time to 35 per cent.. Belgium will replace this
withholding tax with a regime of exchange of information to the Member State of residence as from 1
- 11 -
January 2010. A number of non-EU countries and territories including Switzerland have adopted similar
measures (a withholding system in the case of Switzerland).
If a payment were to be made by or collected through a Member State which has opted for a withholding
system and an amount of, or in respect of, tax were to be withheld from that payment pursuant to the
Directive, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay
additional amounts with respect to any Note as a result of the imposition of such withholding tax. The
Issuer is, however, required to maintain a Paying Agent in a Member State that will not be obliged to
withhold or deduct tax pursuant to the Directive.
Change of law
The Terms and Conditions of the Notes (other than Conditions 4(c) and 4(d) and the Interbolsa Notes) are
based on English law in effect as at the date of issue of the relevant Notes. No assurance can be given as
to the impact of any possible judicial decision or change to English law or administrative practice after
the date of issue of the relevant Notes.
Risks relating to Interbolsa Notes
Reliance upon Interbolsa procedures and Portuguese law
Investments in Interbolsa Notes will be subject to Interbolsa procedures and Portuguese law in respect of
the following:
(a) Form and Transfer of Interbolsa Notes
Notes held through accounts of Affiliate Members of Interbolsa will be represented in
dematerialised book-entry form (forma escritural) and will be registered notes (nominativas).
Interbolsa Notes shall not be issued in bearer form (ao portador), whether in definitive form or
otherwise. Interbolsa Notes will be registered in the relevant issue account opened by the Issuer
with Interbolsa and will be held in control accounts held by the Affiliate Members of Interbolsa
on behalf of the relevant Noteholders. Such control accounts will reflect at all times the
aggregate number of Interbolsa Notes held in the individual securities accounts opened by the
clients of the Affiliate Members of Interbolsa (which may include Euroclear and Clearstream,
Luxembourg). The transfer of Interbolsa Notes and their beneficial interests will be made
through Interbolsa.
(b) Payments on Interbolsa Notes
All payments on Interbolsa Notes (including without limitation the payment of accrued interest
and principal) will be made by the Issuer to the Portuguese Paying Agent and (i) if made in euro
will be (a) credited, according to the procedures and regulations of Interbolsa, by the Portuguese
Paying Agent to the payment current-accounts held in the payment system of the Bank of
Portugal by the Affiliate Members of Interbolsa whose control accounts with Interbolsa are
credited with such Notes and thereafter (b) credited by such Affiliate Members of Interbolsa
from the aforementioned payment current-accounts to the accounts of the Noteholders or
through Euroclear and Clearstream, Luxembourg of the beneficial owners of those Notes in
accordance with the rules and procedures of Interbolsa, Euroclear or Clearstream, Luxembourg,
as the case may be; (ii) if made in currencies other than euro will be (a) transferred, on the
payment date and according to the procedures and regulations applicable by Interbolsa, from the
account held by the Portuguese Paying Agent in the Sistema de Liquidação de Moeda
Estrangeira (Foreign Currency Settlement System) managed by Caixa Geral de Depósitos, S.A.
to the relevant accounts of the relevant Affiliate Members of Interbolsa and thereafter (b)
transferred by such Affiliate Members of Interbolsa from such relevant accounts to the accounts
of the Noteholders or through Euroclear and Clearstream, Luxembourg to the accounts with
Euroclear and Clearstream, Luxembourg of the beneficial owners of those Notes in accordance
with the rules and procedures of Interbolsa, Euroclear or Clearstream, Luxembourg, as the case
may be.
The Noteholders must rely on the procedures of Interbolsa to receive payment under the
Interbolsa Notes. The records relating to payments made in respect of beneficial interests in the
Interbolsa Notes are maintained by the Affiliate Members of Interbolsa and the Issuer accepts no
responsibility for, and will not be liable in respect of, maintenance of such records.
- 12 -
(c) Notice to the Noteholders
Notices to the Noteholders may be given by publication in a leading newspaper having general
circulation in Portugal (which is expected to be Diário de Notícias) or by any other way which
complies with the Portuguese Securities Code and Interbolsa's rules on notices to investors,
notably the disclosure of information through the CMVM official website (www.cmvm.pt).
(d) Meetings of the Noteholders
Mandatory provisions of Portuguese law apply to meetings of Noteholders. Meetings of
Noteholders may be convened by a Common Representative. If the Noteholders have not
appointed a Common Representative or if the same refuses to convene a Noteholders meeting,
Noteholders holding not less than 5 per cent. in principal amount of the Notes for the time being
outstanding may request the chairman of the general meeting of shareholders of the Issuer to
convene a Noteholders meeting.
The quorum required for a meeting convened to pass a resolution will be any person or persons
holding or representing any Notes then outstanding, regardless of the principal amount thereof
outstanding; the number of votes required to pass a resolution is the majority of the votes cast at
the relevant meeting. However, extraordinary resolutions (including, without limitation, those
relating to the amendment of the Terms and Conditions of the Notes) will require the attendance
of a person or persons holding or representing at least 50 per cent. of the Notes then outstanding
or, at any adjourned meeting, any person or persons holding or representing any of the Notes
then outstanding, regardless of the principal amount thereof; the number of votes required to pass
an extraordinary resolution is at least 50 per cent. of the principal amount of the Notes then
outstanding or, at any adjourned meeting, two-thirds of the votes cast at the relevant meeting.
Resolutions passed at any meeting of the Noteholders will be binding on all Noteholders,
whether or not they are present at the meeting or have voted against the approved resolutions.
(e) Portuguese Tax Rules
Pursuant to Decree Law 193/2005 of 7 November (as amended from time to time), investment
income paid to holders of Interbolsa Notes, and capital gains resulting from a sale or other
disposal of such Notes, will be exempt from Portuguese income tax only if certain documentation
requirements are duly complied with.
If the Interbolsa Notes are held in an account with an international clearing system (such as
Euroclear or Clearstream, Luxembourg), the management entity of such clearing system may not
provide the necessary registration services in respect of the Interbolsa Notes and therefore, in
order to be eligible for the exemption, the holders of the Interbolsa Notes are required to submit
to the management entity of the relevant clearing system, by courier, hand delivery or mail (there
is no procedure for electronic filing), on an annual basis:
(i) a certificate with the name of each beneficial owner, address, tax payer number (if
applicable), identification of the securities, amount of securities held and reference to the
relevant legislation supporting the exemption or waiver from Portuguese withholding tax;
or
(ii) a declaration that the beneficial owners are exempt from, or not subject to, Portuguese
withholding tax.
The forms of certificate and declaration are set out in "Taxation in Portugal (including Madeira)" below.
The Issuer will not gross up payments in respect of any such withholding tax in any cases indicated in
Condition 12 of the Interbolsa Notes, including failure to deliver or incorrect filing of the certificate or
declaration referred to above. Accordingly, holders of Interbolsa Notes must seek their own advice to
ensure that they comply with all procedures to ensure correct tax treatment of their Interbolsa Notes.
- 13 -
Risks related to the market generally
Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk,
interest rate risk and credit risk:
The secondary market generally
Notes may have no established trading market when issued, and one may never develop. If a market does
develop, it may not be liquid. Therefore, investors may not be able to sell their Notes easily or at prices
that will provide them with a yield comparable to similar investments that have a developed secondary
market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or
market risks, are designed for specific investment objectives or strategies or have been structured to meet
the investment requirements of limited categories of investors. These types of Notes generally would have
a more limited secondary market and more price volatility than conventional debt securities. Illiquidity
may have a severely adverse effect on the market value of Notes.
Exchange rate risks and exchange controls
Each Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain
risks relating to currency conversions if an investor's financial activities are denominated principally in a
currency or currency unit (the "Investor's Currency") other than the Specified Currency. These include
the risk that exchange rates may significantly change (including changes due to devaluation of the
Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction
over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of
the Investor's Currency relative to the Specified Currency would decrease (1) the Investor's Currency-
equivalent yield on the Notes, (2) the Investor's Currency-equivalent value of the principal payable on the
Notes and (3) the Investor's Currency-equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate. As a result, investors may receive less interest or
principal than expected, or no interest or principal.
Interest rate risks
Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may
adversely affect the value of Fixed Rate Notes.
Credit ratings may not reflect all risks
One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings
may not reflect the potential impact of all risks related to structure, market, additional factors discussed
above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to
buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.
A credit rating reduction may result in a reduction in the trading value of the Notes
The value of the Notes is expected to be affected, in part, by investors' general appraisal of the
creditworthiness of the Issuer. Such perceptions are generally influenced by the ratings accorded to the
outstanding Notes of the Issuer by standard statistical rating services. A reduction in, or a placing on
credit watch of the rating, if any, accorded to outstanding Notes of the Issuer by a rating agency could
result in a reduction in the trading value of the Notes.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and regulations, or
review or regulation by certain authorities. Each potential investor should consult its legal advisers to
determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as
collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any
Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine
the appropriate treatment of Notes under any applicable risk-based capital or similar rules.
- 14 -
IMPORTANT NOTICES
Each of Banif – Banco Internacional do Funchal, S.A. ("Banif"), Banif Finance, Ltd. ("Banif Finance")
and Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch) ("Banif Madeira") (each an "Issuer" and together the "Issuers") and Banif –
Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior (External
Financial Branch) in its capacity as guarantor of Notes issued by Banif Finance (the "Guarantor")
accepts responsibility for the information contained in this Base Prospectus. Each of the Issuers and the
Guarantor declares that, having taken all reasonable care to ensure that such is the case, the information
contained in this Base Prospectus is, to the best of its knowledge, in accordance with the facts and
contains no omission likely to affect its import.
Certain information and data contained in this Base Prospectus relating to the competitive position of the
Issuer was derived from publicly available information. The Issuer accepts responsibility that such
publicly available information has been accurately reproduced and, as far as the Issuer is aware and is
able to ascertain, no facts have been omitted which would render such information inaccurate or
misleading. Where applicable, the source of such information is indicated in footnotes in this Base
Prospectus.
This Base Prospectus should be read and construed together with any supplements hereto and with any
other documents incorporated by reference herein and, in relation to any Tranche (as defined herein) of
Notes which is the subject of Final Terms (as defined herein), should be read and construed together with
the relevant Final Terms.
The Issuers and the Guarantor have confirmed to the Dealers named under "Subscription and Sale"
below that this Base Prospectus (including for this purpose, each relevant Final Terms) contains all
information regarding the Issuers, the Guarantor and the Notes which is (in the context of the Programme,
the issue, offering and sale of the Notes, where applicable, and the guarantee of the Notes thereunder)
material; that such information is true and accurate in all material respects and is not misleading in any
material respect; that any opinions, predictions or intentions expressed herein are honestly held or made
and are not misleading in any material respect; that this Base Prospectus does not omit to state any
material fact necessary to make such information, opinions, predictions or intentions (in such context) not
misleading in any material respect; and that all proper enquiries have been made to ascertain and to verify
the foregoing.
No person has been authorised to give any information or to make any representation not contained in or
not consistent with this Base Prospectus or any other document entered into in relation to the Programme
or any information supplied by the Issuers or the Guarantor or such other information as is in the public
domain and, if given or made, such information or representation should not be relied upon as having
been authorised by the Issuers, the Guarantor, the Trustee or any Dealer.
No representation or warranty is made or implied by any of the Dealers or the Trustee or any of their
respective affiliates, and none of the Dealers, the Trustee nor any of their respective affiliates makes any
representation or warranty or accepts any responsibility as to the accuracy or completeness of the
information contained in this Base Prospectus. Neither the delivery of this Base Prospectus or any Final
Terms nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication
that the information contained in this Base Prospectus is true subsequent to the date hereof or the date
upon which this Base Prospectus has been most recently supplemented or that there has been no adverse
change, or any event reasonably likely to involve any adverse change, in the condition (financial or
otherwise) of the Issuers or the Guarantor since the date thereof or, if later, the date upon which this Base
Prospectus has been most recently supplemented or that any other information supplied in connection
with the Programme is correct at any time subsequent to the date on which it is supplied or, if different,
the date indicated in the document containing the same.
The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of the
Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base
Prospectus or any Final Terms comes are required by the Issuers, the Guarantor, the Trustee and the
Dealers to inform themselves about and to observe any such restrictions. For a description of certain
restrictions on offers, sales and deliveries of Notes and on the distribution of this Base Prospectus or any
Final Terms and other offering material relating to the Notes, see "Subscription and Sale". In particular,
Notes have not been and will not be registered under the United States Securities Act of 1933 (as
- 15 -
amended) (the "Securities Act") and are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.
Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or
purchase any Notes and should not be considered as a recommendation by the Issuers, the Guarantor, the
Trustee, or any of the Dealers that any recipient of this Base Prospectus or any Final Terms should
subscribe for or purchase any Notes. The content of this document should not be construed as providing
legal, business, accounting or tax advice and each recipient of this Base Prospectus or any Final Terms
shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of
the Issuers and the Guarantor.
The maximum aggregate principal amount of Notes outstanding and guaranteed at any one time under the
Programme will not exceed Euro 2,500,000,000 (and for this purpose, any Notes denominated in another
currency shall be translated into euro at the date of the agreement to issue such Notes (calculated in
accordance with the provisions of the Dealer Agreement). The maximum aggregate principal amount of
Notes which may be outstanding and guaranteed at any one time under the Programme may be increased
from time to time, subject to compliance with the relevant provisions of the Dealer Agreement as defined
under "Subscription and Sale".
In this Base Prospectus, unless otherwise specified, references to "U.S.$", " U.S. dollars" or " dollars"
are to United States dollars and references to "EUR" or " euro" are to the single currency introduced at
the start of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing
the European Community, as amended.
Certain figures included in this Base Prospectus have been subject to rounding adjustments; accordingly,
figures shown for the same category presented in different tables may vary slightly and figures shown as
totals in certain tables may not be an arithmetic aggregation of the figures which precede them.
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable
Final Terms may over allot Notes or effect transactions with a view to supporting the market price
of the Notes at a level higher than that which might otherwise prevail. However, there is no
assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager)
will undertake stabilisation action. Any stabilisation action may begin on or after the date on which
adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if
begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue
date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant
Tranche of Notes. Any stabilisation action or over-allotment shall be conducted in accordance with
all applicable laws and rules.
- 16 -
INFORMATION INCORPORATED BY REFERENCE
The following documents shall be deemed to be incorporated in, and to form part of, this Base Prospectus:
1. Unaudited consolidated financial statements of the Banif Financial Group in respect of the 9
months ended 30 September 2009, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement (page 5)
(e) Accounting policies and selected explanatory notes (page 7 to 54)
2. Audited consolidated financial statements and auditors' report of the Banif Financial Group in
respect of the financial year ended 31 December 2008, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2008 and 2007 (page 5 to 6)
(e) Accounting policies and selected explanatory notes (page 7 to 91)
(f) Auditors' Report (page 92 to 95)
3. Audited consolidated financial statements and auditors' reports of the Banif Financial Group in
respect of the financial year ended 31 December 2007, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2007 and 2006 (page 5)
(e) Accounting policies and selected explanatory notes (page 6 to 84)
(f) Auditors' Report (page 84 to 87)
4. Unaudited unconsolidated financial statements and auditors' report of Banif in respect of the 9
months ended 30 September 2009, including:
(a) Balance Sheet (page 2)
(b) Income statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement (page 5)
5. Audited unconsolidated financial statements and auditors' report of Banif in respect of the year
ended 31 December 2008, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
- 17 -
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2008 and 2007 (page 5)
(e) Accounting policies and explanatory notes (page 6 to 54)
(f) Auditors' report (page 55 to 57)
6. Audited unconsolidated financial statements and auditors' report of Banif in respect of the year
ended 31 December 2007, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2007 and 2006 (page 5)
(e) Accounting policies and explanatory notes (page 6 to 55)
(f) Auditors' report (page 56 to 58)
7. Unaudited unconsolidated financial statements of Banif Finance in respect of the 9 months ended
30 September 2009, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement (page 5)
8. Audited unconsolidated financial statements and auditors' report of Banif Finance in respect of
the year ended 31 December 2008, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2008 and 2007 (page 5)
(e) Accounting policies and explanatory notes (page 6 to 20)
(f) Auditors' report (page 21 to 22)
9. Audited unconsolidated financial statements and auditors' report of Banif Finance in respect of
the year ended 31 December 2007, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2006 and 2005 (page 5)
(e) Accounting policies and explanatory notes (page 6 to 11)
(f) Auditors' report (page 12)
- 18 -
10. Unaudited unconsolidated financial statements of Banif Madeira in respect of the 9 months ended
30 September 2009, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement (page 5)
11. Unaudited unconsolidated financial statements of Banif Madeira in respect of the year ended 31
December 2008, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2008 and 2007 (page 5)
12. Unaudited unconsolidated financial statements of Banif Madeira in respect of the year ended 31
December 2007, including:
(a) Balance Sheet (page 2)
(b) Income Statement (page 3)
(c) Statements of changes in shareholders' funds (page 4)
(d) Cash flow statement as at 31 December 2007 and 2006 (page 5)
13. The terms and conditions set out on pages 25 to 60 of the base prospectus dated 8 August 2008
relating to the Programme under the heading "Terms and Conditions of the Notes" (the "2008
Conditions")
provided, however, that any statement contained in this Base Prospectus or in any of the
documents incorporated by reference in, and forming part of, this Base Prospectus shall be
deemed to be modified or superseded for the purpose of this Base Prospectus to the extent that a
statement contained in any document subsequently incorporated by reference modifies or
supersedes such statement.
The Issuers will, at the specified offices of the Paying Agents, provide, free of charge, upon oral or
written request, a copy of this Base Prospectus (or any document incorporated by reference in this Base
Prospectus unless such documents have been modified or superseded). Written or telephone requests for
such documents should be directed to the specified office of any Paying Agent or the specified office of
the Listing Agent in Luxembourg.
This Base Prospectus and the documents incorporated by reference are available for viewing at
www.bourse.lu.
Any information not listed in the cross-reference list but included in the documents incorporated by
reference is given for information purposes only.
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GENERAL DESCRIPTION OF THE PROGRAMME
Under the Programme, Banif, Banif Finance, Ltd. and Banif Madeira may from time to time issue Notes
to one or more of the Dealers. The maximum aggregate principal amount of all Notes any time
outstanding under the Programme will not exceed €2,500,000,000 (or its equivalent in any other
currency). The Issuers may increase the amount of the Programme in accordance with the terms of the
Dealer Agreement (as defined below) from time to time.
Notes issued by Banif Finance, Ltd. will have the benefit of a Guarantee given by Banif Madeira. The
Guarantee constitutes an unconditional, unsecured and unsubordinated obligation of Banif-Banco
Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior (External Financial
Branch) and ranks pari passu with all other unsecured and unsubordinated obligations of Banif-Banco
Internacional do Funchal S.A., Sucursal Financeira Exterior (External Financial Branch).
The Notes may be issued on a continuing basis to one or more of the Dealers and any additional Dealer
appointed under the Programme from time to time by the Issuer(s), which appointment may be for a
specific issue or on an ongoing basis. Notes may be distributed by way of public offer or private
placements and, in each case, on a syndicated or non-syndicated basis. The method of distribution of each
tranche of Notes will be stated in the Final Terms.
The Notes will be issued in series (each, a "Series"). Each Series may comprise one or more tranches
issued on different dates. The specific terms of each tranche of Notes will be set forth in the Final Terms.
Notes will be issued in such denominations as may be agreed between the relevant Issuer and the relevant
Dealer(s) and as indicated in the Final Terms save that the minimum denomination of the Notes will be, if
in euro, €1,000, or, if in any currency other than euro, an amount in such other currency equal to or
exceeding the equivalent of €1,000 at the time of the issue of Notes.
Notes may be issued at an issue price which is at par or at a discount to, or premium over, par, as stated in
the Final Terms.
Application has been made to list Notes on the official list of the Luxembourg Stock Exchange and to
trade Notes on the Luxembourg Stock Exchange's regulated market ("Bourse de Luxembourg"). The
Programme provides that Notes may be listed on other or further stock exchanges, as may be agreed
between the relevant Issuer and the relevant Dealer(s) in relation to each issue. Notes may further be
issued under the Programme which will not be listed on any stock exchange.
Notes will be accepted for clearing through one or more Clearing Systems as specified in the Final Terms.
These systems will include those operated by Clearstream Banking, société anonyme and Euroclear Bank
S. A./N.V and, for Interbolsa Notes, Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de
Sistemas Centralizados de Valores Mobiliários, S.A. ("Interbolsa").
Dexia Banque Internationale à Luxembourg will act as paying agent.
Citibank International plc, Sucursal em Portugal will act as Portuguese paying agent in respect of
Interbolsa Notes.
- 20 -
SUPPLEMENT TO THE BASE PROSPECTUS
The Issuer has undertaken, in connection with the listing of the Notes on the official list of the
Luxembourg Stock Exchange, that if at any time during the duration of the Programme there is a
significant new factor, mistake or material inaccuracy relating to information contained in this Base
Prospectus whose inclusion would reasonably be required by investors and their professional advisers,
and would reasonably be expected by them to be found in this Base Prospectus for the purpose of making
an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of
the Issuer or any change in the information set out under "Terms and Conditions of the Notes", the Issuer
will prepare or procure the preparation of a supplement to this Base Prospectus or, as the case may be,
publish a new Base Prospectus, for use in connection with any subsequent issue by the Issuer of Notes to
be listed on the Official List of the Luxembourg Stock Exchange and to be admitted to trading on the
Luxembourg Stock Exchange's regulated market.
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FORMS OF THE NOTES
1. Bearer Notes
Each Tranche of Notes (except Interbolsa Notes) will initially be in the form of either a
temporary global note (the "Temporary Global Note"), without interest coupons, or a
permanent global note (the "Permanent Global Note"), without interest coupons, in each case as
specified in the relevant Final Terms or Drawdown Prospectus. Each Temporary Global Note or,
as the case may be, Permanent Global Note (each a "Global Note") which is not intended to be
issued in new global note ("NGN") form, as specified in the relevant Final Terms, will be
deposited on or around the issue date of the relevant Tranche of the Notes with a depositary or a
common depositary for Euroclear Bank S.A./N.V. ("Euroclear") and/or Clearstream Banking,
société anonyme, Luxembourg ("Clearstream, Luxembourg") and/or any other relevant
clearing system and each Global Note which is intended to be issued in NGN form, as specified
in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche
of the Notes with a common safekeeper for Euroclear and/or Clearstream, Luxembourg.
On 13 June 2006 the European Central Bank (the "ECB") announced that Notes in NGN form
are in compliance with the "Standards for the use of EU securities settlement systems in ESCB
credit operations" of the central banking system for the euro (the "Eurosystem"), provided that
certain other criteria are fulfilled. At the same time the ECB also announced that arrangements
for Notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June
2006 and that debt securities in global bearer form issued through Euroclear and Clearstream,
Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem
operations if the NGN form is used.
The relevant Final Terms will also specify whether United States Treasury Regulation §1.163-
5(c)(2)(i)(C) (the "TEFRA C Rules") or United States Treasury Regulation §1.163-5(c)(2)(i)(D)
(the "TEFRA D Rules") are applicable in relation to the Notes or, if the Notes do not have a
maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA D Rules are
applicable.
Temporary Global Note exchangeable for Permanent Global Note
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note
exchangeable for a Permanent Global Note", then the Notes will initially be in the form of a
Temporary Global Note which will be exchangeable, in whole or in part, for interests in a
Permanent Global Note, without interest coupons, not earlier than 40 days after the issue date of
the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. No
payments will be made under the Temporary Global Note unless exchange for interests in the
Permanent Global Note is improperly withheld or refused. In addition, interest payments in
respect of the Notes cannot be collected without such certification of non-U.S. beneficial
ownership.
Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a
Permanent Global Note, the relevant Issuer shall procure (in the case of first exchange) the
prompt delivery (free of charge to the bearer) of such Permanent Global Note to the bearer of the
Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal
amount of the Permanent Global Note in accordance with its terms against:
(i) presentation and (in the case of final exchange) surrender of the Temporary Global Note
to or to the order of the Principal Paying Agent; and
(ii) receipt by the Principal Paying Agent of a certificate or certificates of non-U.S.
beneficial ownership,
within 7 days of the bearer requesting such exchange.
The principal amount of the Permanent Global Note shall be equal to the aggregate of the
principal amounts specified in the certificates of non-U.S. beneficial ownership; provided,
however, that in no circumstances shall the principal amount of the Permanent Global Note
exceed the initial principal amount of the Temporary Global Note.
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The Permanent Global Note will be exchangeable in whole, but not in part, for Notes in
definitive form ("Definitive Notes"):
(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or
(ii) at any time, if so specified in the relevant Final Terms;
(iii) or if the relevant Final Terms specifies "in the limited circumstances described in the
Permanent Global Note", then if (a) Euroclear or Clearstream, Luxembourg or any other
relevant clearing system is closed for business for a continuous period of 14 days (other
than by reason of legal holidays) or announces an intention permanently to cease
business and has in fact done so and no successor clearing system satisfactory to the
Trustee is available or (b) any of the circumstances described in Condition 13 (Events of
Default) occurs.
Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the relevant Issuer
shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly
authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms),
in an aggregate principal amount equal to the principal amount of the Permanent Global Note to
the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to
or to the order of the Principal Paying Agent within 30 days of the bearer requesting such
exchange.
Temporary Global Note exchangeable for Definitive Notes
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note
exchangeable for Definitive Notes" and also specifies that the TEFRA C Rules are applicable or
that neither the TEFRA C Rules or the TEFRA D Rules are applicable, then the Notes will
initially be in the form of a Temporary Global Note which will be exchangeable, in whole but not
in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche
of the Notes.
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note
exchangeable for Definitive Notes" and also specifies that the TEFRA D Rules are applicable,
then the Notes will initially be in the form of a Temporary Global Note which will be
exchangeable, in whole or in part, for Definitive Notes not earlier than 40 days after the issue
date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership.
Interest payments in respect of the Notes cannot be collected without such certification of non-
U.S. beneficial ownership.
Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the relevant
Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes,
duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final
Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global
Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global
Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such
exchange.
Permanent Global Note exchangeable for Definitive Notes
If the relevant Final Terms specifies the form of Notes as being "Permanent Global Note
exchangeable for Definitive Notes", then the Notes will initially be in the form of a Permanent
Global Note which will be exchangeable in whole, but not in part, for Definitive Notes:
(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or
(ii) at any time, if so specified in the relevant Final Terms; or
(iii) if the relevant Final Terms specifies "in the limited circumstances described in the
Permanent Global Note", then if (a) Euroclear or Clearstream, Luxembourg or any other
relevant clearing system is closed for business for a continuous period of 14 days (other
than by reason of legal holidays) or announces an intention permanently to cease
- 23 -
business or (b) any of the circumstances described in Condition 13 (Events of Default)
occurs.
Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the relevant Issuer
shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly
authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms),
in an aggregate principal amount equal to the principal amount of the Permanent Global Note to
the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to
or to the order of the Principal Paying Agent within 30 days of the bearer requesting such
exchange.
Terms and Conditions applicable to the Notes
The terms and conditions applicable to any Definitive Note will be endorsed on that Note and
will consist of the terms and conditions set out under "Terms and Conditions of the Notes" below
and the provisions of the relevant Final Terms which supplement, amend and/or replace those
terms and conditions.
The terms and conditions applicable to any Note in global form will differ from those terms and
conditions which would apply to the Note were it in definitive form to the extent described under
"Summary of Provisions Relating to the Notes while in Global Form" below.
Legend concerning United States persons
In the case of any Tranche of Notes having a maturity of more than 365 days, the Notes in global
form, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a
legend to the following effect:
"Any United States person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a)
of the Internal Revenue Code."
The sections referred to in such legend provide that a United States person who holds a Note,
Coupon or Talon will generally not be allowed to deduct any loss realised on the sale, exchange
or redemption of such Note, Coupon or Talon and any gain (which might otherwise be
characterised as capital gain) recognised on such sale, exchange or redemption will be treated as
ordinary income.
2. Interbolsa Notes
Notes held through Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de Sistemas
Centralizados de Valores Mobiliários, S.A. ("Interbolsa") (each an "Interbolsa Note") will be
represented in dematerialised book-entry (escriturais) registered (nominativas) form.
Title to Interbolsa Notes will be evidenced by book-entries in accordance with the Portuguese
Securities Code and the regulations issued by Comissão do Mercado de Valores Mobiliários (the
Portuguese Securities Commission, the "CMVM"), by Interbolsa or otherwise applicable thereto.
Each person shown in the book-entry records of a financial institution which is licensed to act as
a financial intermediary and which is entitled to hold control accounts with Interbolsa on behalf
of their customers and which includes any depositary banks appointed by Euroclear and
Clearstream, Luxembourg for the purpose of holding accounts on behalf of Euroclear and
Clearstream, Luxembourg (each such institution an "Affiliate Member of Interbolsa") as having
an interest in the Interbolsa Notes shall be the holder of the principal amount of Interbolsa Notes
recorded.
Title to the Interbolsa Notes is subject to compliance with all rules, restrictions and requirements
applicable to the activities of Interbolsa and to Portuguese law.
One or more certificates in relation to the Interbolsa Notes (each a "Certificate") will be
delivered by the relevant Affiliate Member of Interbolsa in respect of a registered holding of
Interbolsa Notes upon the request by the relevant Noteholder and in accordance with that
- 24 -
Affiliate Member of Interbolsa's procedures pursuant to Article 78 of the Portuguese Securities
Code.
The Interbolsa Notes will be registered in the relevant control issue account of the Issuer with
Interbolsa and will be held in control accounts held by each Affiliate Member of Interbolsa on
behalf of the Noteholders. Such control accounts will reflect at all times the aggregate number of
Interbolsa Notes held in individual securities accounts opened with the Affiliate Members of
Interbolsa by Noteholders, which are clients of the Affiliate Members of Interbolsa and include
Euroclear and Clearstream, Luxembourg.
The person or entity registered in the relevant individual securities accounts of an Affiliate
Member of Interbolsa (the "Book-Entry Registry" and each such entry a "Book Entry") as the
holder of any Interbolsa Note shall (except as otherwise required by law) be treated as its
absolute owner for all purposes (whether or not it is overdue and regardless of any notice of
ownership, trust or any other interest therein).
The Issuer and the Paying Agents may (to the fullest extent permitted by applicable law) deem
and treat the person or entity registered in the Book-Entry Registry as the holder of any
Interbolsa Note and the absolute owner for all purposes. Proof of such registration is made by
means of a Certificate issued by the relevant Affiliate Member of Interbolsa pursuant to Article
78 of the Portuguese Securities Code.
No Noteholder will be able to transfer Interbolsa Notes, or any interest therein, except in
accordance with Portuguese law and regulations. Interbolsa Notes may only be transferred in
accordance with the applicable procedures established by the Portuguese Securities Code and the
regulations issued by the CMVM and Interbolsa.
- 25 -
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, as supplemented, amended and/or replaced by
the relevant Final Terms, will be incorporated by reference into each Note settled by LCH Clearnet, S.A.,
the clearing system operated by Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de Sistemas
Centralizados de Valores Mobiliários, S.A., each Global Note (as defined below) and endorsed on each
Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in
global form will differ from those terms and conditions which would apply to the Note were it in definitive
form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form"
below.
1. Introduction
(a) Programme: Banif – Banco Internacional do Funchal, S.A. ("Banif"), Banif – Banco
Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior (External
Financial Branch) ("Banif Madeira") and Banif Finance, Ltd. ("Banif Finance") (each an
"Issuer" and together, the "Issuers") have established a Euro Medium Term Note Programme
(the "Programme") for the issuance of up to Euro 2,500,000,000 in aggregate principal amount
of notes (the "Notes"), with Notes issued by Banif Finance being guaranteed by Banif Madeira
(the "Guarantor").
(b) Final Terms: Notes issued under the Programme are issued in series (each a "Series") and each
Series may comprise one or more tranches (each a "Tranche") of Notes. The final terms of each
Tranche of Notes will be set out in a final terms document (the "Final Terms") which
supplements these terms and conditions (the "Conditions"). The terms and conditions applicable
to any particular Tranche of Notes are these Conditions as supplemented, amended and/or
replaced by the relevant Final Terms. In the event of any inconsistency between these Conditions
and/or, for Notes other than Interbolsa Notes, the Trust Deed and/or the relevant Final Terms, the
relevant Final Terms shall prevail.
Copies of the relevant Final Terms are available for inspection and may be obtained during
normal business hours at the Specified Office of the Trustee, the Specified Office of the Principal
Paying Agent, the Specified Office of the Paying Agent in Luxembourg and on the website of the
Luxembourg Stock Exchange at www.bourse.lu, and for Interbolsa Notes, the Specified Office of
the Portuguese Paying Agent, the initial Specified Offices of which are set out below.
(c) Trust Deed: The Notes (except for Interbolsa Notes) are constituted by, are subject to, and have
the benefit of, an amended and restated trust deed dated 16 December 2009 (the "Trust Deed")
made between the Issuers, the Guarantor and Citicorp Trustee Company Limited as trustee (the
"Trustee" which expression shall include all persons for the time being the trustee or trustees
appointed under the Trust Deed). Interbolsa Notes are constituted by entries in individual
securities accounts opened by Noteholders with the Affiliate Members of Interbolsa (as defined
below).
(d) Agency Agreement: The Notes are the subject of an amended and restated issue and paying
agency agreement dated 16 December 2009 (the "Agency Agreement") between the Issuers, the
Guarantor, the Trustee, Citibank, N.A. as principal paying agent (the "Principal Paying Agent",
which expression includes any successor principal paying agent appointed from time to time in
connection with the Notes) and the paying agents named therein (together with the Principal
Paying Agent, the "Paying Agents", which expression includes any successor or additional
paying agents appointed from time to time in connection with the Notes). The Interbolsa Notes
have the benefit of the Agency Agreement as amended by an amendment agreement (the
"Interbolsa Notes Agency Agreement") dated 16 December 2009 and made between the
Issuers, the Guarantor, the Trustee, the Agent, Citibank International plc, Sucursal em Portugal
acting as paying agent in Portugal (the "Portuguese Paying Agent" which expression shall
include any successor Portuguese Paying Agent) and the other paying agents named therein
(together with the Agent, the Portuguese Paying Agent and the other paying agents named in the
Agency Agreement, the "Paying Agents", which expression shall include any additional or
successor paying agents).
- 26 -
(e) The Notes: All subsequent references in these Conditions to "Notes" shall mean:
(i) in relation to any Notes represented by a global Note (a "Global Note"), units of the
lowest Specified Denomination in the Specified Currency;
(ii) definitive Notes issued in exchange for a Global Note (the "Definitive Notes");
(iii) any Global Note; and
(iv) Notes held through Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de
Sistemas Centralizados de Valores Mobiliários, S.A. ("Interbolsa") (each an
"Interbolsa Note"). Interbolsa Notes will only be issued by Banif acting through its
head office and will not be issued by Banif Finance.
All subsequent references in these Conditions to the "Issuer" are to the Issuer of the relevant
Notes. Copies of the relevant Final Terms are available for inspection and may be obtained by
holders of the Notes (the "Noteholders") during normal business hours at the registered office of
the Trustee and the Specified Office of the Principal Paying Agent, the initial Specified Office of
which is set out below.
(f) Noteholders: Any reference to "Noteholders" or "holders" in relation to any Notes shall mean (i)
in the case of bearer Notes, the holders of the Global Notes and Definitive Notes and shall, in
relation any Notes represented by a Global Note, be construed as provided below, or (ii) in the
case of Interbolsa Notes, each person shown in the book-entry records of a financial institution
which is licensed to act as a financial intermediary under the Portuguese Securities Code (Código
dos Valores Mobiliários, the "Portuguese Securities Code") and which is entitled to hold
control accounts with Interbolsa on behalf of their customers (and includes any depositary banks
appointed by Euroclear and/or Clearstream, Luxembourg) (each such institution an "Affiliate
Member of Interbolsa") as having an interest in the principal amount of the Interbolsa Notes.
Any reference herein to "Receiptholders" shall mean the holders of the Receipts and any
reference herein to "Couponholders" shall mean the holders of the Coupons and shall, unless the
context otherwise requires, include the holders of the Talons.
(g) Common Representative: The holders of Interbolsa Notes shall at all times be entitled, by means
of an Extraordinary Resolution, to appoint and dismiss a Common Representative to act as their
common representative, as further described in Condition 23.
(h) Summaries: Certain provisions of these Conditions are summaries of the Trust Deed, the Agency
Agreement and the Interbolsa Notes Agency Agreement are subject to their detailed provisions.
The holders of the Notes (the "Noteholders") and the holders of the related interest coupons, if
any, (the "Couponholders" and the "Coupons", respectively) are bound by, and are deemed to
have notice of, all the provisions of the Trust Deed, the Agency Agreement and the Interbolsa
Notes Agency Agreement applicable to them. Copies of the Trust Deed, Agency Agreement and
the Interbolsa Notes Agency Agreement are available for inspection by Noteholders during
normal business hours at the registered office of the Trustee and the Specified Offices of each of
the Paying Agents.
2. Interpretation
(a) Definitions: In these Conditions the following expressions have the following meanings:
"Accrual Yield" has the meaning given in the relevant Final Terms;
"Additional Business Centre(s)" means the city or cities specified as such in the relevant Final
Terms;
"Additional Financial Centre(s)" means the city or cities specified as such in the relevant Final
Terms;
"Affiliate Member of Interbolsa" means any authorised financial intermediary institution
entitled to hold control accounts with Interbolsa on behalf of their customers and which includes
- 27 -
any depository banks appointed by Euroclear and Clearstream Luxembourg for the purpose of
holding accounts on behalf of Euroclear and Clearstream Luxembourg, respectively;
"Book Entry Registry" means the book entry securities registry system applicable to the
Interbolsa Notes, which is subject to the rules, regulations and procedures under which Interbolsa
operates in respect of book entry securities;
"Business Day" means:
(i) in relation to any sum payable in euro, a TARGET Settlement Day and a day on which
commercial banks and foreign exchange markets settle payments generally in each (if
any) Additional Business Centre; and
(ii) in relation to any sum payable in a currency other than euro, a day on which commercial
banks and foreign exchange markets settle payments generally in London, in the
Principal Financial Centre of the relevant currency and in each (if any) Additional
Business Centre;
"Business Day Convention", in relation to any particular date, has the meaning given in the
relevant Final Terms and, if so specified in the relevant Final Terms, may have different
meanings in relation to different dates and, in this context, the following expressions shall have
the following meanings:
(i) "Following Business Day Convention" means that the relevant date shall be postponed
to the first following day that is a Business Day;
(ii) "Modified Following Business Day Convention" or "Modified Business Day
Convention" means that the relevant date shall be postponed to the first following day
that is a Business Day unless that day falls in the next calendar month in which case that
date will be the first preceding day that is a Business Day;
(iii) "Preceding Business Day Convention" means that the relevant date shall be brought
forward to the first preceding day that is a Business Day;
(iv) "FRN Convention", "Floating Rate Convention" or "Eurodollar Convention" means
that each relevant date shall be the date which numerically corresponds to the preceding
such date in the calendar month which is the number of months specified in the relevant
Final Terms as the Specified Period after the calendar month in which the preceding
such date occurred provided, however, that:
(A) if there is no such numerically corresponding day in the calendar month in
which any such date should occur, then such date will be the last day which is a
Business Day in that calendar month;
(B) if any such date would otherwise fall on a day which is not a Business Day, then
such date will be the first following day which is a Business Day unless that day
falls in the next calendar month, in which case it will be the first preceding day
which is a Business Day; and
(C) if the preceding such date occurred on the last day in a calendar month which
was a Business Day, then all subsequent such dates will be the last day which is
a Business Day in the calendar month which is the specified number of months
after the calendar month in which the preceding such date occurred; and
(v) "No Adjustment" means that the relevant date shall not be adjusted in accordance with
any Business Day Convention;
"Calculation Agent" means the Principal Paying Agent or such other Person specified in the
relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest
Amount(s) and/or such other amount(s) as may be specified in the relevant Final Terms;
"Calculation Amount" has the meaning given in the relevant Final Terms;
- 28 -
"CMVM" means the Portuguese Securities Market Commission (Comissão do Mercado de
Valores Mobiliários);
"Common Representative" means a law firm, an accountant's firm or an individual person
(which is not a Noteholder), which may be appointed by the Noteholders under Article 358 of the
Portuguese Companies Code and pursuant to Condition 23 (Common Representatives);
"CVM" means the Portuguese centralised system of registration of securities (Central de Valores
Mobiliários) composed of interconnected securities accounts, through which securities (and
inherent rights) are created, held and transferred, and which allows Interbolsa to control the
amount of securities so created, held and transferred;
"Coupon Sheet" means, in respect of a Note in definitive form, a coupon sheet relating to the
Note;
"Dated Subordinated Notes" means Notes which are specified in the Final Terms as being dated
subordinated Notes;
"Day Count Fraction" means, in respect of the calculation of an amount for any period of time
(the "Calculation Period"), such day count fraction as may be specified in these Conditions or
the relevant Final Terms and:
(i) if "Actual/Actual (ICMA)" is so specified, means:
(A) where the Calculation Period is equal to or shorter than the Regular Period
during which it falls, the actual number of days in the Calculation Period
divided by the product of (1) the actual number of days in such Regular Period
and (2) the number of Regular Periods in any year; and
(B) where the Calculation Period is longer than one Regular Period, the sum of:
(1) the actual number of days in such Calculation Period falling in the
Regular Period in which it begins divided by the product of (1) the
actual number of days in such Regular Period and (2) the number of
Regular Periods in any year; and
(2) the actual number of days in such Calculation Period falling in the next
Regular Period divided by the product of (1) the actual number of days
in such Regular Period and (2) the number of Regular Periods in any
year;
(ii) if "Actual/365" or "Actual/Actual (ISDA)" is so specified, means the actual number of
days in the Calculation Period divided by 365 (or, if any portion of the Calculation
Period falls in a leap year, the sum of (A) the actual number of days in that portion of the
Calculation Period falling in a leap year divided by 366 and (B) the actual number of
days in that portion of the Calculation Period falling in a non-leap year divided by 365);
(iii) if "Actual/365 (Fixed)" is so specified, means the actual number of days in the
Calculation Period divided by 365;
(iv) if "Actual/360" is so specified, means the actual number of days in the Calculation
Period divided by 360;
(v) if "30/360" is so specified, means the number of days in the Calculation Period divided
by 360 (the number of days to be calculated on the basis of a year of 360 days with 12
30-day months (unless (i) the last day of the Calculation Period is the 31st day of a
month but the first day of the Calculation Period is a day other than the 30th or 31st day
of a month, in which case the month that includes that last day shall not be considered to
be shortened to a 30-day month, or (ii) the last day of the Calculation Period is the last
day of the month of February, in which case the month of February shall not be
considered to be lengthened to a 30-day month)); and
- 29 -
(vi) if "30E/360" or "Eurobond Basis" is so specified means, the number of days in the
Calculation Period divided by 360 (the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months, without regard to the date of the first day or
last day of the Calculation Period unless, in the case of the final Calculation Period, the
date of final maturity is the last day of the month of February, in which case the month
of February shall not be considered to be lengthened to a 30-day month);
"Early Redemption Amount (Tax)" means, in respect of any Note, its principal amount or such
other amount as may be specified in, or determined in accordance with, the relevant Final Terms;
"Early Termination Amount" means, in respect of any Note, its principal amount or such other
amount as may be specified in, or determined in accordance with, these Conditions or the
relevant Final Terms;
"Extraordinary Resolution" has the meaning given in the Trust Deed;
"Final Redemption Amount" means, in respect of any Note, its principal amount or such other
amount as may be specified in, or determined in accordance with, the relevant Final Terms;
"Fixed Coupon Amount" has the meaning given in the relevant Final Terms;
"Guarantee" means, in relation to any Indebtedness of any Person, any obligation of another
Person to pay such Indebtedness including (without limitation):
(i) any obligation to purchase such Indebtedness;
(ii) any obligation to lend money, to purchase or subscribe shares or other securities or to
purchase assets or services in order to provide funds for the payment of such
Indebtedness;
(iii) any indemnity against the consequences of a default in the payment of such Indebtedness;
and
(iv) any other agreement to be responsible for such Indebtedness;
"Guarantee of the Notes" means the guarantee of the Notes issued by Banif Finance given by
the Guarantor in the Trust Deed;
"Indebtedness" means any indebtedness of any Person for money borrowed or raised including
(without limitation) any indebtedness for or in respect of:
(i) amounts raised by acceptance under any acceptance credit facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or hire purchase contracts which would,
in accordance with applicable law and generally accepted accounting principles, be
treated as finance or capital leases;
(iv) the amount of any liability in respect of any purchase price for assets or services the
payment of which is deferred for a period in excess of 60 days; and
(v) amounts raised under any other transaction (including, without limitation, any forward
sale or purchase agreement) having the commercial effect of a borrowing;
"Interbolsa" means Interbolsa – Sociedade Gestora de Sistemas de Liquidação e de Sistemas
Centralizados de Valores Mobiliários, S.A., as management entity of the CVM;
"Interest Amount" means, in relation to a Note and an Interest Period, the amount of interest
payable in respect of that Note for that Interest Period;
"Interest Commencement Date" means the Issue Date of the Notes or such other date as may be
specified as the Interest Commencement Date in the relevant Final Terms;
- 30 -
"Interest Determination Date" has the meaning given in the relevant Final Terms;
"Interest Payment Date" means the date or dates specified as such in, or determined in
accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is
specified in the relevant Final Terms:
(i) as the same may be adjusted in accordance with the relevant Business Day Convention;
or
(ii) if the Business Day Convention is the FRN Convention, Floating Rate Convention or
Eurodollar Convention and an interval of a number of calendar months is specified in the
relevant Final Terms as being the Specified Period, each of such dates as may occur in
accordance with the FRN Convention, Floating Rate Convention or Eurodollar
Convention at such Specified Period of calendar months following the Interest
Commencement Date (in the case of the first Interest Payment Date) or the previous
Interest Payment Date (in any other case);
"Interest Period" means each period beginning on (and including) the Interest Commencement
Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;
"ISDA Definitions" means the 2000 ISDA Definitions (as amended and updated as at the date of
issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final
Terms) as published by the International Swaps and Derivatives Association, Inc.) or, if so
specified in the relevant Final Terms, the 2006 ISDA Definitions (as amended and updated as at
the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the
relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);
"Issue Date" has the meaning given in the relevant Final Terms;
"Margin" has the meaning given in the relevant Final Terms;
"Maturity Date" has the meaning given in the relevant Final Terms;
"Maximum Redemption Amount" has the meaning given in the relevant Final Terms;
"Minimum Redemption Amount" has the meaning given in the relevant Final Terms;
"Optional Redemption Amount (Call)" means, in respect of any Note, its principal amount or
such other amount as may be specified in, or determined in accordance with, the relevant Final
Terms;
"Optional Redemption Amount (Put)" means, in respect of any Note, its principal amount or
such other amount as may be specified in, or determined in accordance with, the relevant Final
Terms;
"Optional Redemption Date (Call)" has the meaning given in the relevant Final Terms;
"Optional Redemption Date (Put)" has the meaning given in the relevant Final Terms;
"Participating Member State" means a Member State of the European Communities which
adopts the euro as its lawful currency in accordance with the Treaty;
"Payment Business Day" means:
(i) if the currency of payment is euro, any day which is:
(A) a day on which banks in the relevant place of presentation are open for
presentation and payment of bearer debt securities and for dealings in foreign
currencies; and
(B) in the case of payment by transfer to an account, a TARGET Settlement Day
and a day on which dealings in foreign currencies may be carried on in each (if
any) Additional Financial Centre; or
- 31 -
(ii) if the currency of payment is not euro, any day which is:
(A) a day on which banks in the relevant place of presentation are open for
presentation and payment of bearer debt securities and for dealings in foreign
currencies; and
(B) in the case of payment by transfer to an account, a day on which dealings in
foreign currencies may be carried on in the Principal Financial Centre of the
currency of payment and in each (if any) Additional Financial Centre;
"Permitted Indebtedness" means any Indebtedness which does not exceed, in aggregate, 20 per
cent. of Banif's consolidated total assets calculated at the time of creation of the relevant Security
Interest by reference to Banif's most recently published financial statements.
"Person" means any individual, company, corporation, firm, partnership, joint venture,
association, organisation, state or agency of a state or other entity, whether or not having separate
legal personality;
"Portuguese Companies Code" means the Portuguese Código das Sociedades Comerciais,
approved by Decree-Law 262/86, dated 2 September, as amended from time to time;
"Portuguese Paying Agent" means Citibank International plc, Sucursal em Portugal;
"Portuguese Securities Code" means the Portuguese Código dos Valores Mobiliários, approved
by Decree-Law 486/99, dated 13 November, as amended from time to time;
"Principal Financial Centre" means, in relation to any currency, the principal financial centre
for that currency provided, however, that:
(i) in relation to euro, it means the principal financial centre of such Member State of the
European Communities as is selected (in the case of a payment) by the payee or (in the
case of a calculation) by the Calculation Agent; and
(ii) in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to
New Zealand dollars, it means either Wellington or Auckland; in each case as is selected
(in the case of a payment) by the payee or (in the case of a calculation) by the
Calculation Agent;
"Put Option Notice" means a notice which must be delivered to a Paying Agent by any
Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;
"Put Option Receipt" means a receipt issued by a Paying Agent to a depositing Noteholder upon
deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to
redeem a Note at the option of the Noteholder;
"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of interest
payable in respect of the Notes specified in the relevant Final Terms or calculated or determined
in accordance with the provisions of these Conditions and/or the relevant Final Terms;
"Redemption Amount" means, as appropriate, the Final Redemption Amount, the Early
Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption
Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption
amount as may be specified in, or determined in accordance with the provisions of, the relevant
Final Terms;
"Reference Banks" has the meaning given in the relevant Final Terms or, if none, four major
banks selected by the Calculation Agent in the market that is most closely connected with the
Reference Rate;
"Reference Price" has the meaning given in the relevant Final Terms;
"Reference Rate" has the meaning given in the relevant Final Terms;
- 32 -
"Regular Period" means:
(i) in the case of Notes where interest is scheduled to be paid only by means of regular
payments, each period from and including the Interest Commencement Date to but
excluding the first Interest Payment Date and each successive period from and including
one Interest Payment Date to but excluding the next Interest Payment Date;
(ii) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be
paid only by means of regular payments, each period from and including a Regular Date
falling in any year to but excluding the next Regular Date, where "Regular Date" means
the day and month (but not the year) on which any Interest Payment Date falls; and
(iii) in the case of Notes where, apart from one Interest Period other than the first Interest
Period, interest is scheduled to be paid only by means of regular payments, each period
from and including a Regular Date falling in any year to but excluding the next Regular
Date, where "Regular Date" means the day and month (but not the year) on which any
Interest Payment Date falls other than the Interest Payment Date falling at the end of the
irregular Interest Period;
"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date on
which the payment in question first becomes due and (b) if the full amount payable has not been
received in the Principal Financial Centre of the currency of payment by the Principal Paying
Agent on or prior to such due date, the date on which (the full amount having been so received)
notice to that effect has been given to the Noteholders;
"Relevant Financial Centre" has the meaning given in the relevant Final Terms;
"Relevant Screen Page" means the page, section or other part of a particular information service
(including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant
Final Terms, or such other page, section or other part as may replace it on that information
service or such other information service, in each case, as may be nominated by the Person
providing or sponsoring the information appearing there for the purpose of displaying rates or
prices comparable to the Reference Rate;
"Relevant Time" has the meaning given in the relevant Final Terms;
"Reserved Matter" has the meaning given in Schedule 3 of the Trust Deed;
"Security Interest" means any mortgage, charge, pledge, lien or other security interest including,
without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;
"Senior Notes" means Notes which are specified in the Final Terms as being unsubordinated
Notes;
"Specified Currency" has the meaning given in the relevant Final Terms;
"Specified Denomination(s)" has the meaning given in the relevant Final Terms;
"Specified Office" has the meaning given in the Agency Agreement;
"Specified Period" has the meaning given in the relevant Final Terms;
"Subsidiary" means, in relation to any Person (the "first Person") at any particular time, any
other Person (the "second Person"):
(i) whose affairs and policies the first Person controls or has the power to control, whether
by ownership of share capital, contract, the power to appoint or remove members of the
governing body of the second Person or otherwise; or
(ii) whose financial statements are, in accordance with applicable law and generally
accepted accounting principles, consolidated with those of the first Person;
"Talon" means a talon for further Coupons;
- 33 -
"TARGET2" means the Trans European Automated Real-Time Gross Settlement Express
Transfer payment system which utilises a single shared platform and which was launched on 19
November 2007;
"TARGET Settlement Day" means any day on which TARGET2 is open for the settlement of
payment in euro;
"Treaty" means the Treaty establishing the European Communities, as amended;
"Undated Subordinated Notes" means Notes which are specified in the applicable Final Terms
as being undated subordinated Notes;
"Undated Subordinated Notes with Conditional Interest" means Notes which are specified in
the applicable Final Terms as being undated subordinated Notes with conditional interest;
"Zero Coupon Note" means a Note specified as such in the relevant Final Terms.
(b) Interpretation: In these Conditions:
(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not
applicable;
(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the
time of issue, references to Coupons shall be deemed to include references to Talons;
(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at
the time of issue, references to Talons are not applicable;
(iv) any reference to principal shall be deemed to include the Redemption Amount, any
additional amounts in respect of principal which may be payable under Condition 12
(Taxation) or any undertakings given in addition to or in substitution for that Condition,
any premium payable in respect of a Note and any other amount in the nature of
principal payable pursuant to these Conditions;
(v) any reference to interest shall be deemed to include any additional amounts in respect of
interest which may be payable under Condition 12 (Taxation) or any undertakings given
in addition to or in substitution for that Condition and any other amount in the nature of
interest payable pursuant to these Conditions;
(vi) references to Notes being "outstanding" shall be construed in accordance with the Trust
Deed;
(vii) if an expression is stated in Condition 2(a) to have the meaning given in the relevant
Final Terms, but the relevant Final Terms gives no such meaning or specifies that such
expression is "not applicable" then such expression is not applicable to the Notes;
(viii) any reference to the Agency Agreement or the Trust Deed shall be construed as a
reference to the Agency Agreement or the Trust Deed as the case may be, as amended
and or supplemented up to and including the Issue Date of the Notes; and
(ix) any reference to a person includes a reference to that persons successors and permitted
assigns.
3. Form Denomination and Title
The Notes are in bearer form, in the Specified Denomination(s) with Coupons and, if specified in
the relevant Final Terms, Talons attached at the time of issue or, in the case of Interbolsa Notes,
represented by dematerialised book-entry ("escriturais") registered ("nominativas") form as
specified in the applicable Final Terms.
In the case of a Series of Notes with more than one Specified Denomination, Notes of one
Specified Denomination will not be exchangeable for Notes of another Specified Denomination.
The Notes are Senior Notes or Subordinated Notes, as indicated in the applicable Final Terms.
- 34 -
Title to the Notes (other than Interbolsa Notes) and the Coupons will pass by delivery. The
holder of any Note or Coupon shall (except as otherwise required by law) be treated as its
absolute owner for all purposes (whether or not it is overdue and regardless of any notice of
ownership, trust or any other interest therein, any writing thereon or any notice of any previous
loss or theft thereof) and no Person shall be liable for so treating such holder. No person shall
have any right to enforce any term or condition of any Note (other than Interbolsa Notes) or the
Trust Deed under the Contracts (Rights of Third Parties) Act 1999.
Title to the Interbolsa Notes will be evidenced by book-entries in accordance with the Portuguese
Securities Code and the regulations issued by the CMVM, by Interbolsa or otherwise applicable
thereto. Each person shown in the book-entry records of a financial institution which is licensed
to act as a financial intermediary and which is an Affiliate Member of Interbolsa as having an
interest in the Interbolsa Notes shall be the holder of the principal amount of the Interbolsa Notes
recorded.
Title to the Interbolsa Notes is subject to compliance with all rules, restrictions and requirements
applicable to the activities of Interbolsa.
One or more certificates in relation to the Interbolsa Notes (each a "Certificate") will be
delivered by the relevant Affiliate Member of Interbolsa in respect of a registered holding of
Interbolsa Notes upon the request by the relevant Noteholder and in accordance with such
Affiliate Member of Interbolsa's procedures pursuant to Article 78 of the Portuguese Securities
Code.
The Interbolsa Notes will be registered in the relevant control issue account of the Issuer with
Interbolsa and will be held in control accounts held by each Affiliate Member of Interbolsa on
behalf of the Noteholders. Such control accounts will reflect at all times the aggregate number of
Interbolsa Notes held in individual securities accounts opened with the Affiliate Members of
Interbolsa by Noteholders which are clients of the Affiliate Members of Interbolsa and include
Euroclear and Clearstream, Luxembourg.
The person or entity registered in the relevant individual securities accounts of an Affiliate
Member of Interbolsa book-entry registry of the Central de Valores Mobiliários (the "Book-
Entry Registry" and each such entry therein a "Book Entry") as the holder of any Interbolsa
Note shall (except as otherwise required by law) be treated as its absolute owner for all purposes
(whether or not it is overdue and regardless of any notice of ownership, trust or any other interest
therein).
The Issuer and the Paying Agents may (to the fullest extent permitted by applicable law) deem
and treat the person or entity registered in the Book-Entry Registry as the holder of any
Interbolsa Note and the absolute owner for all purposes. Proof of such registration is made by
means of Certificate issued by the relevant Affiliate Member of Interbolsa pursuant to Article 78
of the Portuguese Securities Code.
No Noteholder will be able to transfer Interbolsa Notes, or any interest therein, except in
accordance with Portuguese law and regulations. Interbolsa Notes may only be transferred in
accordance with the applicable procedures established by the Portuguese Securities Code and the
regulations issued by the CMVM and Interbolsa.
4. Status and Guarantee
(a) Status of the Senior Notes: If the Notes are specified as Senior Notes in the applicable Final
Terms, the Notes constitute direct, general, unsubordinated and unconditional obligations of the
Issuer which will at all times rank pari passu among themselves and at least pari passu with all
other present and future unsecured obligations of the Issuer, save for such obligations as may be
preferred by provisions of law that are both mandatory and of general application.
(b) Guarantee of the Senior Notes: Where the relevant Issuer is Banif Finance and the Notes are
specified as Senior Notes in the applicable Final Terms, the Guarantor has in the Trust Deed
unconditionally and irrevocably guaranteed the due and punctual payment of all principal and
interest and other sums from time to time payable by the Issuer in respect of the Notes. This
Guarantee of the Notes constitutes direct, general, unsubordinated and unconditional obligations
- 35 -
of the Guarantor which will at all times rank at least pari passu with all other present and future
unsecured obligations of the Guarantor, save for such obligations as may be preferred by
provisions of law that are both mandatory and of general application.
(c) Status of the Subordinated Notes
(i) Dated Subordinated Notes
Dated Subordinated Notes will constitute direct, unsecured, subordinated and
unconditional obligations of the Issuer and will rank pari passu among themselves and at
least pari passu with all other present and future dated subordinated obligations of the
Issuer, save for those that have been accorded by law preferential rights.
In the event of the liquidation, bankruptcy or analogous proceedings of the Issuer, the
claims of the holders of the Dated Subordinated Notes against the Issuer will be
subordinated in right of payment to the claims of all other creditors (other than holders
of Subordinated Indebtedness, if any) of the Issuer in the manner provided in the Trust
Deed.
"Subordinated Indebtedness" means all the indebtedness of the Issuer under the terms
of which the right to payment of the person(s) entitled thereto is, or is expressed to be,
subordinated, in the event of the winding up of the Issuer, to the right to payment of the
holder of Dated Subordinated Notes and so that for the purpose of this definition
indebtedness shall include all liabilities, whether actual or contingent, under guarantees
or indemnities.
(ii) Undated Subordinated Notes
Undated Subordinated Notes will constitute direct, unsecured, subordinated and
unconditional obligations of the Issuer which are subordinated to the claims of Senior
Creditors of the Issuer and to the claims of the holders of the Dated Subordinated Notes
in that payments are conditional upon the Issuer and the Guarantor being solvent at the
time of payment and no such payment shall be made except to the extent that such
payment could be made and the Issuer and the Guarantor would still be solvent
immediately thereafter. For this purpose, each of the Issuer and the Guarantor shall be
considered to be solvent if both (i) it is able to pay its debts to Senior Creditors as they
fall due and (ii) its Assets exceed its Liabilities to its Senior Creditors.
Furthermore, in order to allow Banif and Banif Madeira as Issuers and the Guarantor to
continue its business activities (in accordance with the Bank of Portugal Regulation
12/92 as amended), any amounts which would be payable as principal or interest under
the Undated Subordinated Notes, will be available to meet the losses of the Issuer or of
the Guarantor provided: (a) that there has occurred (i) consumption of the whole of the
reserves and retained earnings; (ii) writing down of the ordinary share capital of the
Issuer and the Guarantor and (iii) writing down of the Issuer's and the Guarantor's
preference shares (including any preference share capital guaranteed by the Guarantor);
and (b) that therefore, the Issuer's and the Guarantor's total shareholders' equity and the
preference shares have been reduced to zero.
In the above circumstances where unpaid principal and interest may be used to meet the
losses of the Issuer or of the Guarantor, the unpaid amounts of interest first and then
principal will be cancelled and utilised to the extent that may be necessary to meet the
losses of the Issuer or of the Guarantor. The cancelled amounts will only be reinstated as
subordinated credits of the corresponding holders as if such amounts had never been
written down or cancelled in the event of (i) the winding-up, liquidation or bankruptcy of
the Issuer or of the Guarantor, in which event such reinstatement will be deemed to take
effect at the moment which immediately precedes the commencement of the winding-up,
liquidation or bankruptcy proceedings; or of (ii) a decision being taken by the
shareholders of the Issuer or of the Guarantor to allow a dividend to be paid or to
reinstate the cancelled or written down amounts, in each case subject to the approval of
the Bank of Portugal. In both the above cases and at all times, cancelled or written down
- 36 -
amounts will revert to being treated as subordinated credits of the corresponding holders,
without prejudice to the subordination regime applying thereto.
During any period of cancellation or writing down such cancelled or written amounts
shall not bear interest.
In the event of liquidation, bankruptcy or analogous proceedings of the Issuer, no
Noteholder (having a debt or a liability towards the Issuer) may exercise any set–off,
compensation or retention or other similar rights against any amounts held by the Issuer.
Without prejudice to the foregoing, the Undated Subordinated Notes will, in the event of
a distribution of the assets in the dissolution or liquidation of the Issuer, rank senior to
the share capital of the Issuer.
A report as to the solvency of the Issuer or the Guarantor as the case may be, by (a) two
directors of the Issuer or the Guarantor as the case may be, or, if the directors have not
reported to the Issuer or the Guarantor as the case may be, within 14 days before any
payment needs to made pursuant to Condition 6, the auditors of the Issuer or the
Guarantor as the case may be, or (b) if the Issuer or the Guarantor as the case may be, is
being wound up, its liquidator shall, in each case in the absence of manifest error, be
treated and accepted by the Issuer, the Guarantor, the Trustee and the holders of Undated
Subordinated Notes as correct and sufficient evidence thereof.
For the purposes of this Condition 4(c)(ii):
(A) "Assets" means, in the case of Banif Finance, the total gross assets of Banif
Finance and, in the case of Banif or the Guarantor, the total consolidated gross
assets of Banif and "Liabilities" means, in the case of Banif Finance, the total
gross liabilities of Banif Finance and, in the case of Banif or the Guarantor, the
total consolidated gross liabilities of Banif, all as shown by, in the case of Banif
Finance, the latest published audited balance sheet of Banif Finance and, in the
case of Banif or the Guarantor, the last published audited consolidated balance
sheet of Banif, but in each case adjusted for contingencies and for subsequent
events in such manner and to such extent as such directors, auditors or liquidator,
as the case may be, may determine to be appropriate; and
(B) "Senior Creditors" means creditors of the Issuer or, as the case may be, the
Guarantor who (x) are depositors or other unsubordinated creditors of the Issuer
or, as the case may be, the Guarantor or (y) are subordinated creditors of the
Issuer or, as the case may be, the Guarantor other than those whose claims rank
pari passu with or junior to the claims of the holders of Undated Subordinated
Notes or (in respect of the Guarantor) persons entitled to claim under the
Guarantee in respect of such Notes.
(iii) Undated Subordinated Notes with Conditional Interest
Undated Subordinated Notes with Conditional Interest will constitute direct, unsecured,
subordinated and unconditional obligations of the Issuer which are subordinated to the
claims of Senior Creditors of the Issuer and to the claims of the holders of the Dated
Subordinated Notes.
Furthermore, in order to allow Banif or Banif Madeira as Issuers and the Guarantor to
continue its business activities, any amounts which would be payable as principal or
interest under the Undated Subordinated Notes with Conditional Interest will be
available to meet the losses of the Issuer or of the Guarantor in the same proportion in
which the share capital of the Issuer or of the Guarantor is reduced so as to absorb losses
of the Issuer or of the Guarantor, as determined by the board of directors of the Issuer or
of the Guarantor.
In the above circumstances where unpaid principal and interest may be used to meet the
losses of the Issuer or of the Guarantor, the unpaid amounts of interest first and then
principal will be cancelled and utilised to the extent that may be necessary to meet the
- 37 -
losses of the Issuer or of the Guarantor and the nominal value of each Undated
Subordinated Note with Conditional Interest may be reduced in the same proportion in
which the share capital of the Issuer or the Guarantor is reduced, to a minimum of €0.01
if the own capital of the Issuer or of the Guarantor becomes lower than its share capital.
The cancelled or reduced amounts will only be reinstated as subordinated credits of the
corresponding holders as if such amounts had never been written down or cancelled (i)
to the extent of a positive variation of the own capital of the Issuer or of the Guarantor
resulting from profits or positive reserves (in accordance with the individual accounting
rules applicable to the financial statements of the Issuer or of the Guarantor on an
individual basis) in a proportionate amount relatively to the increase in the share capital
of the Issuer or of the Guarantor; or (ii) in the event of the winding-up, liquidation or
bankruptcy of the Issuer or of the Guarantor, in which event such reinstatement will be
deemed to take effect at the moment which immediately precedes the commencement of
the winding-up, liquidation or bankruptcy proceedings; or (iii) in the event of a
distribution of assets to shareholders of the Issuer or of the Guarantor, including the
payment of a dividend or, regardless of any such distribution or payment, a decision
being taken by the shareholders of the Issuer or of the Guarantor in terms which allow a
distribution of assets to shareholders of the Issuer or of the Guarantor, including the
payment of a dividend; or (iv) in the event of early redemption of the Undated
Subordinated Notes with Conditional Interest pursuant to Condition 10(c) or Condition
10(f), in each case subject to the approval of the Bank of Portugal. In the above cases
and at all times, cancelled or written down amounts will revert to being treated as
subordinated credits of the corresponding holders, without prejudice to the subordination
regime applying thereto. During any period of cancellation or writing down such
cancelled or written amounts shall not bear interest.
In determining the amount which the Undated Subordinated Notes with Conditional
Interest are affected in a proportionate amount relatively to the share capital of the Issuer
or of the Guarantor, the losses or the positive variation of the own capital (as the case
may be) of the Issuer or of the Guarantor shall be multiplied by the number resulting
from: (i) the division of the nominal amount of the Undated Subordinated Notes with
Conditional Interest; and (ii) the sum of such nominal amount and the share capital of
the Issuer or of the Guarantor.
In the event of liquidation, bankruptcy or any other analogous event or proceeding in
respect of the Issuer, claims of Noteholders against the Issuer or the Guarantor will be
limited to principal and interest due up to the Interest Payment Date which would fall
immediately after any such event or proceeding, such claims ranking:
(A) junior to all claims against the Issuer or the Guarantor (irrespectively of such
obligations being subordinated or unsubordinated), including claims in respect
of Dated Subordinated Notes and Undated Subordinated Notes in relation to
which a higher ranking has been granted;
(B) pari passu with other claims against the Issuer or the Guarantor ranking equally
with the claims under the Undated Subordinated Notes with Conditional Interest
(if any);
(C) senior to claims against the Issuer or the Guarantor arising out of or in
connection with preference or ordinary shares of the Issuer or the Guarantor and
other securities with lower ranking (if any).
In addition no Noteholder (having a debt or a liability towards the Issuer or the
Guarantor) may exercise any set–off, compensation or retention or other similar rights
against any amounts held by the Issuer or the Guarantor.
If so specified in the Final Terms, the payment of interest under Undated Subordinated
Notes with Conditional Interest shall be conditional and subject to the discretion of the
Issuer or the Guarantor. Accordingly, in the absence of any Limitation on Payment of
Interest, any payment of interest thereunder will be dependent upon the approval of a
- 38 -
resolution of the board of directors of the Issuer or the Guarantor and subject to the terms
and conditions set out in the applicable Final Terms.
The Issuer or the Guarantor will, in any case and regardless of any resolution of the
board of directors of the Issuer or the Guarantor, be prevented from paying interest on
Undated Subordinated Notes with Conditional Interest, and such interest shall not be due
and payable, in any of the following situations (each a "Limitation on Payment of
Interest"):
(A) if so specified in the final terms, to the extent that, and up to the amount in
which, the sum of the eventual interest payment with (i) the amount of any
dividends paid, or approved and pending payment, and guaranteed payments
made by the Issuer or the Guarantor, in respect of preference shares issued by a
subsidiary, and (ii) the amount of any dividends in respect of preference shares
issued by the Issuer or the Guarantor or its subsidiaries and guaranteed
payments which rank equally as to participation in profits, in all cases if
liquidated in the financial year in course or due in the same financial year,
exceeds the Distributable Funds of the Issuer or the Guarantor; or
(B) if the Issuer or the Guarantor fails to comply with the Own Funds Requirements
Regulation or the payment of such interest would result for the Issuer or the
Guarantor in a failure to comply with the Own Funds Requirements Regulation;
or
(C) if, in the opinion of (i) the board of directors of the Issuer or the Guarantor or (ii)
the Bank of Portugal, such payment would put at risk the compliance by the
Issuer or the Guarantor with the Own Funds Requirements Regulation taking
into consideration the past and expected evolution of the financial situation of
the Issuer or the Guarantor.
In the event that interest on Undated Subordinated Notes with Conditional Interest may
not become integrally due on an Interest Payment Date and, consequently, the respective
payment may not be integrally effected on an Interest Payment Date due to any
Limitation on Payment of Interest, such interest shall become due and the respective
payment shall be effected to the extent permitted by the relevant Limitation on Payment
of Interest.
For the purposes of this Condition 4(c)(iii):
"Distributable Funds" means, in relation to any financial year of the Issuer or, as the
case may be, the Guarantor the amount calculated by reference to the end of the previous
financial year corresponding to the sum of accumulated retained results with any other
reserves and amounts which may be distributable to shareholders of the Issuer or, as the
case may be, the Guarantor pursuant to Portuguese law, plus or less, respectively, the
amount of any profits or losses of such financial year, net of the amounts to be used for
(i) creation or increase of mandatory, legal and statutory reserves and (ii) distribution to
employees and directors of the Issuer or, as the case may be, the Guarantor, in
accordance with the articles of association of the Issuer or, as the case may be, the
Guarantor, but prior to deduction of the amount of any dividends or other payments in
respect of the ordinary shares of the Issuer or, as the case may be, the Guarantor or any
other subordinated securities ranking junior to the Undated Subordinated Notes with
Conditional Interest.
"Senior Creditors" means creditors of the Issuer or, as the case may be, the Guarantor
that (x) are depositors or other unsubordinated creditors of the Issuer or, as the case may
be, the Guarantor or (y) are subordinated creditors of the Issuer or, as the case may be,
the Guarantor other than those whose claims rank pari passu with or junior to the claims
of the holders of Undated Subordinated Notes with Conditional Interest.
"Own Funds Requirements Regulation" means the legislation, regulations,
requirements, guidelines and policies in force from time to time in relation to own funds
- 39 -
requirements, including those issued by the Bank of Portugal or applicable to credit
institutions in Portugal as well as those which may be specifically applied to the Issuer
or, as the case may be, the Guarantor.
(d) Status of the Subordinated Guarantee
(i) If the Notes are Dated Subordinated Notes issued by Banif Finance, the obligation of the
Guarantor, acting under the Guarantee constitutes direct, unsecured, subordinated and
unconditional obligations of the Guarantor but, in the event of the dissolution,
bankruptcy or liquidation or analogous proceedings of the Guarantor, subordinated in
right of the payment to the claims of the depositors and other unsecured creditors of the
Guarantor (other than creditors in respect of indebtedness of the Guarantor which is
subordinated to at least the same extent as the obligations of the Guarantor under its
guarantee in respect of such Dated Subordinated Notes); and
(ii) If the Notes are Undated Subordinated Notes issued by Banif Finance, the obligation of
the Guarantor, under the Guarantee constitutes direct, unsecured, subordinated and
unconditional obligations of the Guarantor which, to the extent permitted by Portuguese
law, are subordinated to the claims of Senior Creditors of the Guarantor, and to the
claims of the holders of the Dated Subordinated Notes in that payment under the
guarantee is conditional upon the Guarantor being solvent at the time of payment and
that no such payment shall be made except to the extent that the Guarantor could make
such payment and still be solvent immediately thereafter. For this purpose, the Guarantor
shall be considered to be solvent if both (a) it is able to pay its debts to the Senior
Creditors of the Guarantor as they fall due and (b) its Assets exceed its Liabilities to
Senior Creditors of the Guarantor.
Without prejudice to the foregoing, the obligations of the Guarantor, under the
Guarantee in respect of Undated Subordinated Notes issued by Banif Finance will, in the
event of a distribution of the assets in the dissolution or liquidation of the Guarantor,
rank senior to the share capital of the Guarantor.
A report as to the solvency of the Guarantor by (a) two directors of the Guarantor or, if
the directors have not reported to the Guarantor within 14 days before any payment
needs to be made pursuant to this Condition 4(d)(ii), the auditors of the Guarantor or (b)
if the Guarantor is being wound up, its liquidator shall, in each case in the absence of
manifest error, be treated and accepted by Banif Finance, the Guarantor, the Trustee and
the holders of Undated Subordinated Notes issued by Banif Finance as correct and
sufficient evidence thereof.
For the purposes of this Condition 4(d)(ii):
(A) "Assets" means the total consolidated gross assets of the Guarantor and
"Liabilities" means the total consolidated gross liabilities of the Guarantor, all
as shown by the latest published audited consolidated balance sheet of the
Guarantor but adjusted for contingencies and for subsequent events in such
manner and to such extent as such directors, auditors or liquidator, as the case
may be, may determine to be appropriate; and
(B) "Senior Creditors of the Guarantor" means creditors of the Guarantor who (x)
are depositors or other unsubordinated creditors of the Guarantor or (y) are
subordinated creditors of the Guarantor other than those whose claims rank pari
passu with or junior to the claims of the holders of Undated Subordinated Notes
and persons entitled to claim under the Guarantee in respect of such Notes.
The obligations of the Guarantor under the Guarantee in respect of Undated
Subordinated Notes issued by Banif Finance are conditional upon the Guarantor being
solvent immediately before and after payment by the Guarantor. Any amount, which
might otherwise have been allocated in or towards payment by Banif Finance of
principal or interest in respect of the Undated Subordinated Notes, will be available to
meet the losses of the Guarantor.
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Furthermore, in order to allow the Guarantor to continue its business activities (in
accordance with the Bank of Portugal Regulation 12/92), any amounts which, under the
Conditions, would be payable as principal or interest under the Guarantee in respect of
Undated Subordinated Notes issued by Banif Finance, will be available to meet the
losses of the Guarantor, provided: (a) that there has occurred (i) utilisation of the whole
of the reserves and retained earnings; (ii) writing down of the ordinary share capital of
the Guarantor and (iii) writing down of the Guarantor's preference shares (including any
preference share capital guaranteed by the Guarantor); and (b) that therefore the
Guarantor's total shareholders' equity and the preference share interests of Banif have
been reduced to zero.
In the above circumstances where unpaid principal and interest may be used to meet the
losses of the Guarantor, the unpaid amounts of interest first and then principal will be
cancelled and utilised to the extent that may be necessary to meet the losses of the
Guarantor. The cancelled amounts will only be reinstated as subordinated credits to the
corresponding holders as if such amounts had never been written down or cancelled in
the event of (i) the winding-up, liquidation or bankruptcy of the Guarantor, in which
event such reinstatement will be deemed to take effect at the moment which immediately
precedes the commencement of the winding-up, liquidation or bankruptcy proceedings;
or of (ii) a decision being taken by the shareholders of the Issuer or of the Guarantor to
allow a dividend to be paid or to reinstate the cancelled or written down amounts, in
each case subject to the approval of the Bank of Portugal in both the above cases and at
all times, cancelled or written down amounts will revert to being treated as subordinated
credits of the corresponding holders, without prejudice to the subordination regime
applying thereto.
During any period of cancellation or writing down such cancelled or written down
amounts shall not bear interest.
In the event of liquidation, bankruptcy or analogous proceedings of the Guarantor, no
Noteholder (having a debt or a liability towards the Guarantor) may exercise any set-off,
compensation or retention or other similar rights against any amounts held by the
Guarantor.
(iii) If the Notes are Undated Subordinated Notes with Conditional Interest issued by Banif
Finance, the obligation of the Guarantor, under the Guarantee, constitutes direct,
unsecured, subordinated and unconditional obligations of the Guarantor which, to the
extent permitted by Portuguese law, are subordinated to the claims of Senior Creditors of
the Guarantor, and to the claims of the holders of the Dated Subordinated Notes.
Furthermore, in order to allow the Guarantor to continue its business activities, any
amounts which would be payable as principal or interest under the Undated
Subordinated Notes with Conditional Interest will be available to meet the losses of the
Guarantor in the same proportion in which the share capital of the Guarantor is reduced
so as to absorb losses of the Guarantor, as determined by the board of directors of the
Guarantor.
In the above circumstances where unpaid principal and interest may be used to meet the
losses of the Guarantor, the unpaid amounts of interest first and then principal will be
cancelled and utilised to the extent that may be necessary to meet the losses of the
Guarantor and the nominal value of each Undated Subordinated Note with Conditional
Interest may be reduced in the same proportion in which the share capital of the
Guarantor is reduced to a minimum of €0.01 if the own capital of the Guarantor becomes
lower than its share capital. The cancelled or reduced amounts will only be reinstated as
subordinated credits of the corresponding holders as if such amounts had never been
written down or cancelled (i) to the extent of a positive variation of the own capital of
the Guarantor resulting from profits or positive reserves (in accordance with the
individual accounting rules applicable to the financial statements of the Guarantor on an
individual basis) in a proportionate amount relatively to the increase in the share capital
of the Guarantor; or (ii) in the event of the winding-up, liquidation or bankruptcy of the
Guarantor, in which event such reinstatement will be deemed to take effect at the
- 41 -
moment which immediately precedes the commencement of the winding-up, liquidation
or bankruptcy proceedings; or (iii) in the event of a distribution of assets to shareholders
of the Guarantor, including the payment of a dividend or, regardless of any such
distribution or payment, a decision being taken by the shareholders of the Guarantor in
terms which allow a distribution of assets to shareholders of the Guarantor, including the
payment of a dividend; or (iv) in the event of early redemption of the Undated
Subordinated Notes with Conditional Interest pursuant to Condition 10(c) or Condition
10(f), in each case subject to the approval of the Bank of Portugal. In the above cases
and at all times, cancelled or written down amounts will revert to being treated as
subordinated credits of the corresponding holders, without prejudice to the subordination
regime applying thereto. During any period of cancellation or writing down such
cancelled or written amounts shall not bear interest.
In determining the amount in which the Undated Subordinated Notes with Conditional
Interest are affected in a proportionate amount relatively to the share capital of the
Guarantor, the losses or the positive variation of the own capital (as the case may be) of
the Guarantor shall be multiplied by the number resulting from the division of: (i) the
nominal amount of the Undated Subordinated Notes with Conditional Interest; and (ii)
the sum of such nominal amount and the share capital of the Guarantor.
In the event of liquidation, bankruptcy or any other analogous event or proceeding in
respect of the Guarantor, claims of Noteholders against the Guarantor will be limited to
principal and interest due up to the Interest Payment Date which would fall immediately
after any such event or proceeding, such claims ranking:
(A) junior to all claims against the Guarantor (irrespectively of such obligations
being subordinated or unsubordinated), including claims in respect of Dated
Subordinated Notes and Undated Subordinated Notes in relation to which a
higher ranking has been granted;
(B) pari passu with other claims against the Guarantor ranking equally with the
claims under the Undated Subordinated Notes with Conditional Interest (if any);
(C) senior to claims against the Guarantor arising out of or in connection with
preference or ordinary shares of the Guarantor and other securities with lower
ranking (if any).
5. Negative Pledge
This Condition 5 shall apply only to Senior Notes and references to "Notes" and "Noteholders"
shall be construed accordingly.
So long as any Note remains outstanding (as defined in the Trust Deed or, in respect of Interbolsa
Notes, as defined in the Agency Agreement as amended by the Interbolsa Notes Agency
Agreement), neither the Issuer nor, if applicable, the Guarantor shall, and the Issuer and, if
applicable, the Guarantor shall procure that none of their respective Subsidiaries will, create or
permit to subsist any Security Interest upon the whole or any part of its present or future
undertaking, assets or revenues (including uncalled capital) to secure any Indebtedness (except
where this is Permitted Indebtedness) or Guarantee of Indebtedness (except where this is
Permitted Indebtedness) without (a) (except in the case of Interbolsa Notes) at the same time or
prior thereto securing the Notes equally and rateably therewith to the satisfaction of the Trustee,
(b) (except in the case of Interbolsa Notes) providing such other security for the Notes as the
Trustee may in its absolute discretion consider to be not materially less beneficial to the interests
of the Noteholders or (c) (in the case of any Notes, including Interbolsa Notes) as may be
approved by an Extraordinary Resolution of Noteholders (as described in Condition 17 and in the
Trust Deed or, in respect of Interbolsa Notes, in the Agency Agreement as amended by the
Interbolsa Notes Agency Agreement), save that the Issuer or, if applicable, the Guarantor, may
create or permit to subsist a Security Interest to secure Indebtedness and/or any Guarantee of
Indebtedness, (but without the obligation to accord or provide to the Noteholders, an equal and
rateable interest in the same or such other security as aforesaid) where such security interest:
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(a) is only over such part of the undertaking or assets, present or future, of the Issuer or of
the Guarantor, if applicable, that belonged to a company whose assets or undertaking
have become part of the assets or undertakings of the Issuer or of the Guarantor, if
applicable, pursuant to an amalgamation or merger of such company with the Issuer or
the Guarantor, if applicable, which Security Interest exists at the time of such
amalgamation or merger and was not created in contemplation thereof or in connection
therewith and the principal, nominal or capital amount secured at the time of such
amalgamation or merger is not thereafter increased; or
(b) is created over an asset or assets specifically to secure Indebtedness that was granted to
the Issuer or Guarantor for the specific purposes of the Issuer or Guarantor to acquire the
asset or assets that are the subject of the Security Interest in question; or
(c) is created pursuant to any securitisation, asset-backed financing or like arrangement in
accordance with normal market practice and whereby the amount of Indebtedness
secured by such Security Interest or in respect of which any guarantee or indemnity is
secured by such Security Interest is limited to the value of the assets secured; or
(d) is granted in relation to mortgage-backed bonds ("Obrigações hipotecárias") and/or
covered bonds issued by Banif under Portuguese law.
6. Fixed Rate Note Provisions
(a) Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the
Fixed Rate Note Provisions are specified in the relevant Final Terms as being applicable.
(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of
Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11
(Payments). Each Note will cease to bear interest from the due date for final redemption unless,
upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in
which case it will continue to bear interest in accordance with this Condition 6 (as well after as
before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of
such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day
which is seven days after the Principal Paying Agent or as the case may be the Trustee has
notified the Noteholders that it has received all sums due in respect of the Notes up to such
seventh day (except to the extent that there is any subsequent default in payment).
(c) Fixed Coupon Amount: The amount of interest payable in respect of each Note for any Interest
Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one
Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant
Specified Denomination.
(d) Calculation of interest amount: The amount of interest payable in respect of each Note for any
period for which a Fixed Coupon Amount is not specified shall be calculated by applying the
Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count
Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half
a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the
Specified Denomination of such Note divided by the Calculation Amount. For this purpose a
"sub-unit" means, in the case of any currency other than euro, the lowest amount of such
currency that is available as legal tender in the country of such currency and, in the case of euro,
means one cent. Interest on Interbolsa Notes will be calculated on the full nominal amount
outstanding of the Fixed Rate Notes (or, if they are Partly Paid Notes, the full amount paid up)
and will be paid to the Affiliate Members of Interbolsa for distribution by them to the accounts of
entitled Noteholders in accordance with Interbolsa's usual rules and operating procedures.
7. Floating Rate Note and Index-Linked Interest Note Provisions
(a) Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is
applicable to the Notes only if the Floating Rate Note Provisions or the Index-Linked Interest
Note Provisions are specified in the relevant Final Terms as being applicable.
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(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of
Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11
(Payments). Each Note will cease to bear interest from the due date for final redemption unless,
upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in
which case it will continue to bear interest in accordance with this Condition (as well after as
before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of
such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day
which is seven days after the Principal Paying Agent or as the case may be the Trustee has
notified the Noteholders that it has received all sums due in respect of the Notes up to such
seventh day (except to the extent that there is any subsequent default in payment).
(c) Screen Rate Determination: If Screen Rate Determination is specified in the relevant Final Terms
as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest
applicable to the Notes for each Interest Period will be determined by the Calculation Agent on
the following basis:
(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, the
Calculation Agent will determine the Reference Rate which appears on the Relevant
Screen Page as of the Relevant Time on the relevant Interest Determination Date;
(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the
Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on
the relevant Interest Determination Date;
(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii)
above, fewer than two such rates appear on that page or if, in either case, the Relevant
Screen Page is unavailable, the Calculation Agent will:
(A) request the principal Relevant Financial Centre office of each of the Reference
Banks to provide a quotation of the Reference Rate at approximately the
Relevant Time on the Interest Determination Date to prime banks in the
Relevant Financial Centre interbank market in an amount that is representative
for a single transaction in that market at that time; and
(B) determine the arithmetic mean of such quotations; and
(iv) if fewer than two such quotations are provided as requested, the Calculation Agent will
determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as
determined by the Calculation Agent) quoted by major banks in the Principal Financial
Centre of the Specified Currency, selected by the Calculation Agent, at approximately
11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the
first day of the relevant Interest Period for loans in the Specified Currency to leading
European banks for a period equal to the relevant Interest Period and in an amount that is
representative for a single transaction in that market at that time,
and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as
the case may be) the arithmetic mean so determined; provided, however, that if the Calculation
Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance
with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the
Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may
be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest
Period.
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(d) ISDA Determination: If ISDA Determination is specified in the relevant Final Terms as the
manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to
the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate
where "ISDA Rate" in relation to any Interest Period means a rate equal to the Floating Rate (as
defined in the ISDA Definitions) that would be determined by the Calculation Agent under an
interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that
interest rate swap transaction under the terms of an agreement incorporating the ISDA
Definitions and under which:
(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the
relevant Final Terms;
(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the
relevant Final Terms; and
(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant
Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a
currency, the first day of that Interest Period or (B) in any other case, as specified in the
relevant Final Terms.
(e) Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant
Final Terms as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest
Period will be determined in the manner specified in the relevant Final Terms.
(f) Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of
Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be
greater than the maximum or be less than the minimum so specified.
(g) Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time
at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the
Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount
will be calculated by applying the Rate of Interest for such Interest Period to the Calculation
Amount during such Interest Period, multiplying the product by the relevant Day Count Fraction
rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit
being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified
Denomination of the relevant Note divided by the Calculation Amount. For this purpose a "sub-
unit" means, in the case of any currency other than euro, the lowest amount of such currency that
is available as legal tender in the country of such currency and, in the case of euro, means one
cent. Interest on Interbolsa Notes will be calculated on the full nominal amount outstanding of
the relevant Notes (or, if they are Partly Paid Notes, the full amount paid up) and will be paid to
the Affiliate Members of Interbolsa for distribution by them to the accounts of entitled
Noteholders in accordance with Interbolsa's usual rules and operating procedures.
(h) Calculation of other amounts: If the relevant Final Terms specifies that any other amount is to be
calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the
time or times at which any such amount is to be determined, calculate the relevant amount. The
relevant amount will be calculated by the Calculation Agent in the manner specified in the
relevant Final Terms.
(i) Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount
determined by it, together with the relevant Interest Payment Date, and any other amount(s)
required to be determined by it together with any relevant payment date(s) to be notified to the
Paying Agents and each listing authority, stock exchange and/or quotation system (if any) by
which the Notes have then been admitted to listing, trading and/or quotation as soon as
practicable after such determination but (in the case of each Rate of Interest, Interest Amount and
Interest Payment Date) in any event not later than the first day of the relevant Interest Period.
Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be
entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without
notice in the event of an extension or shortening of the relevant Interest Period. If the Calculation
Amount is less than the minimum Specified Denomination the Calculation Agent shall not be
- 45 -
obliged to publish each Interest Amount but instead may publish only the Calculation Amount
and the Interest Amount in respect of a Note having the minimum Specified Denomination.
(j) Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations
and decisions given, expressed, made or obtained for the purposes of this Condition by the
Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Guarantor
(if the Notes are guaranteed), the Trustee, the Common Representative, the Paying Agents, the
Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will
attach to the Calculation Agent or the Trustee in connection with the exercise or non-exercise by
it of its powers, duties and discretions for such purposes.
(k) Determination or Calculation by Trustee: If the Calculation Agent fails at any time to determine
a Rate of Interest or to calculate an Interest Amount or Additional Interest Amount, the Trustee
(except for Interbolsa Notes) or (in respect of Interbolsa Notes), any bank designated by the
Common Representative for such purpose or, if no such bank is designated, a meeting of the
Noteholders by Extraordinary Resolution will determine such Rate of Interest and make such
determination or calculation which shall be deemed to have been made by the Calculation Agent.
In doing so, the Trustee or the designated bank on the meeting of Noteholders (as the case may
be) shall apply all of the provisions of these conditions with any necessary consequential
amendments to the extent that, in its sole opinion and with absolute discretion, it can do so and in
all other respects it shall do so in such manner as it shall deem fair and reasonable in all the
circumstances and will not be liable for any loss, liability, cost, charge or expense which may
arise as a result thereof. Any such determination or calculation made by the Trustee or the
designated bank on the meeting of Noteholders (as the case may be) shall be binding on the
Issuer, the Guarantor (if the Notes are guaranteed), the Paying Agents, the Noteholders and the
Couponholders.
8. Zero Coupon Note Provisions
(a) Application: This Condition 8 is applicable to the Notes only if the Zero Coupon Note Provisions
are specified in the relevant Final Terms as being applicable.
(b) Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero
Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an
amount equal to the sum of:
(i) the Reference Price; and
(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference
Price on the basis of the relevant Day Count Fraction from (and including) the Issue
Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in
respect of such Note up to that day are received by or on behalf of the relevant
Noteholder and (ii) the day which is seven days after the Principal Paying Agent, or as
the case may be, the Trustee, has notified the Noteholders that it has received all sums
due in respect of the Notes up to such seventh day (except to the extent that there is any
subsequent default in payment).
9. Dual Currency Note Provisions
This Condition 9 does not apply to Interbolsa Notes.
(a) Application: This Condition 9 is applicable to the Notes only if the Dual Currency Note
Provisions are specified in the relevant Final Terms as being applicable.
(b) Rate of Interest: If the rate or amount of interest falls to be determined by reference to an
exchange rate, the rate or amount of interest payable shall be determined in the manner specified
in the relevant Final Terms.
10. Redemption and Purchase
(a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will
be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in
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Condition 11 (Payments). If the Note is an Undated Subordinated Note, it has no final maturity
and is only redeemable in accordance with the following provisions of this Condition 10 or
Condition 13(B) (Events of Default relating to Subordinated Notes).
(b) Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in whole, but
not in part (after obtaining the consent of the Bank of Portugal whenever it is required in the case
of Subordinated Notes):
(i) at any time (if neither the Floating Rate Note Provisions or the Index-Linked Interest
Note Provisions are specified in the relevant Final Terms as being applicable); or
(ii) on any Interest Payment Date (if the Floating Rate Note Provisions or the Index-Linked
Interest Note Provisions are specified in the relevant Final Terms as being applicable),
on giving not less than 30 nor more than 60 days' notice to the Noteholders (which
notice shall be irrevocable), at their Early Redemption Amount (Tax), together with
interest accrued (if any) to the date fixed for redemption, if:
(A) the Issuer has or will become obliged to pay additional amounts as provided or
referred to in Condition 12 (Taxation) as a result of any change in, or
amendment to, the laws or regulations of the country of incorporation of the
Issuer, or if different, the country of tax residence of the Issuer, or any political
subdivision or any authority thereof or therein having power to tax, or any
change in the application or official interpretation of such laws or regulations
(including a holding by a court of competent jurisdiction), which change or
amendment becomes effective on or after the date of issue of the first Tranche
of the Notes; and
(B) such obligation cannot be avoided by the Issuer taking reasonable measures
available to it,
provided, however, that no such notice of redemption shall be given earlier than:
(1) where the Notes may be redeemed at any time, 90 days prior to the
earliest date on which the Issuer would be obliged to pay such
additional amounts if a payment in respect of the Notes were then due;
or
(2) where the Notes may be redeemed only on an Interest Payment Date, 60
days prior to the Interest Payment Date occurring immediately before
the earliest date on which the Issuer would be obliged to pay such
additional amounts if a payment in respect of the Notes were then due.
Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall
deliver to the Agent and the Common Representative (in respect of Interbolsa Notes) or to the
Trustee (in respect of Notes other than Interbolsa Notes) (A) a certificate satisfactory to the
Agent and the Common Representative (in case of Interbolsa Notes) or the Trustee (in case of
Notes other than Interbolsa Notes) signed by two directors of the Issuer stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer so to redeem have occurred of and (B) an opinion
of independent legal advisers of recognised standing to the effect that the Issuer has or will
become obliged to pay such additional amounts as a result of such change or amendment (and the
Trustee or, as the case may be, the Agent and the Common Representative, shall be entitled to
accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out
above in which event it shall be conclusive and binding on the Noteholders and the
Couponholders). Upon the expiry of any such notice as is referred to in this Condition 10(b), the
Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b).
(c) Redemption at the option of the Issuer: If the Call Option is specified in the relevant Final Terms
as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so
specified in the relevant Final Terms, in part (after obtaining the consent of the Bank of Portugal
whenever it is required in the case of Subordinated Notes) on any Optional Redemption Date
(Call) at the relevant Optional Redemption Amount (Call) on the Issuer's giving not less than 30
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nor more than 60 days' notice to the Noteholders and having notified the Agent and the Common
Representative (in respect of Interbolsa Notes) or the Trustee (in respect of Notes other than
Interbolsa Notes) prior to the provision of such notice (which notice shall be irrevocable and
shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such
notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount
(Call) plus accrued interest (if any) to such date).
(d) Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with
Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be
selected by the drawing of lots in such place as the Trustee (in respect of Notes other than
Interbolsa Notes), or, as the case may be, the Common Representative (in respect of Interbolsa
Notes), approves and in such manner as the Trustee or, as the case may be, the Common
Representative considers appropriate, subject to compliance with applicable law and the rules of
each listing authority, stock exchange and/or quotation system (if any) by which the Notes have
then been admitted to listing, trading and/or quotation and in accordance with the rules of
Interbolsa, in the case of Redeemed Notes that are Interbolsa Notes, and the notice to
Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify
the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or
Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional
Redemption Amount (Call) shall in no event be greater than the maximum or be less than the
minimum so specified.
(e) Redemption at the option of Noteholders: If the Put Option is specified in the relevant Final
Terms (provided that a Put Option may not be specified if this is a Subordinated Note) as being
applicable, the Issuer shall, at the option of the holder of any Note redeem such Note on the
Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant
Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order
to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than
30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any
Paying Agent such Note together with all unmatured Coupons relating thereto and a duly
completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent
with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the
depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in
accordance with this Condition 10(e), may be withdrawn; provided, however, that if, prior to the
relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable
or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put),
payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent
shall mail notification thereof to the depositing Noteholder at such address as may have been
given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its
Specified Office for collection by the depositing Noteholder against surrender of the relevant Put
Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance
with this Condition 10(e), the depositor of such Note and not such Paying Agent shall be deemed
to be the holder of such Note for all purposes. If the Note is an Interbolsa Note, in order to
exercise the right to require redemption of this Note the holder of this Note must, during normal
business hours on a day falling within the notice period, deliver to the Portuguese Paying Agent a
Certificate and a duly completed and signed notice of exercise in the form obtainable from the
specified office of the Portuguese Paying Agent (an "Interbolsa Notes Put Option Notice", each
Interbolsa Notes Put Notice or Put Option Notice being a "Put Notice") and in which the holder
of the Notes must specify a bank account or, if payment is required to be made by cheque, an
address to which payment is to be made under this Condition.
(f) Redemption due to Own Funds Non-Qualification Event
In the event of occurrence of an Own Funds Non-Qualification Event in respect of the Dated
Subordinated Notes, the Undated Subordinated Notes or the Undated Subordinated Notes with
Conditional Interest, such Notes may be redeemed at any time by the Issuer in whole, but not in
part (subject to the prior consent of the Bank of Portugal in the situations described in (b) below
only), on giving no less than 15 nor more than 30 days’ notice to the Noteholders (which notice
shall be irrevocable), at their Early Redemption Amount, together with interest accrued (if any)
to the date fixed for redemption.
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For the purposes of this Condition 10(f):
"Own Funds Non-Qualification Event" means:
(a) the non-acceptance by the Bank of Portugal of the qualification of:
(i) the Dated Subordinated Notes as lower tier two capital (fundos próprios
complementares); or
(ii) the Undated Subordinated Notes as upper tier two capital (fundos próprios
complementares); or
(iii) the Undated Subordinated Notes with Conditional Interest as tier one capital
(fundos próprios de base),
of the Issuer;or
(b) any change in, or amendment to, any applicable law or regulation of the Republic of
Portugal, or any political subdivision or any authority thereof or therein, or any change
in the application or official interpretation of such laws or regulations (including a
decision by a court of competent jurisdiction or a competent regulatory authority), as a
result of which and for the purpose of the Own Funds Requirements Regulation, the
board of directors of the Issuer or the Guarantor (as the case may be) decides, or the
Bank of Portugal makes public or notifies the Issuer or the Guarantor (as the case may
be), that the qualification referred to in (a) above in respect of each of the Dated
Subordinated Notes, the Undated Subordinated Notes and the Undated Subordinated
Notes with Conditional Interest ceases to be applicable.
(g) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as
provided in paragraphs (a) to (f) above.
(h) Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Final Terms,
the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the
Maturity Date shall be an amount equal to the sum of:
(i) the Reference Price; and
(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference
Price from (and including) the Issue Date to (but excluding) the date fixed for
redemption or (as the case may be) the date upon which the Note becomes due and
payable.
Where such calculation is to be made for a period which is not a whole number of years, the
calculation in respect of the period of less than a full year shall be made on the basis of such Day
Count Fraction as may be specified in the Final Terms for the purposes of this Condition 10(h)
or, if none is so specified, a Day Count Fraction of 30E/360.
(i) Purchase: The Issuers, the Guarantor or any of their respective Subsidiaries may (after obtaining
the consent of the Bank of Portugal whenever it is required in the case of Subordinated Notes) at
any time purchase Notes in the open market or otherwise and at any price, provided that all
unmatured Coupons are purchased therewith.
(j) Cancellation: All Notes so redeemed or purchased by an Issuer, the Guarantor or any of their
respective Subsidiaries and any unmatured Coupons attached to or surrendered with them shall
be cancelled and may not be reissued or resold. All Interbolsa Notes which are redeemed or
purchased by or on behalf of the Issuer or the Guarantor or any of its Subsidiaries will forthwith
be cancelled by Interbolsa following receipt by Interbolsa of notice thereof by the Portuguese
Paying Agent, and accordingly such Interbolsa Notes may not be held, reissued or resold and
shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to
be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the
purposes of Condition 17 or the Agency Agreement, as amended by the Interbolsa Notes Agency
Agreement.
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11. Payments
(a) Principal: Payments of principal shall be made only against presentation and (provided that
payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside
the United States by cheque drawn in the currency in which the payment is due on, or by transfer
to an account denominated in that currency (or, if that currency is euro, any other account to
which euro may be credited or transferred) and maintained by the payee with, a bank in the
Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing
branch of a bank in the City of London).
(b) Interest: Payments of interest shall, subject to paragraph (h) below, be made only against
presentation and (provided that payment is made in full) surrender of the appropriate Coupons at
the Specified Office of any Paying Agent outside the United States in the manner described in
paragraph (a) above.
(c) Payments in New York City: Payments of principal or interest may be made at the Specified
Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside
the United States with the reasonable expectation that such Paying Agents will be able to make
payment of the full amount of the interest on the Notes in the currency in which the payment is
due when due, (ii) payment of the full amount of such interest at the offices of all such Paying
Agents is illegal or effectively precluded by exchange controls or other similar restrictions and
(iii) payment is permitted by applicable United States law.
(d) Payments in respect of Interbolsa Notes: Payment of principal and interest in respect of
Interbolsa Notes will be (i) credited by the Issuer in the payment current account held by the
Portuguese Paying Agent with the Bank of Portugal, (ii) transferred, on the payment date and
according to the applicable procedures and regulations of Interbolsa, from the payment current
account held by the Portuguese Paying Agent with the Bank of Portugal to the payment current
accounts held by the Affiliate Members of Interbolsa with the Bank of Portugal, and thereafter
(iii) transferred by such Affiliate Members of Interbolsa from the respective payment current
accounts held with the Bank of Portugal to the accounts of the Noteholders or of Euroclear or
Clearstream, Luxembourg with such Affiliate Members of Interbolsa, as the case may be.
(e) Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to
any applicable fiscal or other laws and regulations in the place of payment, but without prejudice
to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the
Noteholders or Couponholders in respect of such payments.
(f) Deductions for unmatured Coupons: If the relevant Final Terms specifies that the Fixed Rate
Note Provisions are applicable and a Note is presented without all unmatured Coupons relating
thereto:
(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of
principal due for payment, a sum equal to the aggregate amount of the missing Coupons
will be deducted from the amount of principal due for payment; provided, however, that
if the gross amount available for payment is less than the amount of principal due for
payment, the sum deducted will be that proportion of the aggregate amount of such
missing Coupons which the gross amount actually available for payment bears to the
amount of principal due for payment;
(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal
due for payment:
(A) so many of such missing Coupons shall become void (in inverse order of
maturity) as will result in the aggregate amount of the remainder of such
missing Coupons (the "Relevant Coupons") being equal to the amount of
principal due for payment; provided, however, that where this sub-paragraph
would otherwise require a fraction of a missing Coupon to become void, such
missing Coupon shall become void in its entirety; and
(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the
amount of principal due for payment) will be deducted from the amount of
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principal due for payment; provided, however, that, if the gross amount
available for payment is less than the amount of principal due for payment, the
sum deducted will be that proportion of the aggregate amount of the Relevant
Coupons (or, as the case may be, the amount of principal due for payment)
which the gross amount actually available for payment bears to the amount of
principal due for payment.
Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above
against presentation and (provided that payment is made in full) surrender of the relevant missing
Coupons.
(g) Unmatured Coupons void: If the relevant Final Terms specifies that this Condition 11(f) is
applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions
are applicable, on the due date for final redemption of any Note or early redemption of such Note
pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(e) (Redemption at the
option of Noteholders), Condition 10(c) (Redemption at the option of the Issuer) or Condition 13
(Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall
become void and no payment will be made in respect thereof.
(h) Payments on business days: If the due date for payment of any amount in respect of any Note or
Coupon is not a Payment Business Day in the place of presentation, the holder shall not be
entitled to payment in such place of the amount due until the next succeeding Payment Business
Day in such place and shall not be entitled to any further interest or other payment in respect of
any such delay.
(i) Payments other than in respect of matured Coupons: Payments of interest other than in respect of
matured Coupons shall be made only against presentation of the relevant Notes at the Specified
Office of any Paying Agent outside the United States (or in New York City if permitted by
paragraph (c) above).
(j) Partial payments: If a Paying Agent makes a partial payment in respect of any Note or Coupon
presented to it for payment, such Paying Agent will endorse thereon a statement indicating the
amount and date of such payment.
(k) Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the
time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such
Coupon Sheet may be exchanged at the Specified Office of the Principal Paying Agent for a
further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in
respect of which claims have already become void pursuant to Condition 14 (Prescription)).
Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note
shall become void and no Coupon will be delivered in respect of such Talon.
12. Taxation
(a) Gross up: All payments of principal and interest in respect of the Notes and the Coupons by or on
behalf of the Issuer or, if applicable, the Guarantor shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or
on behalf of the country of incorporation of the Issuer, or, if applicable, the Guarantor, or if
different, the country of tax residence of the Issuer, or, if applicable, the Guarantor (in the case of
the Issuer, the "Issuer Taxing Jurisdiction" and, in the case of the Guarantor, the "Guarantor
Taxing Jurisdiction") or any political subdivision therein or any authority therein or thereof
having power to tax, unless the withholding or deduction of such taxes, duties, assessments, or
governmental charges is required by law. In that event, the Issuer or (as the case may be) the
Guarantor shall pay such additional amounts as will result in receipt by the Noteholders and the
Couponholders after such withholding or deduction of such amounts as would have been
received by them had no such withholding or deduction been required, except that no such
additional amounts shall be payable in respect of any Note or Coupon presented for payment:
(i) in the Republic of Portugal; or
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(ii) by or on behalf of a holder which is liable to such taxes, duties, assessments or
governmental charges in respect of such Note or Coupon by reason of its having some
connection with the jurisdiction by which such taxes, duties, assessments or charges
have been imposed, levied, collected, withheld or assessed other than the mere holding
of the Note or Coupon; or
(iii) by or on behalf of a holder which is able to avoid such withholding or deduction by
making a declaration of non-residence or other claim for exemption to the relevant tax
authority; or
(iv) in case of Interbolsa Notes, where such withholding or deduction is required to be made
due to the fact that the holders of such Notes are:
individuals residing for tax purposes in the Republic of Portugal who do not benefit
from any other applicable withholding tax exemption; or
entities or individuals (i) whose residence, registered office or effective management
is located in the Republic of Portugal or (ii) which have a permanent establishment
located in the Republic of Portugal to which income is attributable, or (iii) which are
resident in any of the countries or territories included in the list of jurisdictions with
a more favourable tax regime approved by Portaria 150/2004 of 13 February
(Portaria do Ministro das Finanças e da Administração Pública nº 150/2004) as
amended from time to time, issued by the Portuguese Minister of Finance and
Public Administration, with the exception of central banks and governmental
agencies of those blacklisted jurisdictions, or (iv) which are held, directly or
indirectly, as to more than 20 per cent. by entities which are resident in the Republic
of Portugal; or
entities established in the Madeira International Business Centre which are credit
institutions or financial companies or financial branches: (a) that carry out
transactions related to their activities with residents, for tax purposes, in the
Republic of Portugal; or (b) that carry out such transactions with any permanent
establishments located in the Republic of Portugal of entities considered as non-
resident in such jurisdiction for tax purposes; or
(v) where such withholding or deduction is imposed on a payment to an individual and is
required to be made pursuant to European Council Directive 2003/48/EC or any other
Directive implementing the conclusions of the ECOFIN Council meeting of 26-27
November 2000 on the taxation of savings income or any law implementing or
complying with, or introduced in order to conform to, such Directive; or
(vi) in case of bearer Notes, by or on behalf of a holder who would have been able to avoid
such withholding or deduction by presenting the relevant Note or Coupon to another
Paying Agent in a Member State of the EU; or
(vii) in case of bearer Notes, more than 30 days after the Relevant Date except to the extent
that the holder of such Note or Coupon would have been entitled to such additional
amounts on presenting such Note or Coupon for payment on the last day of such period
of 30 days; or
(viii) in the case of Interbolsa Notes, to, or to a third party on behalf of, a Noteholder,
Receiptholder or Couponholder in respect of whom the information and documentation
(which may include certificates) required in order to comply with Decree Law 193/2005
of 7 November (as amended), and any implementing legislation, is not received before
the income payment date; and/or
(ix) in case of Interbolsa Notes, to, or to a third party on behalf of, a Noteholder in respect of
which the relevant information required to comply with Decree Law 193/2005 of 7
November (as amended from time to time) is not received prior to the income payment
date and which is otherwise eligible for the withholding tax exemption set out in such
legislation by claiming a refund of the relevant amounts withheld on such payment date
- 52 -
using models 22 or 23 (Relações Fiscais Internacionais (RFI)), or, having been eligible
to claim such refund, does not do so within the applicable time period established by
Portuguese law.
(b) Taxing jurisdiction: If the Issuer or, if applicable, the Guarantor becomes subject at any time to
any taxing jurisdiction other than the Issuer Taxing Jurisdiction or the Guarantor Taxing
Jurisdiction respectively, references in these Conditions to the Issuer Taxing Jurisdiction or the
Guarantor Taxing Jurisdiction shall be construed as references to the Issuer Taxing Jurisdiction
or (as the case may be) the Guarantor Taxing Jurisdiction and/or such other jurisdiction.
13. Events of Default
(A) Events of Default relating to Senior Notes
If any of the following events occurs and is continuing (i) in respect of Notes (other than
Interbolsa Notes), the Trustee at its discretion may and, if so requested in writing by holders of at
least one quarter in principal amount of the outstanding Notes or, if so directed by an
Extraordinary Resolution of the holders, shall (subject, in the case of the happening of any of the
events mentioned in sub paragraph (ii), below and, in relation only to a Subsidiary of the Issuer
or, if applicable, a Subsidiary of the Guarantor, sub paragraphs (iii), (iv), (v), (vi), (vii), or (viii)
below, to the Trustee having certified in writing that the happening of such events is in its
opinion materially prejudicial to the interests of the Noteholders and, in all cases to the Trustee
having been indemnified and/or provided with security to its satisfaction) give written notice to
the Issuer declaring the Notes to be immediately due and payable, whereupon they shall become
immediately due and payable at their principal amount together with accrued interest without
further action or formality; or (ii) in respect of Interbolsa Notes, the Common Representative
shall, if so requested in writing by means of a request addressed to it and to Banif by the holders
of not less than 20 per cent. of the nominal amount of the Interbolsa Notes then outstanding, or if
so directed by an Extraordinary Resolution of the Noteholders, give notice to the Issuer (the
"Acceleration Notice") and the Portuguese Paying Agent at the respective specified office,
effective upon the date of receipt thereof by the Portuguese Paying Agent, that the Interbolsa
Notes are, and they shall accordingly thereby forthwith become, immediately due and repayable
at their Early Redemption Amount together with accrued interest (if any) to the date of
repayment, without demand, protest or other notice of any kind:
(a) Non-payment: the Issuer fails to pay any amount of principal in respect of the Notes on
the due date for payment thereof or fails to pay any amount of interest in respect of the
Notes within ten days of the due date for payment thereof; or
(b) Breach of other obligations: the Issuer or, if applicable, the Guarantor defaults in the
performance or observance of any of its other obligations under or in respect of the
Notes of such Series in respect of Notes other than Interbolsa Notes, the Trust Deed or
the Guarantee of the Notes and (except where, (i) for Notes other than Interbolsa Notes,
in the opinion of the Trustee, or (ii) for Interbolsa Notes, in the opinion of the Common
Representative, such default is incapable of remedy where no such continuation or notice
as is hereinafter mentioned will be required) such default remains unremedied for 30
days after the Trustee or, as the case may be, the Common Representative, has given
written notice thereof to the Issuer and, if applicable, the Guarantor; or
(c) Cross-default of Issuer, Guarantor or Subsidiary:
(i) any Indebtedness of the Issuer, if applicable, the Guarantor, or any of its or their
respective Subsidiaries is not paid when due or (as the case may be) within any
originally applicable grace period;
(ii) any such Indebtedness becomes (or becomes capable of being declared) due and
payable prior to its stated maturity otherwise than at the option of the Issuer, if
applicable, the Guarantor or the relevant Subsidiary, as the case may be, or
(provided that no event of default, howsoever described, has occurred) any
Person entitled to such Indebtedness; or
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(iii) the Issuer, if applicable, the Guarantor or any of its or their respective
Subsidiaries fails to pay when due any amount payable by it under any
Guarantee of any Indebtedness;
provided that no such event referred to above shall constitute an Event of
Default unless the indebtedness, whether alone or when aggregated with other
indebtedness relating to all (if any) other such events which shall have occurred,
shall exceed Euro 15,000,000 (or its equivalent in any other currency);
(iv) Unsatisfied judgment: one or more judgment(s) or order(s) for the payment is
rendered against the Issuer or if applicable, the Guarantor or any of its or their
respective Subsidiaries and continue(s) unsatisfied and unstayed for a period of
30 days after the date(s) thereof or, if later, the date therein specified for
payment; or
(v) Security enforced: a secured party takes possession, or a receiver, manager or
other similar officer is appointed, of the whole or a substantial (in respect of
Notes other than Interbolsa Notes, in the sole opinion of the Trustee or, in
respect of Interbolsa Notes, in the opinion of the Common Representative) part
of the assets of the Issuer or, if applicable, the Guarantor or any of its or their
respective Subsidiaries and in any of the foregoing cases it or he is not
discharged within 60 days; or
(vi) Insolvency etc: (i) the Issuer, if applicable, the Guarantor or any of its or their
respective Subsidiaries becomes insolvent or is unable to pay its debts as they
fall due, (ii) an administrator or liquidator of the Issuer, if applicable, the
Guarantor or any of its or their respective Subsidiaries or the whole or a
substantial (in respect of Notes other than Interbolsa Notes, in the sole opinion
of the Trustee or, in respect of Interbolsa Notes, in the opinion of the Common
Representative) part of the assets of the Issuer, if applicable, the Guarantor or
any of its or their respective Subsidiaries is appointed (or application for any
such appointment is made), (iii) the Issuer, if applicable, the Guarantor or any of
its or their respective Subsidiaries takes any action for a readjustment or
deferment of any of its obligations or makes a general assignment or an
arrangement or composition with or for the benefit of its creditors or declares a
moratorium in respect of any of its Indebtedness or any Guarantee of any
Indebtedness given by it or (iv) the Issuer, if applicable, the Guarantor or any of
its or their respective Subsidiaries ceases or threatens to cease to carry on all or
any substantial part of its business; or
(vii) Winding up etc: an order is made or an effective resolution is passed for the
winding up, liquidation or dissolution of the Issuer or if applicable, the
Guarantor or any of its or their respective Subsidiaries (other than for the
purpose of an amalgamation, merger or reconstruction approved by (i) the
Trustee or an Extraordinary Resolution in the case of Notes other than
Interbolsa Notes or (ii) an Extraordinary Resolution of the Noteholders (as
described in Condition 17) in the case of Interbolsa Notes); or
(viii) Analogous event: any event occurs which under the laws of the country of
incorporation of the Issuer, or if applicable, the country of incorporation of the
Guarantor, has an analogous effect to any of the events referred to in sub
paragraphs (iv) to (vii) above; or
(ix) Failure to take action etc: any action, condition or thing at any time required to
be taken, fulfilled or done in order (i) to enable the Issuer and the Guarantor
lawfully to enter into, exercise their respective rights and perform and comply
with their respective obligations under and in respect of the Notes and, in
respect of Notes other than Interbolsa Notes, the Trust Deed, (ii) to ensure that
those obligations are legal, valid, binding and enforceable and (iii) to make the
Notes, the Coupons and, in respect of Notes other than Interbolsa Notes, the
Trust Deed admissible in evidence in the courts of the country of incorporation
- 54 -
of the Issuer, or if applicable, the country of incorporation of the Guarantor, is
not taken, fulfilled or done; or
(x) Unlawfulness: it is or will become unlawful for the Issuer or, if applicable, the
Guarantor to perform or comply with any of its obligations under or in respect
of the Notes, the Guarantee of the Notes, in respect of Notes other than
Interbolsa Notes, or the Trust Deed; or
(xi) Guarantee not in force: the Guarantee of the Notes, if applicable, is not (or is
claimed by the Guarantor not to be) in full force and effect; or
(xii) Change of control: the Issuer (where the Issuer is Banif Finance) ceases to be a
subsidiary wholly owned and controlled, directly or indirectly, by Banif.
(B) Events of Default relating to Subordinated Notes
If any one or more of the following events (each an "Event of Default") occurs with respect to
any Subordinated Note (any reference to "Note", "Notes" and "Noteholders" shall be construed
accordingly):
(i) the Issuer fails to pay for a period of 7 days or more any amount of principal in respect
of the Notes on the due date for payment thereof; or
(ii) the Issuer fails to pay for a period of 14 days or more any amount of interest in respect of
the Notes on the due date for payment thereof; or
(iii) any order shall be made by any competent court or resolution passed for the winding-up
or dissolution of the Issuer or the Guarantor (where the Issuer is Banif Finance) (other
than for the purpose of an amalgamation, merger or reconstruction approved by (i) the
Trustee or an Extraordinary Resolution, in the case of Notes other than Interbolsa Notes,
or (ii) an Extraordinary Resolution of the Noteholders (as described in Condition 17), in
the case of Interbolsa Notes),
then:
(i) in respect of Notes other than Interbolsa Notes, the Trustee at its discretion may, and if
so requested in writing by the holders of not less than 20 per cent. in principal amount of
the Notes then outstanding or if so directed by an Extraordinary Resolution of the
holders shall (subject in each case to the Trustee having been indemnified and/or secured
to its satisfaction), give written notice to the Issuer declaring the Notes to be, whereupon
they shall accordingly immediately become, immediately due and repayable at their
Early Termination Amount together, with any accrued interest (as provided in the Trust
Deed) without any further action or formality.
(ii) in respect of Interbolsa Notes, the Common Representative shall, if so requested in
writing by means of a request addressed to it and to Banif by the holders of not less than
20 per cent. of the nominal amount of the Interbolsa Notes then outstanding, or if so
directed by an Extraordinary Resolution of the Noteholders, give an Acceleration Notice
to the Issuer and the Portuguese Paying Agent at the respective specified office, effective
upon the date of receipt thereof by the Portuguese Paying Agent, that the Interbolsa
Notes are, and they shall accordingly thereby forthwith become, immediately due and
repayable at their Early Redemption Amount together with accrued interest (if any) to
the date of repayment, without demand, protest or other notice of any kind.
Notwithstanding the Trustee having given notice that the Notes are immediately due and
repayable, the Issuer may only redeem such Notes with the prior approval of the Bank of
Portugal.
There can be no assurance that the Bank of Portugal will give its approval to any such
early redemption. Noteholders should be aware of the fact that the Bank of Portugal's
approval will depend on the capital adequacy of Banif.
- 55 -
14. Prescription
Claims for principal shall become void unless the relevant Notes are presented for payment
within ten years of the appropriate Relevant Date. Claims for interest shall become void unless
the relevant Coupons are presented for payment within five years of the appropriate Relevant
Date.
Claims for principal and interest in respect of Interbolsa Notes shall become void unless the
relevant Certificates are surrendered within 20 years and 5 years respectively after the Relevant
Date.
15. Replacement of Notes and Coupons
If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the
Specified Office of the Principal Paying Agent (and, if the Notes are then admitted to listing,
trading and/or quotation by any listing authority, stock exchange and/or quotation system which
requires the appointment of a Paying Agent in any particular place, the Paying Agent having its
Specified Office in the place required by such listing authority, stock exchange and/or quotation
system), subject to all applicable laws and listing authority, stock exchange and/or quotation
system requirements, upon payment by the claimant of the costs and expenses incurred in
connection with such replacement and on such terms as to evidence, security, indemnity and
otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be
surrendered before replacements will be issued.
16. Trustee and Agents
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility, including provisions relieving it from taking proceedings to enforce payment
unless indemnified and/or secured to its satisfaction, and to be paid its costs and expenses in
priority to the claims of Noteholders and Couponholders. The Trustee is entitled to enter into
business transactions with any Issuer, the Guarantor and any entity related to any Issuer or the
Guarantor without accounting for any profit.
In the exercise of its powers and discretions under these Conditions and the Trust Deed, the
Trustee will have regard to the interests of the Noteholders as a class and will not be responsible
for any consequences for individual holders of Notes, Coupons or Talons as a result of such
holders being connected in any way with a particular territory or taxing jurisdiction.
In acting under the Agency Agreement and in connection with the Notes and the Coupons, the
Paying Agents and the Calculation Agent act solely as agents of the Issuer and, if applicable the
Guarantor, or following the occurrence of an Event of Default, the Trustee and do not assume
any obligations towards or relationship of agency or trust for or with any of the Noteholders or
Couponholders.
The initial Paying Agents and their initial Specified Offices are listed below. The initial
Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer and, if applicable
the Guarantor, reserves the right (with the prior written approval of the Trustee and save that
such prior written approval will not be required in respect of the Portuguese Paying Agent) at any
time to vary or terminate the appointment of any Paying Agent or the Calculation Agent and to
appoint a successor principal paying agent or calculation agent and additional or successor
paying agents; provided, however, that:
(a) the Issuer and, if applicable, the Guarantor shall at all times maintain a Principal Paying
Agent; and
(b) the Issuers undertake that they will ensure that they maintain a Paying Agent in an EU
member state that will not be obliged to withhold or deduct tax pursuant to European
Council Directive 2003/48/EC or any other Directive implementing the conclusions of
the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or
complying with, or introduced in order to conform to such Directive; and
- 56 -
(c) if a Calculation Agent is specified in the relevant Final Terms, the Issuer and, if
applicable the Guarantor, shall at all times maintain a Calculation Agent;
(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any
listing authority, stock exchange and/or quotation system which requires the
appointment of a Paying Agent in any particular place, the Issuer and, if applicable the
Guarantor, shall maintain a Paying Agent having its Specified Office in the place
required by such listing authority, stock exchange and/or quotation system;
(e) in the circumstances described in Condition 11(c) (Payments in New York City), a
Paying Agent with a specified office in New York City; and
(f) there will at all times be a Paying Agent in Portugal capable of making payments in
respect of the Interbolsa Notes as contemplated by these Conditions, the Agency
Agreement as amended by the Interbolsa Notes Agency Agreement and applicable
Portuguese law and regulations.
Notice of any change in any of the Paying Agents or in their Specified Offices shall promptly be
given by the Issuer to the Noteholders.
17. Meetings of Noteholders; Modification and Waiver
17.1 Notes other than Interbolsa Notes
This Condition 17.1 does not apply to Interbolsa Notes.
(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of
Noteholders to consider matters relating to the Notes, including the modification of any provision
of these Conditions or the provisions of the Trust Deed. Any such modification may be made if
sanctioned by an Extraordinary Resolution. Any modification to the Conditions in respect of
Subordinated Notes is, however, conditional upon the approval of the Bank of Portugal and,
notwithstanding its sanctioning by Extraordinary Resolution, such modification will only take
effect upon the Bank of Portugal granting the Issuer such approval. Such a meeting may be
convened by the Issuer or the Trustee and shall be convened by them upon the request in writing
of Noteholders holding not less than one-tenth of the aggregate principal amount of the
outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution
will be two or more Persons holding or representing one more than half of the aggregate principal
amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or
representing Noteholders whatever the principal amount of the Notes held or represented;
provided, however, that Reserved Matters may only be sanctioned by an Extraordinary
Resolution passed at a meeting of Noteholders at which two or more Persons holding or
representing not less than three-quarters or, at any adjourned meeting, one quarter of the
aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary
Resolution duly passed at any such meeting shall be binding on all the Noteholders and
Couponholders, whether present or not.
In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time
being are entitled to receive notice of a meeting of Noteholders will take effect as if it were an
Extraordinary Resolution. Such a resolution in writing may be contained in one document or
several documents in the same form, each signed by or on behalf of one or more Noteholders.
(b) Modification and Waiver: The Trustee may agree without the consent of the Noteholders or the
Couponholders to (i) any modification of any provision of these Conditions or the Trust Deed
which is of a formal, minor or technical nature or is made to correct a manifest error and (ii) any
other modification (other than in respect of a Reserved Matter) and any waiver or authorisation
of any breach or proposed breach of any provision of these Conditions or the Trust Deed which is
in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. In
addition, the parties to the Agency Agreement may agree to modify any provision thereof, save
the Trustee shall only agree, without the consent of the Noteholders, to such modification if, in
the opinion of the Trustee, such modification is not materially prejudicial to the interests of the
Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders
and Couponholders.
- 57 -
(c) Substitution: The Trustee may agree without the consent of the Noteholders or the
Couponholders to the substitution of a Subsidiary of the Issuer in place of the Issuer as principal
debtor under the Trust Deed, the Notes and the Coupons provided that certain conditions
specified in the Trust Deed are fulfilled, including, in the case of a substitution of Banif Finance
by a company other than the Guarantor, a requirement that the Guarantee of the Notes is fully
effective in relation to the obligations of the new principal debtor under the Trust Deed and the
Notes.
(d) No Noteholder or Couponholder shall, in connection with any substitution, be entitled to claim
any indemnification or payment in respect of any tax consequence thereof for such Noteholder or
(as the case may be) Couponholder except to the extent provided for in Condition 12 (Taxation)
(or any undertaking given in addition to or substitution for such Condition).
17.2 Interbolsa Notes
This Condition 17.2 applies only to Interbolsa Notes.
(a) Meetings
Meetings of the holders of Interbolsa Notes may be convened to consider any matter affecting
their interests, including the sanctioning by Extraordinary Resolution of a modification of the
terms and conditions of the Notes and the appointment or dismissal of the Common
Representative and are governed by the Portuguese Companies Code.
Such meetings may be convened by the Common Representative (if any) or, if no Common
Representative has been appointed, or an appointed Common Representative fails to convene a
meeting, by the chairman of the general meeting of shareholders of the Issuer, and shall be
convened if requested by Noteholders holding not less than 5 per cent. of the principal amount of
the Notes for the time being outstanding.
The quorum required for a meeting convened to pass a resolution other than an Extraordinary
Resolution will be any person or persons holding or representing Notes then outstanding
regardless of the principal amount thereof. The quorum required for a meeting convened to pass
an Extraordinary Resolution will be a person or persons holding or representing at least 50 per
cent. of the principal amount of the Notes then outstanding or, at any adjourned meeting, any
person or persons holding or representing any of the Notes then outstanding, regardless of the
principal amount thereof.
The number of votes required to pass a resolution other than an Extraordinary Resolution is a
majority of the votes cast at the relevant meeting. The majority required to pass an Extraordinary
Resolution is at least 50 per cent. of the principal amount of the Notes then outstanding or, at any
adjourned meeting, two-thirds of the votes cast at the relevant meeting.
Resolutions passed at any meeting of the Noteholders will be binding on all the Noteholders,
whether or not they are present at the meeting or have voted against the approved resolutions.
(b) Dismissal and substitution of the Common Representative
The Noteholders may dismiss and substitute the Common Representative (if any) by means of an
Extraordinary Resolution passed for such purpose.
(c) Notification
Any modification, abrogation, waiver or authorisation in accordance with this Condition 17.2
shall be binding on the Noteholders and shall be notified by the Issuer to the Noteholders as soon
as practicable thereafter in accordance with Condition 20.
(d) Matters required to be approved by Extraordinary Resolution
- 58 -
An Extraordinary Resolution will be required to effect any of the following:
(i) to change any date fixed for payment of principal or interest in respect of the Notes,
reduction of the amount of principal or interest due on any date in respect of the Notes or
variation of the method for calculating the amount of any payment in respect of the
Notes on redemption or maturity;
(ii) to approve the modification or abrogation of any of the provisions of these Conditions;
(iii) to approve any amendment to this definition;
(iv) to waive or authorise any breach or proposed beach of any of these Conditions; and
(v) to approve any other matter in respect of which these Conditions require an
Extraordinary Resolution to be passed.
(e) Matters in the discretion of the Agent and the Issuer
Except for those matters required to be approved by Extraordinary Resolution, the Agent, the
Common Representative and the Issuer may agree, without the consent of the Noteholders, to:
(i) any modification of the Notes which is not materially prejudicial to the interests of the
Noteholders; or
(ii) any modification of the Notes which is of a formal, minor or technical nature or is made
to correct a manifest error or to comply with mandatory provisions of the law of the
jurisdiction in which the Issuer is incorporated.
Any such modification shall be binding on the Noteholders and shall be notified to the
Noteholders in accordance with Condition 20 as soon as practicable thereafter.
18. Enforcement
In the case of Notes other than Interbolsa Notes, the Trustee may at any time, at its discretion and
without notice, institute such proceedings as it thinks fit to enforce its rights under the Trust Deed
in respect of the Notes, but it shall not be bound to do so unless:
(a) it has been so requested in writing by the holders of at least one quarter in principal
amount of the outstanding Notes or has been so directed by an Extraordinary Resolution;
and
(b) it has been indemnified and/or provided with security to its satisfaction.
No Noteholder may proceed directly against the Issuer or, if applicable, the Guarantor.
In the case of Interbolsa Notes, the Common Representative may at any time, or, if so directed by
an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at
least 20 per cent. of the nominal amount of the Notes then outstanding, shall, take such
proceedings against the Issuer as it may think fit to enforce the provisions of the Notes.
19. Further Issues
The Issuer may (after obtaining the consent of the Bank of Portugal whenever it is required in the
case of Subordinated Notes) from time to time, without the consent of the Noteholders or the
Couponholders, and in accordance with the Trust Deed create and issue further notes having the
same terms and conditions as the Notes in all respects (or in all respects except for the date of the
first payment of interest) so that the same shall be consolidated and form a single series with the
Notes.
20. Notices
Notices to the Noteholders shall be valid if published in a leading English language daily
newspaper published in London (which is expected to be the Financial Times), (i) if the Notes
- 59 -
are admitted to trading on the regulated market of the Luxembourg Stock Exchange and the rules
of that exchange so require, a leading newspaper having general circulation in Luxembourg
(which is expected to be the Luxemburger Wort) or published on the website of the Luxembourg
Stock Exchange (www.bourse.lu) or in either case, if such publication is not practicable, in a
leading English language daily newspaper having general circulation in Europe, or (ii) if the
Notes are Interbolsa Notes, by registered mail, by publication in a leading newspaper having
general circulation in Portugal (which is expected to be Diário de Notícias) or by any other way
which complies with the Portuguese Securities Code and Interbolsa's rules on notices to
investors, including the disclosure of information through the official website of the CMVM
(www.cmvm.pt). Any such notice shall be deemed to have been given on the date of first
publication (or if required to be published in more than one newspaper, on the first date on which
publication shall have been made in all the required newspapers). Couponholders shall be
deemed for all purposes to have notice of the contents of any notice given to the Noteholders.
21. Rounding
For the purposes of any calculations referred to in these Conditions (unless otherwise specified in
these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations
will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with
0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts
used in or resulting from such calculations will be rounded to the nearest cent (with one half cent
being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will
be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts
denominated in any other currency used in or resulting from such calculations will be rounded to
the nearest two decimal places in such currency, with 0.005 being rounded upwards.
22. Governing Law and Jurisdiction
(a) Governing law: The Notes (other than Interbolsa Notes) (except Conditions 4(c) and 4(d)) and
the Trust Deed (except for Clause 5 insofar as it relates to Subordinated Notes) and any non-
contractual obligations arising out of or in connection with them are governed by English law.
The Interbolsa Notes, Clause 5 of the Trust Deed (insofar as it relates to Dated Subordinated
Notes, Undated Subordinated Notes and Undated Subordinated Notes with Conditional Interest),
the Agency Agreement, in respect of Interbolsa Notes, to the extent amended by the Interbolsa
Notes Agency Agreement, and Conditions 4(c) and 4(d) are governed by, and shall be construed
in accordance with Portuguese law. In each case, the application of such governing law shall be
without prejudice to the applicability, under the conflict rules applicable in the relevant forum, in
the light of such submission, of Cayman Islands law (in relation to matters concerning Banif
Finance) or Portuguese law (in relation to matters concerning Banif or Banif Madeira as an Issuer
or as Guarantor, as the case may be).
(b) Jurisdiction: In respect of Notes other than Interbolsa Notes, the Issuer has in the Trust Deed: (i)
agreed for the exclusive benefit of the Trustee and the Noteholders that the courts of England
have exclusive jurisdiction to settle any dispute (a "Dispute"), arising out of or in connection
with the Notes (including a dispute relating to the existence, validity or termination of the Notes
or any non-contractual obligation arising out of or in connection with the Notes) or the
consequences of its nullity; (ii) agreed that those courts are the most appropriate and convenient
courts to settle any Dispute and, accordingly, that it will not argue that any other courts are more
appropriate or convenient; (iii) designated a person in England to accept service of any process
on its behalf; and (iv) consented to the enforcement of any judgment. The Trust Deed also states
that nothing contained in the Trust Deed prevents the Trustee or any of the Noteholders from
taking proceedings relating to a Dispute ("Proceedings") in any other courts with jurisdiction and
that, to the extent allowed by law, the Trustee or any of the Noteholders may take concurrent
Proceedings in any number of jurisdictions. In respect of Interbolsa Notes, the Issuer has (i)
agreed for the exclusive benefit of Noteholders that the courts of Portugal shall have exclusive
jurisdiction to settle any Dispute arising from or connected with the Interbolsa Notes; (ii) agreed
that those courts are the most appropriate and convenient courts to settle any Dispute and,
accordingly, that it will not argue that any other courts are more appropriate or convenient; and
(iii) consented to the enforcement of any judgment.
- 60 -
23. Common Representatives
In the case of Interbolsa Notes, the holders of the Notes shall at all times be entitled to appoint
and dismiss a Common Representative by means of an Extraordinary Resolution. Upon the
appointment of a new Common Representative by the holders of the Notes pursuant to this
Condition, any previously appointed and dismissed Common Representative will immediately
cease its engagement and will be under the obligation to immediately transfer to the new
Common Representative all documents and information then held by such Common
Representative in relation to the Notes.
For these purposes, "Common Representative" means a law firm, an accountants' firm or an
individual person (who is not a holder of Notes), which may be appointed by the holders of Notes
in accordance with Article 358 of the Portuguese Companies Code.
- 61 -
FORM OF FINAL TERMS
The Final Terms in respect of each Tranche of Notes will be substantially in the following form, duly
supplemented (if necessary), amended (if necessary) and completed to reflect the particular terms of the
relevant Notes and their issue. Text in this section appearing in italics does not form part of the form of
the Final Terms but denotes directions for completing the Final Terms.
Final Terms dated •
[Banif-Banco Internacional do Funchal, S.A./Banif Finance, Ltd./Banif-Banco Internacional do Funchal
S.A., acting through its Sucursal Financeira Exterior (External Financial Branch)]
Issue of [Aggregate Nominal Amount of Tranche [Title of Notes]
[Guaranteed by
Banif Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch)]
under the Euro 2,500,000,000
Euro Medium Term Note Programme
PART A – CONTRACTUAL TERMS
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in
the Base Prospectus dated 16 December 2009 [and the Base Prospectus Supplement dated [•]] which
[together] constitute[s] a base prospectus (the "Base Prospectus") for the purposes of the Prospectus
Directive (Directive 2003/71/EC) (the "Prospectus Directive"). This document constitutes the Final
Terms relating to the issue of Notes described herein for the purposes of Article 5.4 of the Prospectus
Directive. These Final Terms contain the final terms of the Notes and must be read in conjunction with
the Base Prospectus [as so supplemented].
Full information on the Issuer, the Guarantor and the Notes described herein is only available on the basis
of a combination of these Final Terms and the Base Prospectus [as so supplemented]. The Base
Prospectus [and the Base Prospectus Supplement] [is] [are] available for viewing at [•] and on the website
of the Luxembourg Stock Exchange at www.bourse.lu and copies may be obtained from the Specified
Office of the Principal Paying Agent.
The following alternative language applies if the first tranche of an issue which is being increased was
issued under a base prospectus with an earlier date and the relevant terms and conditions from that base
prospectus with an earlier date were incorporated by reference in this Base Prospectus.
Terms used herein shall be deemed to be defined as such for the purposes of the [date] Conditions (the
"Conditions") incorporated by reference in the Base Prospectus dated [original date][and the Base
Prospectus Supplement dated [•]]. These Final Terms contain the final terms of the Notes and must be
read in conjunction with the Base Prospectus dated 16 December 2009 [and the Base Prospectus
Supplement dated [date]] which [together] constitute[s] a base prospectus (the "Base Prospectus") for the
purposes of the Prospectus Directive (Directive 2003/71/EC) (the "Prospectus Directive"), save in
respect of the Conditions which are set forth in the base prospectus dated [original date] and are
incorporated by reference in the Base Prospectus. This document constitutes the Final Terms relating to
the issue of Notes described herein for the purposes of Article 5.4 of the Prospectus Directive.
Full information on the Issuer, the Guarantor and the Notes described herein is only available on the basis
of a combination of these Final Terms and the Base Prospectus [as so supplemented]. The Base
Prospectus [and the Base Prospectus Supplement] [is] [are] available for viewing at [•] and on the website
of the Luxembourg Stock Exchange at www.bourse.lu and copies may be obtained from the Specified
Office of the Principal Paying Agent.
[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering
should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-
paragraphs. Italics denote directions for completing the Final Terms.]
[When completing any final terms, or adding any other final terms or information, consideration should
be given as to whether such terms or information constitute "significant new factors" and consequently
trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.]
- 62 -
1. (i) Issuer: [Banif-Banco Internacional do Funchal, S.A./Banif
Finance, Ltd./Banif Banco Internacional do Funchal,
S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch)]
[(ii) Guarantor: [Banif-Banco Internacional do Funchal, S.A., acting
through its Sucursal Financeira Exterior (External
Financial Branch)]
2. [(i) [Series Number:] [ ]
[ii) [Tranche Number:
(If fungible with an existing
Series, details of that Series,
including the date on which
the Notes become fungible).]
[ ]
3. Specified Currency or Currencies: [ ]
4. Aggregate Nominal Amount:
[(i)] [Series:] [ ]
[(ii) [Tranche: [ ]]
5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plus
accrued interest from [insert date] (in the case of
fungible issues only, if applicable)]
6. (i) Specified Denominations [ ]
No Notes may be issued which have a minimum
denomination of less than EUR 1,000 (or nearly
equivalent in another currency).
(N.B. If a Global Note is exchangeable for Definitive
Notes at the option of noteholders, the Notes may only
be issued in other denominations equal to, or greater
than, EUR 50,000 (or equivalent) and multiples
thereof).
(N.B. The following wording should be followed where
multiple denominations above EUR 50,000 (or
equivalent) are being used and Global Notes are not
exchangeable for Definitive Notes at the option of
Noteholders):
- 63 -
So long as the Notes are represented by a Temporary
Global Note or a Permanent Global Note and the
relevant clearing system so permits, the Notes will be
tradeable only in the minimum authorised denomination
of [EUR 50,000] and higher integral multiples of [EUR
1,000] notwithstanding that no definitive notes will be
issued with a denomination above [EUR 99,000].
(ii) Calculation Amount: [The applicable Calculation Amount (which is used for
the calculation of interest and redemption amounts) will
be (i) if there is only one Specified Denomination, the
Specified Denomination of the relevant Notes or (ii) if
there are several Specified Denomination or the
circumstances referred to in Note 3 above apply, the
highest common factor of those Specified
Denominations (note: there must be a common factor in
the case of two or more Specified Denominations).]
7. [(i)] Issue Date: [ ]
[(ii) Interest Commencement
Date: [ ]]
8. Maturity Date: [specify date or (for Floating Rate Notes) Interest
Payment Date falling in or nearest to the relevant month
and year]
[If the Maturity Date is less than one year from the Issue
Date and either (a) the issue proceeds are received by
the Issuer in the United Kingdom or (b) the activity of
issuing the Notes is carried on from an establishment
maintained by the Issuer in the United Kingdom, (i) the
Notes must have a minimum redemption value of
£100,000 (or its equivalent in other currencies) and be
sold only to "professional investors" or (ii) another
applicable exemption from section 19 of the FSMA must
be available. ]
9. Interest Basis: [• per cent. Fixed Rate]
[[specify reference rate] +/- • per cent. Floating Rate]
[Zero Coupon]
[Index-Linked Interest]
[Other (specify)]
(further particulars specified below)
- 64 -
10. Redemption/Payment Basis: [Redemption at par]
[Index-Linked Redemption]
[Dual Currency]
[Partly Paid]
[Instalment]
[Other (specify)]
11. Change of Interest or
Redemption/Payment Basis:
[Specify details of any provision for convertibility of
Notes into another interest or redemption/ payment
basis]
12. Put/Call Options: [Investor Put]
[Issuer Call]
[(further particulars specified below)]
13. (i) Status of the Notes: [Senior/[Dated/Undated]Subordinated][with Conditional
Interest]
(ii) Status of the Guarantee: [Senior/[Dated/Undated]Subordinated]
[(iii)] [Date [Board] approval for
issuance of Notes [and
Guarantee] obtained:
[ ] and [ ], respectively]]
(N.B Only relevant where Board (or similar)
authorisation is required for the particular tranche of
Notes or related Guarantee)]
14. Method of distribution: [Syndicated/Non-syndicated]
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15. Fixed Rate Note Provisions [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-
annually/quarterly/monthly] in arrear]
(ii) Interest Payment Date(s): [ ] in each year
(iii) Fixed Coupon Amount[(s)]: [ ] [per Calculation Amount]
(iv) Broken Amount(s): [ ] per Calculation Amount, payable on the Interest
Payment Date falling [in/on] [ ]
[Insert particulars of any initial or final broken
interest amounts which do not correspond with the
Fixed Coupon Amount[(s)]]
- 65 -
(v) Day Count Fraction: [30/360 / Actual/Actual (ICMA/ISDA) / other]
(vi) Other terms relating to the
method of calculating interest
for Fixed Rate Notes:
[Not Applicable/give details]
16. Floating Rate Note Provisions [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph.)
(i) Specified Period: [ ]
(Specified Period and Specified Interest Payment
Dates are alternatives. A Specified Period, rather than
Specified Interest Payment Dates, will only be relevant
if the Business Day Convention is the FRN
Convention, Floating Rate Convention or Eurodollar
Convention. Otherwise, insert "Not Applicable")
(ii) Specified Interest Payment
Dates:
[ ]
(Specified Period and Specified Interest Payment
Dates are alternatives. If the Business Day
Convention is the FRN Convention, Floating Rate
Convention or Eurodollar Convention, insert "Not
Applicable)
(iii) Business Day Convention: [Floating Rate Convention/ Following Business Day
Convention/ Modified Following Business Day
Convention/ Preceding Business Day Convention/
other (give details)]
(iv) Additional Business Centre(s): [Not Applicable/give details]
(v) Manner in which the Rate(s) of
Interest is/are to be
determined:
[Screen Rate Determination/ISDA
Determination/other (give details)]
(vi) Party responsible for
calculating the Rate(s) of
Interest and Interest Amount(s)
(if not the [Fiscal Agent]):
[[Name] shall be the Calculation Agent (no need to
specify if the Fiscal Agent is to perform this function)]
(vii) Screen Rate Determination:
- Reference Rate: [For example, LIBOR or EURIBOR]
- Interest Determination
Date(s):
[ ]
- Relevant Screen Page: [For example, Reuters LIBOR 01/EURIBOR 01]
- Relevant Time: [For example, 11.00 a.m. London time/Brussels time]
- 66 -
- Relevant Financial
Centre:
[For example, London/Euro-zone (where Eurozone
means the region comprised of the countries whose
lawful currency is the euro)]
(viii) ISDA Determination:
- Floating Rate Option: [ ]
- Designated Maturity: [ ]
- Reset Date: [ ]
(ix) Margin(s): [+/-][ ] per cent. per annum
(x) Minimum Rate of Interest: [ ] per cent. per annum
(xi) Maximum Rate of Interest: [ ] per cent. per annum
(xii) Day Count Fraction: [ ]
(xiii) Fall back provisions, rounding
provisions, denominator and
any other terms relating to the
method of calculating interest
on Floating Rate Notes, if
different from those set out in
the Conditions:
17. Zero Coupon Note Provisions [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) [Amortisation/Accrual] Yield: [ ] per cent. per annum
(ii) Reference Price: [ ]
(iii) Any other formula/basis of
determining amount payable:
[Consider whether it is necessary to specify a Day
Count Fraction for the purposes of Condition [10(g)]]
18. Index-Linked Interest Note
Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) Index/Formula: [Give or annex details]
(ii) Calculation Agent responsible
for calculating the interest due:
[ ]
(iii) Provisions for determining
Coupon where calculation by
reference to Index and/or
Formula is impossible or
impracticable:
[ ]
- 67 -
(iv) Specified Period: [ ]
(Specified Period and Specified Interest Payment
Dates are alternatives. A Specified Period, rather than
Specified Interest Payment Dates, will only be relevant
if the Business Day Convention is the FRN
Convention, Floating Rate Convention or Eurodollar
Convention. Otherwise, insert "Not Applicable".)
(v) Specified Interest Payment
Dates:
[ ]
(Specified Period and Specified Interest Payment
Dates are alternatives. If the Business Day
Convention is the FRN Convention, Floating Rate
Convention or Eurodollar Convention, insert "Not
Applicable".)
(vi) Business Day Convention: [Floating Rate Convention/ Following Business Day
Convention/Modified Following Business Day
Convention/Preceding Business Day Convention/other
(give details)]
(vii) Additional Business Centre(s): [ ]
(viii) Minimum Rate of Interest: [ ] per cent. per annum
(ix) Maximum Rate of Interest: [ ] per cent. per annum
(x) Day Count Fraction: [ ]
19. Dual Currency Note Provisions [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) Rate of Exchange/method of
calculating Rate of Exchange:
[Give details]
(ii) Calculation Agent, if any,
responsible for calculating the
principal and/or interest due:
[ ]
(iii) Provisions applicable where
calculation by reference to
Rate of Exchange impossible
or impracticable:
[ ]
(iv) Person at whose option
Specified Currency(ies) is/are
payable:
[ ]
- 68 -
PROVISIONS RELATING TO REDEMPTION
20. Call Option [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) Optional Redemption Date(s): [ ]
(ii) Optional Redemption
Amount(s) of each Note and
method, if any, of calculation
of such amount(s):
[ ] per Calculation Amount
(iii) If redeemable in part:
(a) Minimum Redemption
Amount:
[ ] per Calculation Amount
(b) Maximum Redemption
Amount:
[ ] per Calculation Amount
(iv) Notice period: [ ]
21. Put Option [Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs
of this paragraph)
(i) Optional Redemption Date(s): [ ]
(ii) Optional Redemption
Amount(s) and method, if any,
of calculation of such
amount(s):
[ ] per Calculation Amount
(iii) Notice period: [ ]
22. Final Redemption Amount of each
Note
[ ] per Calculation Amount
In cases where the Final Redemption
Amount is Index-Linked or other
variable-linked:
[give or annex details]
(i) Index/Formula/variable: [ ]
(ii) Calculation Agent responsible
for calculating the Final
Redemption Amount:
[ ]
(iii) Provisions for determining
Final Redemption Amount
where calculated by reference
to Index and/or Formula and/or
other variable:
[ ]
- 69 -
(iv) Determination Date(s): [ ]
(v) Provisions for determining
Final Redemption Amount
where calculation by reference
to Index and/or Formula and/or
other variable is impossible or
impracticable or otherwise
disrupted:
[ ]
(vi) Payment Date: [ ]
(vii) Minimum Final Redemption
Amount:
[ ] per Calculation Amount
(viii) Maximum Final Redemption
Amount:
[ ] per Calculation Amount
23. Early Redemption Amount
Early Redemption Amount(s) per
Calculation Amount payable on
redemption for taxation reasons or on
event of default and/or the method of
calculating the same (if required or if
different from that set out in the
Conditions):
[Not Applicable (if both the Early Redemption Amount
(Tax) and the Early Termination Amount are the
principal amount of the Notes/specify the Early
Redemption Amount (Tax) and/or the Early
Termination Amount if different from the principal
amount of the Notes)]
GENERAL PROVISIONS APPLICABLE TO THE NOTES
24. Form of Notes: [Temporary Global Note exchangeable for a
Permanent Global Note which is exchangeable for
Definitive Notes on [ ] days' notice/at any time/in the
limited circumstances specified in the Permanent
Global Note.]
[Temporary Global Note exchangeable for Definitive
Notes on [ ] days' notice.]
[Permanent Global Note exchangeable for Definitive
Notes on [ ] days' notice/at any time/in the limited
circumstances specified in the Permanent Global
Note].
[Dematerialised book-entry registered form (Interbolsa
Notes)]
25. New Global Note Form: [Applicable/Not Applicable]
26. Additional Financial Centre(s) or other
special provisions relating to Payment
Dates:
[Not Applicable/give details. Note that this item
relates to the date and place of payment, and not
interest period end dates, to which items 16(ii), 17(iv)
and 19(vii) relate]
- 70 -
27. Talons for future Coupons or Receipts
to be attached to Definitive Notes (and
dates on which such Talons mature):
[Yes/No. If yes, give details]
28. Details relating to Partly Paid Notes:
amount of each payment comprising
the Issue Price and date on which each
payment is to be made and
consequences (if any) of failure to pay,
including any right of the Issuer to
forfeit the Notes and interest due on
late payment:
[Not Applicable/give details]
29. Details relating to Instalment Notes:
amount of each instalment, date on
which each payment is to be made:
[Not Applicable/give details]
30. [Consolidation provisions: [Not Applicable/The provisions [in Condition 18
(Further Issues)] [annexed to this Final Terms]
apply]]
31. Other terms or special conditions: [Not Applicable/give details]
(When adding any other final terms consideration
should be given as to whether such terms constitute
"significant new factors" and consequently trigger the
need for a supplement to the Prospectus under Article
16 of the Prospectus Directive.)
DISTRIBUTION
32. (i) If syndicated, names and
addresses and underwriting
commitments of Managers:
[Not Applicable/give names]
(Include names and addresses of entities agreeing to
underwrite the issue on a firm commitment basis and
names and addresses of the entities agreeing to place
the issue without a firm commitment or on a "best
efforts" basis if such entities are not the same as the
Managers.)
(ii) Date of [Subscription
Agreement]
[ ]
(iii) Stabilising Manager (if any): [Not Applicable/give name]
33. If non-syndicated, name and
address of Dealer:
[Not Applicable/give name and address]
34. TEFRA: [Not Applicable/The [C/D] Rules are applicable
35. Total commission and
concession:
[•] per cent. of the Aggregate nominal amount
36. Additional selling restrictions: [Not Applicable/give details]
- 71 -
LISTING AND ADMISSION TO TRADING
These Final Terms comprise the final terms required for the Notes described herein to be admitted to listing
on the Official List of the Luxembourg Stock Exchange and to trading on the regulated market of the
Luxembourg Stock Exchange pursuant to the Euro 2,500,000,000 Euro Medium Term Note Programme of
Banif-Banco Internacional do Funchal, S.A./Banif Finance, Ltd./Banif-Internacional do Funchal, S.A.,
acting through its Sucursal Financeira Exterior (External Financial Branch) [Guaranteed by Banif-Banco
Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior (External Financial
Branch).]
RESPONSIBILITY
The Issuer and the Guarantor accept responsibility for the information contained in this Final Terms [[•] has
been extracted from [•]. [Each of the] [The] Issuer [and the Guarantor] confirms that such information has
been accurately reproduced and that, so far as it is aware, and is able to ascertain from information
published by [•], no facts have been omitted which would render the reproduced inaccurate or misleading.].
Signed on behalf of the Issuer:
By: ....................................................
Duly authorised
[Signed on behalf of the Guarantor:
By: ................................................
Duly authorised]
- 72 -
PART B – OTHER INFORMATION
1. LISTING AND ADMISSION
TO TRADING
(i) Listing: [Luxembourg/other (specify)/None]
(ii) Admission to trading: [Application has been made for the Notes to be admitted to
trading on the regulated market of the Luxembourg Stock
Exchange]/[other] with effect from [ ].] [Not Applicable.]
(Where documenting a fungible issue need to indicate that
original securities are already admitted to trading.)
2. RATINGS
Ratings: The Notes to be issued have been rated:
[S & P: [ ]]
[Moody's: [ ]]]
[[Other]: [ ]]]
[Need to include a brief explanation of the meaning of the
ratings if this has previously been published by the rating
provider.]
(The above disclosure should reflect the rating allocated to
Notes of the type being issued under the Programme
generally or, where the issue has been specifically rated, that
rating.)
3. [NOTIFICATION
The Commission de Surveillance du Secteur Financier [has been requested to provide/has
provided – include first alternative for an issue which is contemporaneous with the establishment
or update of the Programme and the second alternative for subsequent issues] the [include names
of competent authorities of host Member States] with a certificate of approval attesting that the
Prospectus has been drawn up in accordance with the Prospectus Directive.]
4. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE
[ISSUE/OFFER]
Need to include a description of any interest, including conflicting ones, that is material to the
issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the
inclusion of the following statement:
"Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person involved in
the offer of the Notes has an interest material to the offer."]
5. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
(i) Reasons for the offer [ ]
(See ["Use of Proceeds"] wording in Prospectus – if reasons
for offer different from making profit and/or hedging certain
risks will need to include those reasons here.)]
- 73 -
([(ii)] Estimated net proceeds: [ ]
(If proceeds are intended for more than one use will need to
split out and present in order of priority. If proceeds
insufficient to fund all proposed uses state amount and
sources of other funding.)
[(iii)] Estimated total expenses: [ ]. [Include breakdown of expenses.]
(Only necessary to include disclosure of net proceeds and
total expenses at (ii) and (iii) above where disclosure is
included at (i) above.)]
6. [Fixed Rate Notes Only -YIELD
Indication of yield: [ ].
The yield is calculated at the Issue Date on the basis of the
Issue Price. It is not an indication of future yield.]
7. [Floating Rate Notes Only – HISTORIC INTEREST RATES
Details of historic [LIBOR/EURIBOR/other] rates can be obtained from [Reuters].]
8. [Index-Linked Or Other Variable-Linked Notes Only – PERFORMANCE OF
INDEX/FORMULA/OTHER VARIABLE AND OTHER INFORMATION
CONCERNING THE UNDERLYING
Need to include details of where past and future performance and volatility of the
index/formula/other variable can be obtained and a clear and comprehensive explanation of how
the value of the investment is affected by the underlying and the circumstances when the risks are
most evident. Need to include a description of any market disruption or settlement disruption
events that affect the underlying and any adjustment rules in relation to events concerning the
underlying (if applicable).
Where underlying is an index need to include the name of the index and a description if composed
by the Issuer and if the index is not composed by the Issuer need to include details of where the
information about the index can be obtained. Where the underlying is not an index need to include
equivalent information. Where the underlying is a security need to include the name of the issuer
of the security and the International Securities Identification Number (ISIN) or equivalent
identification number. Where the underlying is a basket of underlyings, need to include the
relevant weightings of each underlying in the basket.
9. [Dual Currency Notes Only – PERFORMANCE OF RATE[S] OF EXCHANGE
Need to include details of where past and future performance and volatility of the relevant rate[s]
can be obtained.]
10. OPERATIONAL
INFORMATION
ISIN Code: [ ]
Common Code: [ ]
- 74 -
New Global Note intended to be
held in a manner which would
allow Eurosystem eligibility:
[Not Applicable/Yes/No].
Note that the designation "Yes" simply means that the Notes
are intended upon issue to be deposited with Euroclear or
Clearstream, Luxembourg as common safekeeper and does
not necessarily mean that the Notes will be recognised as
eligible collateral for Eurosystem monetary policy and intra-
day credit operations by the Eurosystem either upon issue or
at any or all times during their life. Such recognition will
depend upon satisfaction of the Eurosystem eligibility
criteria.][Include this text if "Yes" selected in which case the
Notes must be issued in NGN form]
Any clearing system(s) other than
Euroclear Bank S.A./N.V. and
Clearstream Banking société
anonyme and the relevant
identification number(s):
[Not Applicable/give name(s) and number(s)/LCH Clearnet,
S.A., identification number [•]*]
Delivery: Delivery [against/free of] payment
Names and addresses of additional
Paying Agent(s) (if any):
[ ]
11. TERMS AND CONDITIONS OF THE OFFER
Offer Price: [Issuer Price][Specify]
Conditions to which the offer is
subject:
[Not Applicable/give details]
Description of the application
process:
[Not Applicable/give details]
Description of possibility to
reduce subscriptions and manner
for refunding excess amount paid
by applicants:
[Not Applicable/give details]
Details of the minimum and/or
maximum amount of application:
[Not Applicable/give details]
Details of the method and time
limits for paying up and delivering
the Notes:
[Not Applicable/give details]
Manner in and date on which
results of the offer are to be made
public:
[Not Applicable/give details]
Procedure for exercise of any right [Not Applicable/give details]
* For Interbolsa Notes only.
- 75 -
of pre-emption, negotiability of
subscription rights and treatment
of subscription rights not
exercised:
Categories of potential investors
to which the Notes are offered and
whether tranche(s) have been
reserved for certain countries:
[Not Applicable/give details]
Process for notification to
applicants of the amount allotted
and the indication whether dealing
may begin before notification is
made:
[Not Applicable/give details]
Amount of any expenses and taxes
specifically charged to the
subscriber or purchaser:
[Not Applicable/give details]
Name(s) and address(es), to the
extent known to the Issuer, of the
placers in the various countries
where the offer takes place.
[None/give details]
- 76 -
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM
This summary and the provisions contained therein apply only to Notes other than Interbolsa Notes.
Clearing System Accountholders
Each Global Note will be in bearer form. Consequently, in relation to any Tranche of Notes represented by
a Global Note, references in the Terms and Conditions of the Notes to "Noteholder" are references to the
bearer of the relevant Global Note which, for so long as the Global Note is held by a depositary or a
common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system, will be that depositary or common depositary, in the case of a CGN, or a common safekeeper, in
the case of an NGN for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system, will be that depositary or common depositary or, as the case may be, common safekeeper.
Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other
relevant clearing system as being entitled to an interest in a Global Note (each an "Accountholder") must
look solely to Euroclear and/or Clearstream, Luxembourg and/or such other relevant clearing system (as the
case may be) for such Accountholder's share of each payment made by the Issuer or, if applicable, the
Guarantor to the bearer of such Global Note and in relation to all other rights arising under the Global Note.
The extent to which, and the manner in which, Accountholders may exercise any rights arising under the
Global Note will be determined by the respective rules and procedures of Euroclear and Clearstream,
Luxembourg and any other relevant clearing system from time to time. For so long as the relevant Notes
are represented by the Global Note, Accountholders shall have no claim directly against the relevant Issuer
or, if applicable, the Guarantor in respect of payments due under the Notes and such obligations of the
relevant Issuer and, if applicable, the Guarantor will be discharged by payment to the bearer of the Global
Note.
Exchange of Temporary Global Notes
Whenever any interest in a Temporary Global Note is to be exchanged for an interest in a Permanent
Global Note, the Issuer shall procure:
(a) in the case of first exchange, the prompt delivery (free of charge to the bearer) of such Permanent
Global Note, duly authenticated, and, in the case of an NGN, effectuated to the bearer of the
Temporary Global Note; or
(b) in the case of any subsequent exchange, an increase in the principal amount of such Permanent
Global Note in accordance with its terms,
in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in
the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system and received by the Principal Paying Agent against presentation and (in the case of final exchange)
surrender of the Temporary Global Note to or to the order of the Principal Paying Agent within 7 days of
the bearer requesting such exchange.
Whenever a Temporary Global Note is to be exchanged for Definitive Notes, the relevant Issuer shall
procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and
with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal
amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global
Note against the surrender of the Temporary Global Note to or to the order of the Principal Paying Agent
within 30 days of the bearer requesting such exchange.
- 77 -
If:
(a) a Permanent Global Note has not been delivered or the principal amount thereof increased by 5.00
p.m. (London time) on the seventh day after the bearer of a Temporary Global Note has requested
exchange of an interest in the Temporary Global Note for an interest in a Permanent Global Note;
or
(b) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after the
bearer of a Temporary Global Note has requested exchange of the Temporary Global Note for
Definitive Notes; or
(c) a Temporary Global Note (or any part thereof) has become due and payable in accordance with the
Terms and Conditions of the Notes or the date for final redemption of a Temporary Global Note
has occurred and, in either case, payment in full of the amount of principal falling due with all
accrued interest thereon has not been made to the bearer of the Temporary Global Note in
accordance with the terms of the Temporary Global Note on the due date for payment,
then the Temporary Global Note (including the obligation to deliver a Permanent Global Note or increase
the principal amount thereof or deliver Definitive Notes, as the case may be) will become void at 5.00 p.m.
(London time) on such seventh day (in the case of (a) above) or at 5.00 p.m. (London time) on such
thirtieth day (in the case of (b) above) or at 5.00 p.m. (London time) on such due date (in the case of (c)
above) and the bearer of the Temporary Global Note will have no further rights thereunder.
Exchange of Permanent Global Notes
Whenever a Permanent Global Note is to be exchanged for Definitive Notes, the relevant Issuer shall
procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and
with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal
amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global
Note against the surrender of the Permanent Global Note to or to the order of the Principal Paying Agent
within 30 days of the bearer requesting such exchange.
If:
(a) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after the
bearer of a Permanent Global Note has duly requested exchange of the Permanent Global Note for
Definitive Notes; or
(b) a Permanent Global Note (or any part of it) has become due and payable in accordance with the
Terms and Conditions of the Notes or the date for final redemption of the Notes has occurred and,
in either case, payment in full of the amount of principal falling due with all accrued interest
thereon has not been made to the bearer of the Permanent Global Note in accordance with the
terms of the Permanent Global Note on the due date for payment,
then the Permanent Global Note (including the obligation to deliver Definitive Notes) will become void at
5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (London time) on
such due date (in the case of (b) above) and the bearer of the Permanent Global Note will have no further
rights thereunder.
- 78 -
Conditions applicable to Global Notes
Each Global Note will contain provisions which modify the Terms and Conditions of the Notes as they
apply to the Global Note. The following is a summary of certain of those provisions:
Payments: All payments in respect of the Global Note will be made against presentation and (in the case of
payment of principal in full with all interest accrued thereon) surrender of the Global Note to or to the order
of any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the
relevant Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is
made in respect of the Global Note, the relevant Issuer shall procure that in respect of a CGN the payment
is noted in a schedule thereto and in respect of an NGN the payment is entered pro rata in the records of
Euroclear and Clearstream, Luxembourg.
Exercise of put option: In order to exercise the option contained in Condition 10(e) (Redemption at the
option of Noteholders) the bearer of the Permanent Global Note must, within the period specified in the
Conditions for the deposit of the relevant Note and put notice, give written notice of such exercise to the
Principal Paying Agent specifying the principal amount of Notes in respect of which such option is being
exercised. Any such notice will be irrevocable and may not be withdrawn.
Partial exercise of call option: In connection with an exercise of the option contained in Condition 10(c)
(Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent Global Note
may be redeemed in part in the principal amount specified by the relevant Issuer in accordance with the
Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in
accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg (to be reflected in the
records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in principal
amount, at their discretion).
Notices: Notwithstanding Condition 20 (Notices), while all the Notes are represented by a Permanent
Global Note (or by a Permanent Global Note and/or a Temporary Global Note) and the Permanent Global
Note is (or the Permanent Global Note and/or the Temporary Global Note are) deposited with a depositary
or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system or a Common Safekeeper, notices to Noteholders may be given by delivery of the relevant notice to
Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such
notices shall be deemed to have been given to the Noteholders in accordance with Condition 20 (Notices)
on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system, except that, for so long as such Notes are admitted to trading on the Luxembourg Stock Exchange
and it is a requirement of applicable law or regulations, such notices shall be published in a leading
newspaper having general circulation in Luxembourg (which is expected to be Luxemburger Wort) or
published on the website of the Luxembourg Stock Exchange (www.bourse.lu)].
- 79 -
DESCRIPTION OF THE ISSUERS AND THE GUARANTOR
Banif — Banco Internacional do Funchal, S.A.
Banif – Banco Internacional do Funchal, S.A. ("Banif") was incorporated for an unlimited duration as a
public company with limited liability (Sociedade Anónima) on 1 April 2002 in Funchal, Madeira Island,
Portugal (registration number: 8945) and is organised under that country's laws. Its registered office is at
Rua João Tavira, no.30, 9004-509 Funchal, Portugal and its telephone number is +351 291 222 162.
Banif emerged from the restructuring of the Banif Financial Group (the "Group"), which was carried out in
order to concentrade the Group companies according to their business activity.
The impact of the restructuring process was merely organisational, since the business activities of the
Group remained unchanged.
Banif Financial Group changed its financial structure, as Banif - SGPS, S.A. became the holding company
of the Group with its business interests distributed between two sub-holdings, Banif Comercial SGPS, S.A.
and Banif Investimentos SGPS, S.A., while maintaining a direct interest in Companhia de Seguros
Açoreana, S.A., which is responsible for all of the Banif Financial Group's insurance business.
Banif Comercial SGPS, S.A. controls companies geared to commercial banking business, including Banif -
Banco Internacional do Funchal, S.A., Banif - Banco Internacional do Funchal (Brasil), S.A., operating in
Brazil, and others engaged in specialist lending activities - Banif Go, Instituição Financeira de Crédito,
S.A., and Banif Rent - Aluguer Gestão e Comércio de Veículos Automóveis, S.A..
Banif Investimentos SGPS, S.A. controls these companies which operate in investment banking activity,
including Banif - Banco de Investimento, S.A., which positions itself as a specialist operator in private
banking, asset management, brokerage, capital markets, private equity, corporate finance and project
finance activities and Banif – Banco de Investimento (Brasil), S.A..
On 1 January 2009, Banco Banif e Comercial dos Açores, S.A., a commercial bank also controlled by Banif
Comercial SGPS, was merged and incorporated within Banif.
In July 2009, Banif - SGPS, S.A. entered into an agreement with the controlling shareholders of
Tecnicrédito - SGPS, S.A., which is the holding company of the financial group that comprises, among
other entities, Banco Mais, S.A., (which specialises in the automobile finance) through the acquisition by
Banif - SGPS, S.A. of shares representing a minimum of 90.01 per cent. and a maximum of 100 per cent. of
the share capital of Tecnicrédito – SGPS, S.A.
Following integration on 30 September 2009, Rentipar Financeira - SGPS, S.A. (which is controlled by
Comendador Horácio Roque), continues to hold a majority participation and controlling interest in Banif –
SGPS, S.A.. Banif - SGPS, S.A. acquired 100 per cent. of the share capital of Tecnicrédito – SGPS, S.A..
The organisational structure of Banif Financial Group is set out below (as at 30 September 2009):
- 80 -
- 81 -
History and Ownership
The company formally known as Banif - Banco Internacional do Funchal, S.A. was transformed into
Banif - SGPS, S.A., (the holding company of Banif Financial Group), and a new bank with the same
name, "Banif - Banco Internacional do Funchal, S.A." was created by the transfer of the whole banking
activity of the former company and of the holding company of the Group to Banif. As a result, Banif now
acts only as a commercial bank and no longer as a holding company of the Banif Financial Group.
On 1 January 2009, Banco Banif e Comercial dos Açores, S.A. (a commercial bank acting in Portugal,
mainly in the Azores Region), was merged and incorporated within Banif.
Banif is 100 per cent., indirectly owned by the holding company of the Group, Banif - SPGS, S.A., which
has its shares listed on the regulated market of Euronext Lisbon — Sociedade Gestora de Mercados
Regulamentados, S.A. ("Euronext Lisbon").
Regulatory Status
Banif qualifies as a credit institution within the meaning of EU Directive 2000/12/EC. Banif is authorised
by the Portuguese Central Bank (Banco de Portugal) to pursue the business of a credit institution in
Portugal. Pursuant to Article 3 of the Articles of Association of Banif, its corporate objective is the
exercise of banking activity, which may be pursued by carrying out all acts and transactions permitted by
law to retail banks.
Main Activities and Recent Developments
Banif operates in mainland Portugal, in Madeira and in Azores.
In Madeira, Banif operates in the commercial and retail banking markets, concentrating on relationship
banking through the following business units:
(a) Retail banking, comprising a distribution network of 37 branches (as at 30 September 2009),
which offer a wide range of banking products and services (such as mortgage and consumer
loans, credit and debit cards, deposit and investment products, commercial lending and
bancassurance);
(b) Private banking to high net worth individuals and institutional clients, offering tailor-made
products and services; and
(c) Corporate banking, which provides services to medium and large sized corporations in Madeira.
Banif benefits from a close relationship with these regional government and the local administrations as it
is the main financial institution which not only manages the public office accounts (from which most of
the public servants' wages are paid), but also in the finances the main projects and public works that take
place in Madeira.
In September 2009, the loan portfolio of Banif in Madeira was approximately Euro 1,596.7 million and
the total deposits from customers amounted to approximately Euro 1,694.7 million.
In Azores, Banif operates in the same banking segments as in Madeira. In Azores, the retail banking
network comprised of 46 branches as of September 2009, which offer a wide range of products and
services as well as private banking and corporate banking services to high net worth individuals and to
medium sized and large corporations. In 2009, the bank tightened its relationship with local government
through a number of protocols and cooperation agreements. In September 2009, the loan portfolio of
Banif in Azores was approximately Euro 1,519.8 million and the total deposits from customers amounted
to Euro 969.6 million.
In mainland Portugal Banif operates in two main market segments:
(a) Corporate and Medium / High Segment Business, providing services to medium sized and large
companies, institutional clients and medium-to-high income private customers; and
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(b) Retail Segment Business, offering a wide range of banking products (home loans, personal loans,
cash management accounts, credit and debit cards) and services to personal customers, small
businesses and independent professionals.
The Corporate and Private Banking Division is responsible for coordinating and developing business with
medium and large companies, institutional clients and medium-to-high income private customers. In
addition, it also comprises a unit focused on factoring and confirming business.
Since late 2008, following the stabilisation of the organizational restructuring of this division, every
business center has a private manager in order to provide a comprehensive corporate client service and at
the same time respond to the specific needs of private medium-to-high income customers and high net
worth individuals.
The network of business centers has increased in order to provide wider geographical coverage and at the
end of September 2009 the Corporate Banking Division had a total of 25 Business Centers and 48
Account Managers.
The corporate loan portfolio, managed by the Corporate Banking Division amounts to approximately
Euro 3,535.5 million, while total deposits taken by this unit amount to approximately Euro 601.2 million,
as at September 2009.
The loan portfolio, managed by the Private Banking Division amounts to approximately Euro 269.2
million, while total deposits taken by this unit amount to approximately Euro 841.2 million, as at
September 2009.
The Branch Network Division, "Direcção de Rede de Agências", has 262 branches in mainland Portugal
and is primarily focused on bringing in deposits and placing products and services in its target segment:
personal customers, small businesses and independent professionals. In view of its size, the Branch
Network Division has prime responsibility for marketing Banif's strategic products: home loans, personal
loans, cash management accounts, credit and debit cards. It also assumes a leading role in attracting
deposits and in the development of cross-selling, placing the Banif Financial Group's products including
leasing products, investment funds and insurance.
To support the branch network, to increase sales and to capture new business without increasing fixed
costs, a network of agents ("Agency Channel Division") was established in 2001. In the 4th
quarter of
2008, a new project was developed in partnership with Companhia de Seguros Açoreana, the insurance
company of Banif Financial Group, named ―Assurfinance‖, which intends to develop a new network of
agents of the insurance company that will sell financial products offered by Banif. This project, in
September 2009, integrated 224 agents and the objective is to reach 400 agents in 2010.
In September 2009, this network had 1,108 commercial agents, 416 real estate agents and 224
assurfinance agents). These agents limit their activity to introducing the client and identifying the closest
branch to such client, which is, then, responsible for approving and concluding the operations.
The total loan portfolio managed by the Branch Network Division, "Direcção de Rede de Agências" as of
September 2009, was approximately Euro 2,802.7 million, total customer deposits amounted to
approximately Euro 2,589.8 million.
The development of technology, the growing demand for alternative distribution channels and Banif's
concern to continually satisfy the needs and expectations of its clients led Banif to launch an internet
banking service, "Banif@st", in 2001. Banif's clients can access Banif@st through four channels: (i)
Internet (from any computer with an internet connection); (ii) Telephone ("Banifone"); (iii) SMS (from
any mobile phone enabled for text messages); and (iv) WAP (from any mobile phone with WAP
configuration).
By the end of September 2009, 70 per cent. of Banif's clients had access to Banif@st and 17 per cent. of
Banif's clients used the service frequently.
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Boards and Officers of Banif
(a) Management Team
All members of the Management Team of Banif have their business address at the registered
office of Banif.
(i) Board of Directors
Chairman Comendador Horácio da Silva Roque
Vice Chairmen Joaquim Filipe Marques dos Santos
Carlos David Duarte de Almeida
Full Members António Manuel Rocha Moreira
Manuel Isidoro Martins Vaz
José Marques de Almeida
João Manuel da Silva Machado dos Santos
José António Machado de Andrade
Diogo António Rodrigues da Silveira
João Paulo Pereira Marques de Almeida
Vitor Manuel Farinha Nunes
(ii) Executive Board
Chairman Joaquim Filipe Marques dos Santos
Members Carlos David Duarte de Almeida
António Manuel Rocha Moreira
Manuel Isidoro Martins Vaz
José António Machado de Andrade
João Manuel da Silva Machado dos Santos
João Paulo Pereira Marques de Almeida
(b) Audit Board
Chairman Fernando Mário Teixeira de Almeida
Effective Full Members António Ernesto Neto da Silva
José Lino Tranquada Gomes
Alternate Full Member José Pedro Lopes Trindade
(c) Official Auditors
Ernst & Young & Associados – S.R.O.C., S.A., represented by João Carlos Miguel Alves (ROC
nr. 896)
Below we give a list of the offices held in other companies by members of the Board of Directors and of
the Supervision Board of Banif as above mentioned:
Board of Directors
Comendador Horácio da Silva Roque
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Board of Directors
• Rentipar Financeira SGPS, S.A.
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• Banif Comercial SGPS, SA
• Banif - SGPS, S.A.
• Banif - Banco Internacional do Funchal (Brasil), S.A.
• Banif - Banco de Investimento (Brasil), S.A.
• Banif Corretora de Valores e Câmbio, S.A.
• Banif (Açores) - SGPS, S.A.
• Banif Investimentos SGPS, S.A.
• Banif - Banco de Investimento, S.A.
• Banif International Holdings, Ltd.
• Companhia de Seguros Açoreana, S.A.
• Renticapital - Investimentos Financeiros, S.A.
(ii) Chairman of the General Meeting
• Banif Go – Instituição Financeira de Crédito, S.A. (representing Rentipar
Financeira, SGPS, S.A.)
• Banif Rent - Aluguer, Gestão e Comércio de Veículos Automóveis, S.A.
(representing Rentipar Financeira, SGPS, S.A.)
• Banif - Banco Internacional do Funchal (Brasil), S.A.
• Banif - Banco de Investimento (Brasil), S.A.
• Banif Corretora de Valores e Câmbio, S.A.
• Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento
Mobiliário, S.A. (representing Rentipar Financeira, SGPS, S.A.)
• Banif Capital - Sociedade de Capital de Risco, S.A. (representing Rentipar
Financeira, SGPS, S.A.)
• Banif Imobiliária, S.A. (representing Rentipar Financeira, SGPS, S.A.)
• SIP - Sociedade Imobiliária Piedade, S.A. (representing Rentipar Financeira
SGPS, S.A.)
• Gamma - Sociedade de Titularização de Créditos, S.A.
(b) Other Entities
(i) Member of the Board of Directors or Management Board
• Rentipar Indústria SGPS, S.A. (Chairman)
• Rentipar Investimentos SGPS, S.A. (Chairman)
• Rentiglobo SGPS, S.A. (Chairman)
• SIET – Sociedade Imobiliária de Empreendimentos Turísticos Savoi, S.A.
(Chairman)
• Soil SGPS, S.A. (Chairman)
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• Rentimundi – Investimentos Imobiliários, S.A. (Chairman)
• Investaçor Hóteis, S.A. (Chairman)
• EMT – Empresa Madeirense de Tabacos, S.A. (Vice Chairman)
• VITECAF – Fábrica de Rações da Madeira, S.A. (Vice Chairman)
• RAMA – Rações para Animais, S.A. (Vice Chairman)
• AVIATLÂNTICO – Avicultura, S.A. (Vice Chairman)
• Fomentinvest SGPS, S.A. (Member)
• Ronardo – Gestão de Empresas, Lda. (Manager)
(ii) Officer of the General Meeting
• Genius - Mediação de Seguros, S.A. (Chairman)
• Rentimedis - Mediação de Seguros, S.A. (Chairman)
• Mundiglobo - Habitação e Investimentos, S.A. (Chairman)
• Habiprede - Sociedade de Construções, S.A. (Chairman)
• MS Mundi - Serviços Técnicos de Gestão e Consultoria, S.A. (Chairman)
• EMT - Empresa Madeirense de Tabacos, S.A. (Chairman)
• VITECAF - Fábrica de Rações da Madeira, S.A. (Chairman)
• RAMA - Rações para Animais, S.A. (Chairman)
• Investaçor SGPS, S.A. (Chairman)
• SIET - Sociedade Imobiliária de Empreendimentos Turísticos Savoi, S.A. (Vice
Chairman)
• Rentipar Seguros SGPS, S.A. (Chairman)
Joaquim Filipe Marques dos Santos
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Board of Directors
• Banif Go – Instituição Financeira de Crédito, S.A.
• Banif Rent - Aluguer, Gestão e Comércio de Veículos Automóveis, S.A.
• Banif - Banco Internacional do Funchal (Cayman), Ltd.
• BanifServ - Empresa de Serviços e Tecnologias de Informação, ACE
• Banif Finance, Ltd.
• Banif International Bank, Ltd.
(ii) Vice-Chairman of the Board of Directors
• Banif - SGPS, S.A.
• Banif – Banco Internacional do Funchal (Brasil), S.A.
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• Banif - Banco de Investimento (Brasil), S.A.
• Banif - Corretora de Valores e Câmbio, S.A.
• Banif International Holdings, Ltd.
(iii) Member of the Board of Directors
• Banif Investimentos SGPS, S.A.
• Banif (Açores) - SGPS, S.A.
• Banif Comercial SGPS, S.A.
(iv) Chairman of the General Meeting
• Vestiban – Gestão de Investimentos, S.A.
(v) Chairman of the General Meeting and Member of the Remuneration Committee
• BCN – Banco Caboverdiano de Negócios, S.A.
Carlos David Duarte de Almeida
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Board of Directors
• Banif Forfaiting Company, Ltd.
• Banif Finance (USA) Corp.
• Banif Financial Services Inc.
• Banif Holding (Malta), Ltd.
• Banif Trading, Inc.
(ii) Vice-Chairman of the Board of Directors
• Banif - SGPS, S.A.
• Banif - Banco de Investimento, S.A.
• Banif International Bank, Ltd.
(iii) Member of the Board of Directors
• Banif Comercial SGPS, S.A.
• Banif – Banco Internacional do Funchal (Brasil), S.A.
• Banif – Banco de Investimento (Brasil), S.A.
• Banif - Corretora de Valores e Câmbio, S.A.
• Companhia de Seguros Açoreana, S.A.
• Banif (Açores) SGPS, S.A.
• Banif Investimentos SGPS, S.A.
• Banif – Banco Internacional do Funchal (Cayman), Ltd.
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• Banif Finance, Ltd.
• Banif International Holdings, Ltd.
• Banif Bank (Malta) Plc.
António Manuel Rocha Moreira
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Vice-Chairman of the Board of Directors
• BCN – Banco Caboverdiano de Negócios, S.A.
(ii) Member of the Board of Directors
• Banif - SGPS, S.A.
• Banif Comercial SGPS, S.A.
• Banif Rent - Aluguer, Gestão e Comércio de Veículos Automóveis, S.A.
• Banif Go – Instituição Financeira de Crédito, S.A. (ex-Banif Leasing, S.A.)
• Banif (Açores) SGPS, S.A.
• Banif Finance, Ltd.
• Banif International Bank, Ltd.
(b) Other entities
(i) Chairman of the Audit Board
• Zon TV Cabo Madeirense, S.A., representing Banif – Banco Internacional do
Funchal, S.A.
Manuel Isidoro Martins Vaz
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Board of Directors
• Banco Imobiliária, S.A.
• Sociedade Imobiliária Piedade, S.A.
• BANIEUROPA HOLDING, S.L.
(ii) Member of the Board of Directors
• Banif Go – Instituição Financeira de Crédito, S.A.
• Banif Rent - Aluguer, Gestão e Comércio de Veículos Automóveis, S.A.
• Banca Pueyo, S.A.
José Marques de Almeida
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Board of Directors
• Banif - SGPS, S.A.
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• Rentipar Financeira SGPS, S.A.
(ii) Chairman of the Board of Directors
• Vestiban – Gestão e Investimentos, S.A.
(iii) Chairman of the General Meeting
• Banif Comercial SGPS, S.A.
(b) Other entities
(i) Chairman of the General Meeting
• Rentipar Investimentos SGPS, S.A.
João Manuel da Silva Machado dos Santos
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Board of Directors
• Banco Banif e Comercial dos Açores, S.A. (former Banco Comercial dos
Açores, S.A.)
(ii) Chairman of the Executive Board
• BanifServ – Empresa de Serviços e Tecnologias de Informação, ACE
(iii) Chairman of the General Meeting
• Banif (Açores) SGPS, S.A., representing Banif – Banco Internacional do
Funchal, S.A.
(b) Other entities
(i) Member of the Board of Directors
• SIBS – Sociedade Interbancária de Serviços, S.A., representing Banif – Banco
Internacional do Funchal, S.A.
José António Machado de Andrade
(a) Other entities
(i) Member of the Board of Directors
• Zon TV Cabo Madeirense, S.A., representing Banif – Banco Internacional do
Funchal, S.A.
(ii) Chairman
• Conselho Económico e Social da RAM
Diogo António Rodrigues da Silveira
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Executive Committee
• Companhia de Seguros Açoreana, S.A.
(ii) Member of the Board of Directors
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• Banif Imobiliária, S.A.
• Sociedade Imobiliária Piedade, S.A.
• BanifServ – Empresa de Serviços e Tecnologias de Informação, ACE
João Paulo Pereira Marques de Almeida
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Board of Directors
• Vestiban - Gestão de Investimentos, S.A.
Vitor Manuel Farinha Nunes
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Board of Directors
• Tecnicrédito SGPS, S.A.
• Banco Mais, S.A.
• Bank Plus Bank Zartkoruen Mukodo Reszvenytarsasag
• Banco Pecúnia (Brasil)
• Tecnicrédito ALD, Aluguer de Automóveis, S.A.
• TCC Investments Luxembourg, SARL
• FN Participações, SGPS, S.A.
(b) Other entities
(i) Manager
• Core Investimentos, Consultoria e Serviços, Lda.
• Margem – Mediação de Seguros, Lda.
Audit Board
Fernando Mário Teixeira de Almeida
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Chairman of the Audit Board
• Banif - SGPS, S.A.
• Banif Comercial SGPS, S.A.
• Banif – Banco de Investimento, S.A.
• Companhia de Seguros Açoreana, S.A.
(b) Other entities
(i) Chairman of the General Meeting
• Advancer – Soluções de Gestão, S.A.
- 90 -
António Ernesto Neto da Silva
(a) Companies in the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Audit Board
• Banif - SGPS, S.A.
• Banif Comercial SGPS, S.A.
(b) Other entities
(i) Chairman of the Board of Directors
• Deimos Engenharia, S.A.
(ii) Managing Director
• Financetar – Sociedade de Serviços Financeiros, Empresariais e Imobiliários,
S.A.
José Lino Tranquada Gomes
(a) Companies on the Rentipar Financeira SGPS, S.A. Group
(i) Member of the Audit Board
• Banif - SGPS, S.A.
• Banif Comercial SGPS. S.A.
(b) Other entities
(i) Manager
• Tranquada Gomes & Coito Pita – Sociedade de Advogados
• Imolapeira – Imobiliária da Madeira, Lda
• Freitas, Sales & Gomes – Empreendimentos Imobiliários, Lda
• Netanarium – Consultadoria e Gestão, Unipessoal, Lda
(ii) Chairman of the General Meeting
• Edifícios Park – Empreendimentos Imobiliários e Turísticos, S.A.
Conflicts of Interest
To the knowledge of Banif the members of the administrative, management or supervisory bodies of
Banif do not have any potential conflicts of interest between any duties of Banif and their private
interests.
Audit Committee
Banif does not have an internal Audit Committee. Audit responsibilities are exercised within Banif by the
Audit and Inspection Department, which plays an important role in assessing and validating the internal
control instituted within Banif.
As an integral part of the permanent monitoring system for internal control of the Bank, the Department is
responsible for independently verifying compliance with the regulations in force by:
• striving to ensure compliance with internal rules and legal provisions, reporting facts and
situations which represent deviation from these rules;
- 91 -
• checking the quality of controls and security levels established in systems and information
technology, focussing in particular on the e-banking service (Banif@st), with regard to both
quality and security of services rendered; and
• regular audits of operations involving business risks.
The evolving perspective of the Bank of Portugal on the effectiveness and adequacy of internal control
systems and requirements recognized and accepted internationally, as reflected in the publication of
notice 5/2008, has led to the development of new routines for the prevention of internal fraud, with new
specialised analysis.
Work on harmonising operational audit processes between the Inspection and Audit Office (IAO) at
Banco Banif e Comercial dos Açores, S.A. and the Operational Audit and Inspection Office (OAIO),
which had started in 2007, resulted in 2008 in full and effective convergence, making it possible to carry
out joint operational audits in mainland Portugal, Madeira and Azores. The offices now share working
methodologies, allowing for complete integration of auditors from Banco Banif e Comercial dos Açores,
S.A. into the Banif structure during the merger process.
A set of audits are planned for 2009 central divisions and information systems, which will enable an
assessment of risk in accordance with the Bank of Portugal’s Risk Assessment Model, and a review of the
level of internal control.
Ernst & Young Audit & Associados – SROC, S.A. are the external auditors of Banif.
Control of Operating Risks
The Banif Financial Group has long recognized the importance of risk management in its operations,
assuring that its business activities are supported by a risk culture which is internalised throughout the
operation, constituting an important pillar for the implementation of the strategies and policies defined by
the Board of Directors, aligned with the guidelines issued by the supervisory authorities.
Over recent years the Group has undertaken a number of projects with a view to the progressive
improvement of risk management and monitoring practices. These improvements seek to address the
complexity and speed of change and evolution in the risks to which the Group is exposed and the
priorities for implementation.
At the same time, work has proceeded on the development of a complete and up-to-date risk information
system, supported by specific information technologies for management of the different risks in the
Group’s business activities. The Group has gradually but consistently invested in integrated technology
for risk information and management, in order to comply with the toughest standards in this field.
In 2008, as part of the new governance model, the Group instituted a corporate risk division, which takes
central responsibility for risk management. The division continued many projects already undertaken,
such as those related to the implementation of measures in accordance with Basel II requirements.
Each group entity has its own organisational structure for risk management, with resources to match its
respective business activities and associated risks, to implement the policies defined by the directors of
Banif – SGPS, S.A.
The Group manages risk and develops policy in this area through a cross-group development structure.
The Board of Directors is responsible for designing risk policies supported by assessment and monitoring
of risks throughout the corporate structure. They monitor the most significant risks – credit, market,
liquidity and operating risks, amongst others – and whenever necessary propose new policies and
corrective measures to assure risk prevention and mitigation.
Self-assessment exercises were conducted for the risk management system and for the risk control
system, in keeping with the guidelines contained in the Bank of Portugal Notice 5/2008.
These assessments pinpointed the main shortcomings in each Group entity and at corporate level and
resulted in a listing and classification of risks by category and degree. This exercise has generated
mitigation and remediation measures identified and scheduled in keeping with the scale, severity and
frequency of the risks identified.
- 92 -
The Group also conducted stress tests in accordance with Bank of Portugal Instruction 18/2007, selecting
tests in line with its size, products marketed, customer characteristics, the main balance sheet items, its
strategic plan and the tools available for risk management. The tests were applied to the main risks to
which the Group is exposed. The test results therefore provide an additional management tool, helping the
Group to plan corrective measures.
Banking business is exposed to extremely varied risks. Operating risks area managed and controlled on
the basis of identification and analysis of Banif's exposure to various risks (lending, market, structural and
operational risk) deriving from its business operation, and definition of strategies and policies to prevent
and mitigate these risks.
Risks are controlled and managed at Banif by the entire organisational structure, led by strategies and
policies mapped out by the Executive Board and with central responsibility for this work being taken by
the Risk Management Division.
Risk management is based on identification and analysis of Banif's exposure to various risks (lending,
market, structural, operational risk and other risks) and definition of policies to prevent and mitigate these
risks.
Banif seeks to raise collective awareness of the nature and scale of the risks involved in each type of
activity, whilst at the same time adopting strategies to maximize profits permitted by the risks and
exposure limits established.
Risk control activities are carried out, and the respective responsibility is exercised, independently of
other Bank divisions and departments.
Banif assures continuous monitoring of risk through systematic measurement of the performance of its
different business areas, by measuring the results achieved in view of the risks and the limits set.. Risks
are continuously monitored, making it possible to take preventive action whenever necessary.
The policies adopted for each of the main risks identified are reviewed whenever appropriate, allowing
for development of preventive measures.
Also with regard to risk control, Banif worked in 2008 on developing stress tests which will initially be
used internally, and then extended throughout the Group. These tests contribute to more effective and
efficient management of the risks to which Banif is exposed. The main impacts were assessed, both on
equity and on profits, of variations in the main business indicators and of exposure to the most relevant
risks.
Risk control tasks and activities are carried on independently from other management bodies.
Credit Risk
Credit Risk is the probability of occurrence of negative impacts on results or capital, due to the inability
of a counterparty to honour its financial commitments to the Group, including possible restrictions on the
transfer of payments from abroad.
The Group’s credit risk strategy is based on a set of policies which guide the granting and monitoring of
credit. Whenever necessary, these policies are adjusted in line with the evolution of business and market
conditions.
Credit risk is managed and responsibilities are delegated in line with the principles and rules for granting
and maintaining credit to customers, these are set out in rules and procedures which are reviewed and
adjusted when and as necessary.
These rules apply across the Group, as they include regulations on each business area and marketing
network, as well as rules on the preparation, analysis and follow-up of customer credit.
Credit risk is managed and monitored in keeping with the principles and rules for granting and
maintaining credit set out in Banif's Credit Manual, which sets out a series of general rules,
complemented by specific procedures and regulations for each specific business area and the related sales
networks, together with rules on the preparation, analysis and follow-up of lending to customers.
- 93 -
In 2008, in line with the quality and efficiency policy which defines standards in all areas of the Banif’s
activities, all credit rules and regulations for sales areas were reviewed.
Credit risk management
Credit risk management at Banif is based on permanent monitoring of lending portfolios and on
compliance with the quality targets set each year. In this context, management assures that risk indicators
are kept at levels consistent with the lending strategy defined.
Objectives are set for risk management in terms of: (i) defining targets for the risk scoring of the
portfolio; (ii) concentration of exposure, geographically and in terms of sectors and major risks; (iii)
setting of targets for increasing the security of operations, by obtaining guarantees. This also assures that
these factors are maintained as consistent with lending policies.
Banif has implemented a set of initiatives designed to achieve improvements in analysis and monitoring
of credit risk management and worked in 2008 on creating an IT platform for the management process for
credit applications from corporate customers, and approval and renewal of credit limits, contributing to
more effective management, shared between all the participants in the process.
At the same time, the Bank has continued to develop projects for modelling internal risk scoring systems,
which have proved to have sufficient capacity in relation to identification and prediction of credit risks.
The development of the internal models have allowed the Bank to assess its home loans, personal loans
and small business portfolios. Banif also uses external models and then compares the findings.
Internal Risk Scoring Systems
Considering the particular features of Banif’s portfolios, the internal risk scoring systems look at specific
customer characteristics, historical and relationship variables and the qualitative and quantitative
characteristics of the operations.
The internal risk scoring systems subdivide into the following categories:
Internal scoring models – Acceptance and Behavioural. These scoring models allow each credit
application to be assigned a probability of default, and these models are used when credit is
granted. These models also make it possible to classify an operation, in terms of exposure to risk,
until the operation is one year old. The behavioural scoring models are used to measure the risk on
lending operations over their lifetime, in view of the irregular behaviour or otherwise of the
counterparty in operations more than one year old.
Internal rating models for corporate lending. The rating model assigns to each (corporate)
customer a risk classification in line with the probability of default, thereby measuring the risk of
default by the counterparty. Banif has a statistical rating model for portfolios of small and medium
sized business, which combines financial information with qualitative data, including relationship
variables.
Credit risk assessment process
The risk of non-standard credit is assessed by Risk Analysis Units belonging to the organisational
structure of the Risk Management Division.
Non-standard operations and the respective customers are assessed by experienced teams using methods
and procedures established by Banif and designed to provide adequate security in acceptance, monitoring
and control of portfolio risk. These procedures involve strict criteria, comprising analysis of:
• quality of the financial information provided by customers;
• assessment of the experience of the customer as manager, in the business sector in question,
repayment capacity and their relationship with the financial market;
quality of the proposed operation, namely purpose, duration, guarantees, exchange rate risk, etc;
- 94 -
assessment of the results obtained, namely through use of the rating model and the yield for the
business banking sector.
Standardised lending, such as home loans, personal loans, small business credit, is assessed regularly on a
collective basis, and each portfolio is monitored with regards to credit risk and quality.
In assessing the risk of corporate groups, the following criteria are also considered for risk assessment
purposes:
• external risk ratings;
• the credit risk of the various group companies;
• the regulatory limitations on major risks, the scale of these in relation to equity and weighting of
these risks for Banif's solvency ratio.
The risk assessment units also participate on a daily basis, through their managers, and up to the limits
established in the credit rules, in decision making processes in conjunction with the different business
areas.
Also with regards to credit risk, once operations have been contracted, there is regular and periodic
follow-up, in particular with regards to the renewal of credit lines and the particular terms involved.
Monitoring of credit risk
Credit risk is monitored by following through and controlling the evolution of exposure to credit risk on
the portfolios and in implementing mitigation measures designed to preserve the credit quality and the
pre-defined risk limits.
In 2008, Banif started working on a project to update the existing alert signals. This initiative is based on
a Group project for recovery of overdue credit, and has involved developing a set of tools in order to
achieve improvements in the preventive management of default and respective recovery.
Credit risk is monitored through regular preparation of indicators for credit quality and for the quality of
the respective segmented portfolios, with assessment of the effectiveness of the policies in place, risk-
adjusted returns and application of corrective measures where necessary.
Market Risk
Market risk is understood as the probability of the occurrence of negative impacts on results or capital,
due to unfavourable movements in the market price of instruments in the trading book, caused by
fluctuations in interest rates, exchange rates, listed share prices or commodity prices.
Management of Banif’s market risk is considered as prudent and is monitored on an ongoing basis. The
limits for involvement in markets are systematically reviewed by management and adjusted when
necessary. Decisions are taken on the basis of procedural and internal control rules and of the standards
issued by the regulatory authority.
Management of market risk
Banif’s market risk management policy consists of hedging risk on more volatile assets, in particular on
fixed rate products and on the exchange rate operations contracted with customers. Positions recorded in
Banif’s trading book include foreign exchange, fixed rate and floating rate risks where the respective
fluctuations are entered in the accounts at market prices.
Interest rate sensitivity analysis are conducted periodically, using scenarios to measure the impact of rate
variations on interest rate margins and capital, in keeping with the recommendations of the supervisory
authority.
Interest rate sensitivity analysis
The purposes of interest rate sensitivity analysis is to assess Banif's exposure to this risk and infer its
capacity to absorb adverse variations in the rates to which it is exposed.
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Interest rate risk is systematically analysed in accordance with the repricing periods for assets and
liabities; in 2008, this risk was kept within the limits approved by the authorities.
The Bank conducts sensitivity analyses of interest rates, at regular intervals, measuring their impact, in
various scenarios, on the margin and on equity, in accordance with the recommendations of the regulatory
bodies.
Exchange rate sensitivity analysis
Foreign exchange rate risk represents the risk that the value of financial instruments expressed in a
foreign currency may present fluctuations due to changes in the exchange rate. Banif monitors its
exposure to exchange rate risk through daily control of overall exposure through positions in different
currencies, and adopts overall hedging strategies to assure that these positions are kept within limits
defined by the regulatory authorities.
Price risk sensitivity analysis
Price risk is not very relevant in the context of Banif's overall activities, so sensitivity analysis is not
conducted. In view of the relative unimportance, Banif makes use of the Bank of Portugal regulations (cf.
Decree-Law 103/2007) which allow capital requirements relating to the trading book to be calculated in
accordance with capital requirements for credit risk, if all the following conditions are met: (i) trading
book activity normally accounts for no more than 5 per cent. of total operations; (ii) total exposure on the
trading book is normally less than 15 million euros; and (iii) trading book activities account for no more
than 6 per cent. of total trading and a sum of no more than 20 million euros.
Liquidity Risk
Liquidity risk is defined as the probability of the occurrence of negative impacts on results or capital
resulting from the institution’s inability, especially in the short term, to dispose of liquid funds to honour
its financial obligations, as and when they mature. This risk is managed centrally for the Banif Financial
Group as a whole.
Management of liquidity risk
Current and structural liquidity are managed in line with the value and timing of commitments accepted
and funds obtained, by identifying liquidity gaps. The policies for obtaining funding from customers, on
the one hand, and from the financial market and the European Central bank, on the other, have assured the
stability of funds, despite the widespread reduction in liquidity levels in the financial system, and both the
liquidity gap and the cumulative gap have stayed within acceptable limits defined for the different
periods.
The volatility of the markets in 2008 required closer monitoring of the current liquidity situation, not only
because of the indicators contained in the measures issued by the Bank of Portugal, but also because of
internal indicators geared to efficient day-to-day management.
Analysis of liquidity risk
Stress tests were conducted for liquidity risk. The magnitude of the impacts simulated allowed the Group
to conclude that exposure to this risk is acceptable in view of the current macro-economic environment.
As part of current liquidity management, Banif’s short-term funding plan has involved regular
quantitative and qualitative analyses and stress tests which have made it possible to identify weak points
and to plan measures to be taken, as set out in a contingency plan, with a view to restoring liquidity
whenever deemed necessary.
Considering Banif's interest in improving working methods for developing the measurement and
management of the various balance sheet risks, a project was launched in 2008 for development of an
ALM (Asset and Liability Management) Model, which will allow for an effective improvement in this
field at Banif.
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Operating Risk
Operating risk is the risk of losses resulting from the inadequacy of shortcomings of procedures,
personnel or internal systems, or from external events, including legal risks.
Banif’s operating risk is managed and monitored by a special dedicated team for this purpose. This team
is equipped with the working resources needed for managing operating risks, namely a technological
solution for operating risk management, adapted to the structure of Banif, permitting the collection,
processing and management of events and losses of this type.
Information on operating risks and on how to mitigate them is provided throughout Banif's structure by
the Operating Risk Managers, placed in most of Banif's central and sales divisions, who take part
regularly in the reporting of critical events.
Other information sources were prepared to transmit information of relevance to operating risk, including
information from the Customers Complaints Office, the Audit, Accounts and Organizational (internal
processes) divisions.
Work continues on implementing the interface between the operating risk software and other software
with information of relevance to measuring operating risk, thereby extending the range of sources for risk
management.
Analysis of the main Financial Indicators
The financial statements of Banif for the financial years of 2008 and 2007 have been drawn up in
accordance with the Adjusted Accounting Standards (AAS), under the terms of Bank of Portugal Notice
no. 1/2005. The AAS are based on the International Financial Reporting Standards (IAS/IFRS), as
adopted from time to time by Regulation of the European Union, with the following exceptions:
• Valuation and provisions for lending, given that the Bank of Portugal has maintained the
requirement for the constitution of regulatory provisions under the terms of Notice 3/95;
• Employee benefits, where there is a period for deferral of the impacts of transition to IAS/IFRS;
• The fair value option for valuation of tangible assets is eliminated, and these assets are to be kept
at historical cost.
Income Statement
Despite the adverse market conditions, both in Portugal and internationally, due to the unprecedented
crisis which broke out in 2008, leading to widespread scarcity of funding, due to the extreme volatility of
the markets, Banif has recorded positive performance, as reflected by the increase in operating revenue.
Operating revenue, which is composed by the financial margin, profits on financial operations,
commissions and other net income, grew by 4.0 per cent., standing at 239.7 million euros, despite the
overall poor performance of financial operations.
The financial margin, which includes dividend income, grew by 10 per cent. over the previous year, at
172.8 million euros, reflecting the impact of significant growth in lending, despite the continuous
reduction in the total financial brokerage margin (margin on the lending portfolio plus the portfolio of no-
balance sheet customer deposits), which, from year-end 2007 to year-end 2008, decreased 0.28 per cent.
from 2.91 per cent. to 2.63 per cent..
Profits on financial operations decreased by 12.4 million euros when compared with 2007, with an overall
loss of 5.4 million euros in 2008. This was due to the difficult environment in the financial markets and to
the fact that significant gains were recorded in 2007 on the disposal by Banif – SGPS, S.A. of the holding
in Cabo TV Madeirense, which was recorded under ―Available for Sale Financial Assets‖.
Other net income, which includes commissions on services and reimbursement of expenses, increased by
9 per cent. in 2008 reaching 72.3 million euros, due to the efficient provision of services and the
expansion of the customer base, with improving levels of loyalty.
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Reflecting the organisational growth of Banif, transformation costs (personnel expense, overheads and
depreciation) stood at 169.3 million euros, up by 17.7 per cent. when compared with 2007.
Personnel costs totalled 87.3 million euros, representing a growth of 16.1 per cent. over the previous year,
due to expansion of the workforce with 166 new employees, making a total of 2,162 employees at the end
of 2008, and to payment of an extra month’s salary to mark the Group’s 20th
anniversary.
Overheads also climbed by 20.7 per cent. when compared to 2007, to a total of 71.9 million euros,
particularly due to the costs incurred in expanding the branch network (51 new branches were opened in
2008), to the advertising costs relating essentially to the Group’s new image (at the start of the year) and
also a number of technological projects and other relating to control of business risks.
Depreciation grew by 11.6 per cent. during 2008, due to the investment in expanding the branch network.
As a result of the heavy capital expenditure in 2008, the cost to income ratio rose by 8.2 percentage points
when compared with 2007, up from 62.42 per cent. at year-end 2007 to 70.62 per cent. at the end of 2008.
Operating cash flow stood at 80.5 million euros at the end of 2008, down by 15.8 per cent. when
compared with the figure recorded in 2007.
Net provisions and impairment calculated on an IAS/IFRS basis, totalled 42.7 million euros in 2008, up
by 19.7 million euros, reflecting the impact of the worsening economic situation at Portugal and abroad,
requiring a policy of increased prudence in assessing certain coefficients in the collective analysis of
credit impairment.
As a result, the net profits after tax of Banif totalled 23.6 million euros, on an IAS/IFRS basis, down by
50.4 per cent. when compared with the figure of 47.6 million euros in 2007.
Balance Sheet
Reflecting the strategy implemented in recent years, Banif’s business operations in 2008 presented the
following indicators:
• Growth in Banif's assets of 22.7 per cent.;
• Increase of 20.7 per cent. in the lending portfolio, including the balance for securitisation
operations; and
• Growth in on-balance sheet customer deposits of 20.6 per cent.
The balance sheet shows growth in assets, which stood at 9,542.3 million euros at the end of 2008, up by
22.7 per cent. on 2007.
"Loans and advances to customers" stood at a gross figure of 7,836.6 million euros, representing a growth
of 20.7 per cent. when compared with that recorded in 2007. This was achieved thanks to growth of 22.9
per cent. in mortgage lending, which at year-end 2008 accounted for 71.2 per cent. of lending to private
customers, and expansion of 33.5 per cent. in lending to corporate customers, which represented 55.0 per
cent. of total lending in gross terms in 2008.
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Comparative Analysis in accordance with Adjusted Accounting Standards (AAS) under the terms of Bank
of Portugal Notice no. 1/2005:
Period ended 31 December 2008
2008 2007 Variation
(Million euros) per cent.
Private Clients ....................................................................................................... 3,073.4 2,972.5 3.4
Home Loans ........................................................................................................ 2,189.0 1,781.6 22.9
of which securitized............................................................................................. 1,163.6 256.7 353.3
Other ................................................................................................................... 884.4 1,190.9 (25.7)
Corporate .............................................................................................................. 4,313.8 3,230.8 33.5
Lending ............................................................................................................... 1,620.0 1,183.1 37.0
Commercial Paper ............................................................................................... 1,940.0 1,468.7 32.1 Other ................................................................................................................... 753.0 579.0 30.1
Others .................................................................................................................... 449.5 289.7 55.2
Total Gross Loans and Advances ........................................................................ 7,836.8 6,493.8 20.7
Credit Impairment ................................................................................................... (198.5) (161.1) 23.2
Total Net Lending ................................................................................................. 7,638.3 6,332.7 20.6
Due to the difficult economic environment, Banif remained highly selective in lending to lower risk
customers and has carefully monitored credit risk in order to maintain its lending portfolio, as reflected in
a ratio of impairment to total lending of 2.53 per cent. (2.48 per cent. in December 2007) and a ratio of
defaulting credit to total lending of 1.80 per cent. (1.84 per cent. in December 2007).
The portfolio of financial assets at fair value through profit or loss grew by 116.8 million euros, due to
acquisition of resident issued securities with a value of 170.9 million euros, of which 141.6 million relates
to units in investment funds and 29.3 million euros to bonds.
Despite the current crisis conditions, which have hampered the normal workings of the market, Banif has
managed to maintain adequate liquidity levels.
2008 2007 Variation
(Million euros) per cent.
Total ....................................................................................................................... 8,832 7,100 24.4
Deposits from Central Banks .................................................................................. 648 - -
Deposits from other banks ...................................................................................... 2,168 2,054 5.6
Customer deposits ................................................................................................... 5,707 4,733 20.6
Financial liabilities .................................................................................................. 40 76 (47.9)
Other subordinated liabilities .................................................................................. 270 238 13.5
The breakdown of funding shows an increase in deposits from central banks, which stood at 647.7 million
euros, due to refinancing operations through the Eurosystem (provision of liquidity by the European
Central Bank). Customer accounts and other loans (including liabilities represented by securities) stood at
5,706.5 million euros, up by 20.6 per cent. from the figure of 4,732.5 million euros recorded at year-end
2007. Customer deposits stood at 5,639.8 million euros, representing growth of 22.6 per cent. over the
end of 2007. This growth was due to an increase of 907.6 million euros in term deposits as a result of the
expanding network, expansion of the customer base and enhanced customer loyalty, as well as several
initiatives in 2008 geared towards bringing in funding through innovative products and competitive rates.
2008 2007 Variation
(Million euros) per cent.
Customer Deposits ................................................................................................ 5,639.8 4,601.5 22.6
Sight .................................................................................................................... 1,269.3 1,016.0 24.9
Term .................................................................................................................... 4,272.0 3,364.4 27.0
Savings ................................................................................................................ 98.6 221.1 (55.4)
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In the course of 2008 Banif repaid three issues of medium term notes with a total value of 40.8 million,
each of which was repaid early at Banif’s option.
Also during 2008, Banif's contracted a subordinated loan totalling 15 million euros, provided by Banif
Finance, Ltd., issued subordinated bonds with a value of 25 million euros, and repaid bonds from the
2001/2011 issue of subordinated bonds, with a value of 8.6 million euros, resulting that the account for
other subordinated liabilities recorded an increase of 13.5 per cent., standing at 270.1 million euros.
Banif’s equity, on an IAS/IFRS basis, stood at 386.7 million euros at year-end 2008, up by 2.8 per cent.
on the figure recorded at the end of 2007, reflecting the increase in other reserves and retained earnings,
due to undistributed results from 2007.
The solvency ratio, in the IAS/IFRS accounts, and calculated using the Basel Core Criteria, stood at 9.65
per cent. at the end of 2008 (10.58 per cent. at year-end 2007), whilst the Tier 1 ratio stood at 5.78 per
cent. (6.36 per cent. in December 2007). For the same period, this ratio, calculated on a consolidated basis
for Banif and Banif Finance Ltd., a company controlled by Banif and for the purpose of issuing debt,
stood at 11.83 per cent. (13.29 per cent. in December 2007) on the basis of IAS/IFRS accounts, whilst the
Tier 1 ratio stood at 7.85 per cent. (7.70 per cent. in December 2007).
In 2008, and as a result of the net profit recorded by Banif on an IAS/IFRS basis, of 23.5 million euros,
and of the increase in the equity base, ROE stood at 6.18 per cent. (14.0 per cent. in 2007) and ROA at
0.27 per cent. (0.66 per cent. in 2007), both calculated using average values for equity and assets.
Interim period ended 30 September 2009
The following financial statements of Banif for the period ending 30 September 2009 have been drawn up
in accordance with the Adjusted Accounting Standards (AAS) under the terms of Bank of Portugal Notice
no. 1/2005:
Balance Sheet 30-09-2009 31-12-2008
Variation 31-12-2008
Pro Forma
Banif + BBCA
(Thousand euros) per cent. (Thousand euros)
Net Assets ........................................................................................................... 11,102,077 10,832,883 2.48 9,560,646
Loans and advances to customers ........................................................................ 9,547,351 9,220,566 3.54 7,641,224
Customers Deposits and other loans .................................................................... 6,517,090 6,656,429 (2.09) 5,639,799
Equity .................................................................................................................. 626,192 432,625 44.74 346,181
Income Statement 30-09-2009 30-09-2008 Variation 30-09-2008
Pro Forma
Banif + BBCA
(Thousand euros) per cent. (Thousand euros)
Financial Margin ................................................................................................. 142,683 150,763 (5.36) 120,795
Other Income ....................................................................................................... 78,735 62,620 25.73 54,571
Banking Revenue ................................................................................................ 221,418 213,383 3.77 175,366
Personnel Costs and Overheads (including depreciation) .......................................................................................................
(145,906) (146,170) (0.18) (121,169)
Provisions / Impairment ...................................................................................... (69,395) (56,380) 23.08 (49,197)
Pre-tax Profit ....................................................................................................... 6,117 10,833 (43.53) 5,000
Income Tax.......................................................................................................... (2,458) (1,724) 42.58 (573)
Net Profit ............................................................................................................. 3,659 9,109 (59.83) 4,427
Comparative Analysis, on an IAS/IFRS basis
For the purposes of analysing economic performance, for the sake of international comparability and also
to demonstrate the contribution that Banif makes to the Banif Financial Group, the Banif decided to use
accounting data in accordance with the International Financial Reporting Standards (IAS/IFRS), the rules
adopted by Banif – SGPS, S.A., the Group’s parent company, in preparing and presenting its consolidated
financial statements.
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To this end, Banif has prepared pro-forma financial statements, on an IAS/IFRS basis, and the respective
indicators. These statements are directly comparable in the periods in question (2008 and 2007) and
adequately reflect Banif’s contribution to the consolidated accounts of the Banif Financial Group. For
clarification purposes, the figures are not a pro-forma including Banif and BBCA.
Accordingly, on a IAS/IFRS basis, please find bellow a few financial highlights for 2008:
• Net profits of 23.6 million euros at 31 December 2008, down by 50.4 per cent. on 2007;
• Shareholders’ equity stood at 386.7 million euros, up by 2.8 per cent. over 2007; and
consequently,
• Return on Equity (ROE) stood at 6.18 per cent. as compared with 14 per cent. in 2007.
Balance Sheet 31-12-2008 31-12-2007 Variation
(Thousand euros)
(Thousand
euros) per cent.
Net Assets ..................................................................................... 9,542,302 7,776,292 1,766,010 22.7
Loans and advances to customers (gross) ..................................... 7,836,573 6,493,937 1,342,636 20.7
Customer deposits (including liabilities rep. by securities) ........... 5,706,539 4,732,506 974,033 20.6
Equity ........................................................................................... 386,729 376,107 10,622 2.8
Income Statement 31-12-2008 31-12-2007 Variation
(Thousand euros)
(Thousand
euros) per cent.
Financial Margin ........................................................................... 172,796 157,070 15,726 10.0
Profits on Financial Operations ..................................................... (5,407) 6,956 (12,363) (177.7)
Other Income ................................................................................ 72,354 66,390 5,964 9.0
Banking Revenues ........................................................................ 239.743 230,416 9,327 4.0
Administrative Costs ..................................................................... (159.212) (134,777) (24,435) 18.1
Cash-Flow ..................................................................................... 80,531 95,639 (15,108) (15.8)
Depreciation for the period ........................................................... (10,089) (9,044) (1,045) 11.6
Provisions / Impairment ................................................................ (42,739) (23,030) (19,709) 85.6
Pre-tax Profits ............................................................................... 27,703 63,565 (35,862) (56.4)
Tax ................................................................................................ (4,127) (15,997) 11,870 (74.2)
Profits for the period ..................................................................... 23,576 47,568 (23,992) (50.4)
Other Indicators 31-12-2008 31-12-2007 Variation
(Thousand
euros) per cent.
Credit Impairment/Total lending ................................................... 2.53% 2.48%
Pre-tax profits/Average net assets ................................................. 0.32% 0.88%
Banking revenues/Average net assets ........................................... 2.77% 3.19%
Pre-tax profits/Average equity ...................................................... 7.26% 18.71%
Cost-to-income ............................................................................. 70.62% 62.42%
Personnel costs/Banking revenues ................................................ 36.42% 32.64%
ROE (Return on Equity) ............................................................... 6.18% 14.00%
ROA (Return on Assets) ............................................................... 0.27% 0.66%
Solvency Ratio (Basel Core Criteria) ............................................ 9.65% 10.58%
Tier 1 (Basel Core Criteria) .......................................................... 5.78% 6.36%
Workforce ..................................................................................... 2,162 1,996 166 8.3
No. of Bank branches .................................................................... 279 228 51 22.4
Other Indicators as per Instruction 16/2004 of the Bank of
Portugal 31-12-2008 31-12-2007 Variation
(Thousand
euros) per cent.
Outstanding Credit/Total lending ................................................ 1.80% 1.84%
Net Outstanding Credit/Total net lending ................................... 0.57% 0.55%
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Provisions for Lending/Outstanding Credit ................................. 218.77% 237.80%
Solvency Ratio ............................................................................ 9.25% 10.18%
Core Tier 1 .................................................................................. 4.83% 5.60%
Capital and Shares
Banif is a public company with limited liability under Portuguese law, 100 per cent. owned by Banif
Comercial SGPS, S.A. (Banif - SGPS, S.A. has a 84.8 per cent. stake in Banif Comercial SGPS, S.A. and
Banif Investimentos SGPS, S.A. has the remaining 15.2 per cent.).
Banif's share capital as at 31 December 2008 comprises 58,000,000 shares with a nominal value of 5
euros each and is fully paid up. By the end of December 2008, the merger of Banco Banif e Comercial
dos Açores, S.A. with Banif was concluded and as a result the share capital of Banif was increased by a
total amount of 76,000,000 euros, from 290,000,000 euros to 366,000,000 euros. By the end of March
2009, the share capital of Banif was increased from 366,000,000 euros to 416,000,000 euros and in the
end of September 2009 the share capital of Banif was once again increased from 416,000,000 euros to
566,000,000 euros.
Banif's share capital as at 30 September 2009 comprises 113,200,000 shares with a nominal value of 5
euros each and is fully paid up.
The following table shows the unaudited capitalisation of Banif as at 30 September 2009:
30-09-2009
(Thousand euros)
Total Liabilities .................................................................................................................................................. 10,475,885
Short-term Liabilities ....................................................................................................................................... 7,859,326
Long-term Liabilities ........................................................................................................................................ 2,616,559
Stockholders' Equity .......................................................................................................................................... 626,192
Share Capital .................................................................................................................................................... 566,000
Issue premiums ................................................................................................................................................. 451
Other equity instruments .................................................................................................................................. -
(Treasury shares) .............................................................................................................................................. -
Revaluation reserves ......................................................................................................................................... 26
Other reserves and retained earnings ................................................................................................................ 56,056
Profit for the period .......................................................................................................................................... 3,659
(Interim dividends) ...................................................................................................................................................... -
Total Capitalisation ................................................................................................................................................... 11,102,077
Corporate Governance
Pursuant to the Corporate Governance Regulation, only companies which have their shares admitted to
trading in a regulated market must issue a statement regarding compliance with the corporate governance
regime set out in the Corporate Governance Regulation. Given the fact that Banif is not a company with
shares admitted to trading in a regulated market, there is no such requirement for Banif to comply with
such corporate governance regime and Banif does not comply with the Corporate Governance Regulation.
Indebtedness
In the course of 2008, Banif repaid three issues of medium term notes with a total value of 40.8 million,
from which 2 of them amount to 35 million euros, all repaid early at Banif’s option. Also during this year,
the Bank contracted a subordinated loan totalling 15 million euros, provided by Banif Finance, issued
subordinated bonds with a value of 25 million euros, and repaid bonds from the 2001/2011 issue of
subordinated bonds, with a value of 8.6 million euros, with the result that the account for Other
Subordinated Liabilities recorded an increase of 13.5 per cent., standing at 270.1 million euros.
During the first half of 2009, Banif repaid one issue of Cash Bonds – Banif SFE 2006-2009, with a value
of 7.5 million euros. As a result, the account for financial liabilities at fair value through profit or loss was
down by 26.4 million euros, standing at 20.0 million euros at the end of June 2009.
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In April 2009, Banif issued guaranteed unsubordinated notes with the value of 500 million euros,
guaranteed by the Republic of Portugal in the terms set forth in Law no. 60-A/2008, of 20 October 2008
and in the Ministerial Order no. 1219-A/2008, of 23 October 2008.
Also during the first half of 2009, Banif issued subordinated notes in the amount of 100 million euros and
reimbursed two subordinated loans in the amount of 23.3 million euros, which were granted by Banif
Finance, Ltd. As a result, the account for other subordinated liabilities was up by 32.3 per cent. at 409.6
million euros by the end of June 2009.
In September 2009, Banif issued perpetual subordinated bonds in the amount of 20 million euros. At the
end of the period, subordinated liabilities amounted to 408.74 million euros.
Banif Financial Group
History and Organisation
Banif Financial Group was established in Madeira in January 1988, by incorporating the assets and
liabilities of Caixa Económica do Funchal, which was founded in 1897.
In the first three years of its existence, the Group focused on consolidating its position in Madeira and on
improving its financial condition. On the other hand, it also extended its business portfolio by establishing
a pension fund management company (SGM – Sociedade Gestora de Fundos de Pensões Mundial, S.A.),
a leasing company (Mundileasing – Sociedade de Locação Financeira, S.A.) and a consumer credit
company (Mundicre - Sociedade Financeira para Aquisições a Crédito, S.A.). In addition, the Group
established two asset management subsidiaries (incorporation of Banifundos – Sociedade Gestora de
Fundos de Investimento Mobiliário, S.A. and acquisition of Invesfreiras – Investimentos Imobiliários,
S.A.) and acquired a brokerage company (Ascor Dealer – Sociedade Financeira de Corretagem, S.A.) in
1994.
In 1993, the Group took the first steps towards international expansion with the founding of Banif -
Banco Internacional do Funchal (Cayman), Ltd., a wholly owned subsidiary in the Cayman Islands.
Banif Financial Group became the largest financial group in the Autonomous Region of the Azores when,
in 1996, it acquired a controlling interest in Banco Comercial dos Açores, S.A., the largest commercial
bank in Azores, and a controlling interest in an insurance company, Companhia de Seguros Açoreana,
S.A. ("CSA"). In 1997, the insurance business of the Group was strengthened with the acquisition of
another insurance company, Oceânica – Companhia de Seguros, S.A.. In September 1999, Oceânica –
Companhia de Seguros, S.A. was merged with CSA and in the 1st quarter of 2000, CSA acquired another
insurance company, O Trabalho – Companhia de Seguros, S.A., which was then merged with CSA in
December 2002.
In December 2007, CSA's business volume reached 536 million euros, which compares with a business
volume of 537 million euros in December 2006. According to APS – Associação Portuguesa de
Seguradoras, CSA has a market share of 3.9 per cent., in both its life and non-life insurance businesses.
Banif is today a firmly established bank in the Portuguese financial sector, with a nationwide network of
branches. Banif offers a comprehensive range of products and services for both personal and corporate
clients and continues to be considered the market leader in Madeira, as well as being well established
with Portuguese residents in Venezuela, South Africa and Brazil.
In the Azores, Banco Comercial dos Açores, S.A. (since re-named Banco Banif e Comercial dos Açores,
S.A.) ("BBCA") has positioned itself as the "reference bank" for corporate and individuals, for domestic
and offshore investors and for the Regional Government of Azores. With a total of 52 branches and
corporate centers and 405 employees, BBCA was the second largest bank of the Banif Financial Group.
In order to strengthen its investment activity, the Banif Financial Group acquired, on 15 June 1999, a 51
per cent. stake in a Brazilian investment bank, Banco Primus, which has since been renamed Banco Banif
Primus. The Group became the sole shareholder of Banco Banif Primus on 13 February 2004. On 28
January 2005, Banco Banif Primus was renamed Banif – Banco Internacional do Funchal (Brasil), S.A.
and started acting as the Group's retail bank in Brazil. On 30 June 2005, the brokerage company Banif
Primus Corretora de Valores e Câmbio, S.A., 75 per cent. owned by Banco Banif Primus, was converted
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into an investment bank named Banif Primus – Banco de Investimento, S.A. (75 per cent. owned by Banif
– Banco Internacional do Funchal (Brasil), S.A.).
In 2006, the above mentioned structure suffered significant changes. On 26 June 2006, Banif International
Holdings, Ltd increased the share capital of Banif – Banco Internacional do Funchal (Brasil), S.A.,
holding thereafter 10 per cent. of the bank. On 30 June 2006, aiming to separate investment banking
activities from retail banking activities, Banif Investimentos SGPS, S.A. acquired the participation of
Banif Comercial SGPS, S.A. in Banif Primus – Banco de Investimento, S.A.. On 2 October 2006, Banif
Primus – Banco de Investimento, S.A. was renamed Banif – Banco de Investimento (Brasil), S.A.. On
May 2008, Banif Investimentos SGPS, S.A., through its subsidiary company Banif Securities Holdings,
Ltd, acquired the remaining 25 per cent. stake in Banif – Banco de Investimento (Brasil), S.A. and
became its sole shareholder.
Today, Banif Financial Group has the control of a retail bank and an investment bank in Brazil (Banif –
Banco Internacional do Funchal (Brasil), S.A. and Banif – Banco de Investimento (Brasil), S.A.,
respectively), offering to its clients a full range of products and services.
In December 2000, the spin-off of the brokerage company of the Banif Financial Group (Ascor Dealer –
Sociedade Financeira de Corretagem, S.A.) led to the establishment of Banif – Banco de Investimento,
S.A.. The principal aim of Banif – Banco de Investimento, S.A. is to conduct the Group's investment
banking business, taking responsibility for corporate finance, capital markets, as well as asset
management and brokerage services, through its subsidiaries. This investment bank was incorporated
with a share capital of 20 million euros. Further to a share capital increase on November 2005, the current
share capital is 30 million euros. In December 2007, the net profit of 1.3 million euros, represented a
decrease of 79.5 per cent., when compared with December 2006.
In 2001, Banif Financial Group expanded its international presence by opening an office in Miami and
purchasing a securities broker dealer in New York.
In 2002, the company formally known as Banif – Banco Internacional do Funchal, S.A. was transformed
into Banif - SGPS, S.A. (the holding company of Banif Financial Group), and a new bank with the same
name "Banif – Banco Internacional do Funchal, S.A." was created by the transfer of the whole banking
activity of the former company.
In April 2003, the privatisation of the remaining 15 per cent. of Banco Comercial dos Açores, S.A.,
owned by the Regional Government of Azores, took place. As a result, Banif Financial Group took
control of 100 per cent. of the capital of Banco Comercial dos Açores, S.A.. On November 2007, Banco
Comercial dos Açores, S.A. was renamed Banco Banif e Comercial dos Açores, S.A.
With a view to extending the international business of the Banif Financial Group, a subsidiary bank,
Banif International Bank, Ltd, was opened in Nassau, Bahamas, on 21 June 2005, which enabled the
offering of the Group's banking products and services to its clients, mainly in America.
In May 2005, the Group reorganized its holdings by separating the banking and other financial service
activities of the Group from the insurance business. Banif - SGPS, S.A. sold its 100 per cent. stake in
Banif Seguros SGPS, S.A., the Group's insurance sub-holding group, and acquired 33.62 per cent. of the
capital of CSA. As a result, the Group now holds, directly and indirectly, 47.69 per cent. of the share
capital of CSA, down from the previous level of 66.38 per cent. The remaining 53.31 per cent. are
controlled by the largest shareholder of the Banif Financial Group, Mr. Horácio Roque, a Portuguese
businessman with diversified range of interests including hotels, tourism, real estate, tobacco, industry
and international trade through investments in Portugal, Brazil, Canada and South Africa.
The shares of Banif - SGPS, S.A. have been listed on the Stock Exchange since November 1992. Since
October 2007, the shares of Banif - SGPS, S.A. have been integrated on the NEXT 150 index of Euronext
Lisbon.
In the first quarter of 2007, Banif Financial Group increased its international presence, through
partnerships and acquisitions. In fact, Banif - SGPS, S.A. acquired 46 per cent. stake of Banco
Caboverdiano de Negócios, assuming the effective management control and established a retail bank in
Malta - Banif Bank (Malta), Plc., together with local partners.
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Additionally, Banif Financial Group has entered the Spanish market, through the acquisition of significant
participation in two banks. With the acquisition of 33.32 per cent. of Banca Pueyo, the Group will be
entitled to participate in the management of Banco Puego through its Board of Directors. With the
acquisition of 27.5 per cent. of Bankpime, the Group has become its largest individual shareholder.
Through this acquisition, the Group will assure its presence in the asset management business in
Cataluña, where Bankpime manages a total of 443.9 million euros in investment funds.
In September 2007, a new company Banif Go, Instituição Financeira de Crédito, S.A. was created
resulting from the merger of Banif Crédito – Sociedade Financeira para Aquisições a Crédito, S.A. with
Banif Leasing, S.A.
In 2008, Banif Financial Group acquired a 25 per cent. stake of Banif – Banco de Investimento (Brasil),
S.A. and as a result, the Group now holds, directly and indirectly, 100 per cent. of its share capital.
Moreover, Banif - SGPS, S.A. also reinforced its presence in Banco Caboverdiano de Negócios’s share
capital, in which it reinforced its control percentage to 52 per cent.
Also in 2008, Banif Financial Group capitalised several companies of the Group, including Banif –
SGPS, S.A. which increased its share capital from 250 million euros to 350 million euros, Banif
Investimentos SGPS, S.A. from 8.75 million euros to 10 million euros, Banif – Banco de Investimento,
S.A. from 30 million euros to 40 million euros, Companhia de Seguros Açoreana, S.A., from 36.25
million euros to 57.25 million euros and Banif Bank (Malta) from 15 million euros to 25 million euros.
In December 2008, the merger of Banco Banif e Comercial dos Açores, S.A. with Banif was concluded,
with effect from 1 January 2009 onwards.
In September 2009, Banif – SGPS, S.A. acquired 100 per cent. of the share capital of Tecnicrédito SGPS,
S.A., a Portuguese group specialised in car and consumer finance and in October, Banif – SGPS, S.A.
increased its share capital from 350 million euros to 490 million euros.
Currently, the main business activities of Banif Financial Group are carried out through more than 40
companies in the following areas:
Banking
• Banif – Banco Internacional do Funchal, S.A.
• Banif – Banco Internacional do Funchal (Brasil), S.A.
• Banif - Banco Internacional do Funchal (Cayman), Ltd.
• Banca Pueyo, S.A.
• Banco Caboverdiano de Negócios, S.A.
• Banco de la Pequeña y Mediana Empresa, S.A. (Bankpime)
• Banif Bank (Malta), Ltd.
• Banif International Bank, Ltd.
• Banif – Banco de Investimento, S.A.
• Banif – Banco de Investimento (Brasil), S.A.
Insurance
• Companhia de Seguros Açoreana, S.A.
Leasing and Consumer Credit
• Banif Go, Instituição Financeira de Crédito, S.A.
• Banif Rent – Aluguer, Gestão e Comércio de Veículos Automóveis, S.A.
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Brokerage
• Banif Corretora de Valores e Câmbio, S.A. (brokerage in Brazil)
• Banif Securities, Inc. (brokerage in USA)
Asset Management
• Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, S.A.
(mutual fund management in Portugal)
• Banif Açor Pensões - Sociedade Gestora de Fundos de Pensões, S.A. (pension fund management
in Portugal)
• Banif International Asset Management, Ltd. (offshore wealth management)
• Banif Multifund, Ltd. (offshore mutual fund management)
• Banif Nitor Asset Management, S.A. (mutual fund management in Brazil)
Real Estate
• Banif Imobiliária, S.A.
• Sociedade Imobiliária Piedade, S.A.
Venture Capital
• Banif Capital - Sociedade de Capital de Risco, S.A.
• Centro Venture – Sociedade de Capital de Risco, S.A.
Trade Finance
• Banif Forfaiting Company, Ltd
• Banif Trading, Inc.
Other Activities
• Banifserv – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE (communication,
tecnhology and data processing)
• Inmobiliaria Vegas Altas (Spain)
• Banif Holding (Malta), Ltd.
• Numberone – SGPS, Lda.
• Banif Finance, Ltd. (issuer vehicle)
• Banif Financial Services, Inc. (personal services – Miami)
• Banif Finance (USA) Corp. (mortgage financing in USA)
• Finab – International Corporate Management Services, Ltd. (management services and company
formation)
• Banif (Brasil), Ltda (advisory services in Brazil)
• Econofinance, S.A. (financial portal in Brazil)
• Gamma – Sociedade de Titularização de Créditos, S.A. (securitisation vehicle)
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Banif Financial Group is strongly involved in "cross-selling" among its companies in order to better serve
clients' needs and take advantage of the relevant synergies.
The Group develops its activities in several countries including Portugal, Brazil, United Kingdom, United
States of America, Cayman, Bahamas, South Africa, Venezuela, Mexico, Argentina, Spain, Malta and
Cape Verde.
By September 2009, Banif Financial Group had approximately 4,727 employees and 576 "points of sale"
(including branches, business and corporate centers and representative offices abroad). The total of 576
points of sale includes 19 branches of Banco Caboverdiano de Negócios and 29 branches of Banco Mais.
This figure does not include 84 branches of Banca Pueyo and 23 branches of Bankpime.
In January 2003, ratings were assigned to Banif - Banco International do Funchal, S.A. by Moody's
(Baa1/P-2) and by Fitch Ratings (BBB+/F2). These ratings have been reconfirmed in December 2005
with a Stable outlook. In April 2007, with the implementation of the Joint Default Analysis Methodology,
recently developed by Moody's, Banif was upgraded by two notches, being assigned a A2/P-1 by
Moody's. In April 2009 Moody’s downgraded Banif’s rating to Baa1/P-2.
In 2008, Banif was included on The S&P Global Challengers List™. This list identifies 300 mid-size
companies that show the highest growth characteristics along dimensions encompassing intrinsic and
extrinsic growth. These companies are expected to emerge as challengers to the world's leading
companies.
Shareholder Structure of Banif - SGPS, S.A.
Shareholder Structure of Banif – SGPS, S.A. (as at 20 October 2009) % Share Capital No. of Shares
Comendador Horácio da Silva Roque ........................................................................ 56.924% 278,929,518
Auto Industrial SGPS, S.A. ........................................................................................ 12.123% 59,405,000
In June 2003, Rentipar SGPS, S.A., currently Rentipar Financeira SGPS, S.A. (―Rentipar‖), a holding
company controlled by Mr Horácio Roque, entered into an agreement with Fundação Horácio Roque, for
the purchase of 799,793 shares representing 1.99 per cent. of Banif - SGPS, S.A. share capital. With the
purchase of the above mentioned shares, Rentipar's participation in Banif - SGPS, S.A. exceeded half of
the total voting rights, which, according to the Portuguese Securities Code, required the launch of a public
offer of acquisition of the remaining 19,914,668 shares in the market. This offer which was concluded on
9 October 2003, confirmed Mr Horácio Roque as the controlling shareholder of the Group.
In May 2005, Banif - SGPS, S.A. announced that it was going to proceed with a reorganisation of its
holdings, by separating the banking and other financial service activities of the Group from the insurance
one. This reorganisation was dictated by the adoption of the IAS/IFRS new rules, given the different risks
associated to those activities, assuring that the participation in Companhia de Seguros Açoreana, S.A. will
not bound the normal developments of the core business of the Group, the banking and financial services
activities.
Based on the decision of separating the banking and insurance activities, Banif - SGPS, S.A. sold to Soil
SGPS, S.A. ("Soil"), a company under the control of Rentipar Indústria SGPS, S.A. (99.9 per cent. owned
by Mr Horácio Roque), 100 per cent. of the capital of Banif Seguros, SGPS, S.A., which controls 52.31
per cent. of Companhia de Seguros Açoreana, S.A., for an amount of 44.6 million euros. In turn, Banif -
SGPS, S.A. acquired from Soil 33.62 per cent. of the capital of Companhia de Seguros Açoreana, S.A.,
for 28.3 million euros.
After the conclusion of these transactions, Banif - SGPS, S.A. owns, directly and indirectly, 47.69 per
cent. of the capital of Companhia de Seguros Açoreana, S.A., including the participation of 14.07 per
cent. now owned by Banif. After 11 November 2009, these participations in Companhia de Seguros
Açoreana, S.A. are held through an ―holding company‖ called Rentipar Seguros, SGPS, S.A. that controls
100 per cent. of the share capital of Companhia de Seguros Açoreana, S.A. and where Banif – SGPS, S.A.
controls the same 47.69 per cent. of the share capital.
This change allows Mr Horácio Roque, majority shareholder of Banif - SGPS, S.A., to keep the
shareholding control of Companhia de Seguros Açoreana, S.A. within his controlling scope, in order to
assure continuity of the Group’s current strategy in terms of distribution of the insurance products through
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the banking branch networks of the Banif Financial Group and the distribution of banking and financial
products through the networks of Companhia de Seguros Açoreana, S.A..
These transactions were subject to the previous authorisation of the Portuguese Supervisory Board for the
Insurance sector, Instituto de Seguros de Portugal.
On 26 June 2006, Banif - SGPS, S.A. increased its share capital by 50 million euros, from 200 million
euros to 250 million euros. This involved capitalisation of reserves worth 25 million euros, and cash
subscription for a further 25 million euros (5,000,000 shares with a nominal value of five euros at a price
of 14.00 euros per share), generating an issue premium totalling 45 million euros.
Once the share capital had been increased, Banif - SGPS, S.A. proceeded to alter the nominal value of its
shares, and on 26 October it split each of the former shares with a nominal value of 5 euros into five new
shares. As a result, the share capital of Banif - SGPS, S.A. was represented by 250 million shares each
with a nominal value of 1 euro.
Rentipar Financeira SGPS, S.A., a holding company controlled by Mr Horácio Roque, sold on 14
February 2007 25,000,000 shares in Banif - SGPS, S.A., representing 10 per cent. of the share capital and
voting rights of the company. With this transaction, Mr Horácio Roque became the holder, directly and
indirectly, of 62.33 per cent. of the share capital of Banif - SGPS, S.A.
On 27 June 2008, Banif - SGPS, S.A. increased its share capital by 100 million euros, from 250 million
euros to 350 million euros. This involved capitalisation of reserves worth 50 million euros, and cash
subscription for a further 50 million euros (50,000,000 shares with a nominal value of 1 euro at a price of
2.00 euros per share), generating an issue premium totalling 50 million euros. As a result of this capital
increase, the share capital of Banif - SGPS, S.A. became 350 million euros, represented by 350 million
shares each with a nominal value of 1.00 euro.
On 30 September 2009, Banif - SGPS, S.A. increased its share capital by 140 million euros, from 350
million euros to 490 million euros. This transaction was comprised of two tranches, one of 70 million
euros in exchange for Tecnicrédito SGPS, S.A. shares and a cash subscription for a further 70 million
euros. Following the share capital increase, Mr. Horácio Roque now holds, directly and indirectly 56,924
per cent. and Auto-Industrial, Investimentos e Participações, SGPS, S.A. (former shareholder of
Tecnicrédito SGPS, S.A.) nows holds 12.123 per cent. of Banif - SGPS, S.A.’s share capital.
Stock Market Evolution
Banif - SGPS, S.A.'s market capitalisation in 30 September 2009 was approximately 479.5 million euros
(1.37 euros per share and 350 million shares outstanding), compared with a capitalisation of 381.5 million
euros as of December 2008 (1.09 euros per share and 350 million shares outstanding).
Since 2000, Banif - SGPS, S.A.'s shares have been included in the BVL 30 Index (Euronext Lisbon
Index). Due to the termination of this index at the end of June 2002, Banif - SGPS, S.A. shares became
included in the "PSI Geral" Index.
On September 2007, the shares of Banif - SGPS, S.A. were integrated on NEXT 150 index of Euronext
Lisbon.
Analysis of the main Financial Indicators – Banif Financial Group (Banif – SGPS, S.A., consolidated
accounts)
The 2008 consolidated accounts of Banif - SGPS, SA, the holding company of the Banif Financial Group,
were drawn up under the International Financial Reporting Standards (IAS/IFRS), as adopted, from time
to time, by European Union Regulation. The following leading indicators may be highlighted:
• Consolidated profits stood at 59.2 million euros, representing a decline of 41.4 per cent., when
compared with the result recorded in 2007.
• ROE (Return on Equity) stood at 10.1 per cent., as against 19.3 per cent. in 2007, whilst ROA
(Return on Assets) stood at 0.5 per cent., as compared with 1.02 per cent. a year earlier.
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• Net assets, at 31 December 2008, totalled 12,876 million euros, representing growth of 19.7 per
cent. over year-end 2007.
• Loans and advances to customers totalled 10,410 million euros, up by 18.1 per cent. on the close
of 2007 and the ratio for ―Impairment of lending/Total lending‖ edged up from 2.23 per cent. to
2.44 per cent..
• At the end of 2008 the Group’s core capital permitted a Tier 1 ratio of 6.84 per cent., as against
5.89 per cent. one year earlier. Considering total equity, the solvency ratio at year-end was 9.22
per cent. (9.93 per cent. at 31 December 2007).
The following table provides further detail on the financial statements at 31 December 2008, together
with 2007 comparative data.
Balance Sheet 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Net Assets ........................................................................................................... 12,876,616 10,760,960 19.7
Lending (gross) ................................................................................................... 10,409,701 8,816,168 18.1
Customer Deposits (Less debt securities recorded under loans and accounts receivable) ............. 6,605,429 5,488,159 20,4
Total Customer Deposits (Includes Customer accounts and other loans, Debt securities in issue
and Other subordinated liabilities) .................................................................................... 8,223,863 7,388,027 11.3
Equity .................................................................................................................. 583,369 615,065 -5.2
Income Statement 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Financial Margin (includes income from equity instruments) ............................................. 272,171 241,864 12.5
Profits on Financial Operations ........................................................................... 67,143 68,327 -1.7
Commissions and Fees ........................................................................................ 102,812 94,768 8.5
Other Income ....................................................................................................... 27,917 38,809 -28.1
Banking Revenue ................................................................................................ 470,043 443,768 5.9
Personnel Costs ................................................................................................... 162,606 136,323 19.3
Overheads ............................................................................................................ 134,239 105,470 27.3
Cash Flow ........................................................................................................... 173,199 201,975 -14.2
Depreciation ........................................................................................................ 31,285 26,750 17.0
Provisions / Impairment ...................................................................................... 63,257 32,108 97.0
Negative Goodwill .............................................................................................. 0 510 -100.0
Pre-tax Profits ...................................................................................................... 81.938 155.075 -47.2
Taxes ................................................................................................................... 15.175 38.271 -60.3
Minority Interests ................................................................................................ 7,526 15,720 -52.1
Net Profit ............................................................................................................. 59,237 101,084 -41.4
Other Indicators 31-12-2008 31-12-2007 Variation
per cent.
Personnel Costs/Operating Revenue .................................................................... 34,5% 30.3%
No of Branches (Banking only) ........................................................................... 324 270 20.0
No of Employees (EoP) ....................................................................................... 4,626 4,412 4.85
Financial margin, which includes earnings from securities, increased by 12.5 per cent. to 272.2 million
euros. This item benefitted from strong growth in lending, but was negatively affected by the reduction in
the total brokerage margin (margin on the lending portfolio added to the margin on the portfolio of on-
balance sheet customer deposits), which declined continuously over the year, from 2.91 per cent. in
December 2007 to 2.63 per cent. in December 2008.
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Profits on financial operations fell by 1.7 per cent., totalling 67.1 million euros, benefitting from gains
realised on the disposal of financial holdings in Brazil, but brought down by losses associated with write-
downs on the Banif Financial Group’s trading and investment portfolios.
Fee and commission income rose was up by 8.5 per cent. at 102.8 million euros. Growth in this item was
also supported by expansion in the Group’s commercial operations, but in part hampered by the
continuing crisis in the main international financial markets, which led to a reduction in activity in
investment banking and asset management business.
Other income (net), fell from 28.1 per cent., to 27.9 million euros. This reduction can be explained in part
by gains realized on tangible assets in 2007 and a significant reduction in income in 2008 for the same
reasons as described above.
Despite the worsening economic situation, the Banif Financial Groups recording banking revenues of 470
million euros in 2008, corresponding to an increase of 5.9 per cent. over the previous period, when this
figure has stood at 443.8 million euros; this was achieved thanks to expansion in business and
development of customer relations.
Operating costs, which include overheads and personnel costs, stood at 296.8 million euros, up by 22.8
per cent. on the financial year of 2007, due to the following factors: (i) expansion of the distribution
networks in Portugal, Cape Verde, Brazil and Malta, (ii) the costs of the rebranding of the Banif Financial
Group, and associated publicity costs, (iii) the commemorations for the 20th anniversary of the Group,
including a special bonus for employees, (iv) the merger of Banco Banif e Comercial dos Açores, S.A.
into Banif, with preparations taking place for practically the entire length of the year, involving a team of
more than 200 employees and more than 110 sub-projects – legal, organisational and IT, and (v) the cost
of modernising the technological infrastructure, and also the control models for risk assessment. The
direct costs of rebranding and the Group’s 20th
anniversary were in excess of 13 million euros.
Banif Financial Group recorded consolidated operating cash flow of 173.2 million euros, down by 14.2
per cent. on the previous year.
In 2008, the Cost to Income ratio (Operating costs + Depreciation / Banking Revenues) increased from
57.5 per cent. in 2007, to 68.9 per cent., as a result of investment in expansion of branch networks and
other substantial costs relating to the situations described above.
Net provisions and impairment for the period were up by 97.0 per cent., at 63.3 million euros, due to the
worsening of the economic situation at Portugal and abroad, which also required a policy of increased
prudence in assessment of certain coefficients in the collective analysis of credit impairment.
Banif - SGPS, SA, the holding company of the Banif Financial Group recorded consolidated profits in
2008 of 59.2 million euros, representing a reduction, as explained above, of 41.4 per cent. in relation to
the previous year.
Considering only the recurrent results in the period in question, the reduction in net profits from 2007 to
2008 is 45.25 per cent., with consolidated net profits falling from 73.6 million euros in 2007 to 40.3
million euros in 2008. This decrease reflects lower profits from insurance business and from investment
banking, in terms of commissions and trading operations, and especially, as regards commercial banking,
the reduction in the financial brokerage margin, increased provisions for impairment of lending and the
costs involved in expanding sales networks and capital expenditure on technological infrastructures.
Recurrent results evolved as follows in each of the Group’s main business areas:
(a) Commercial banking, with net recurrent profits of 50.4 million euros in 2008, as against 66.3
million euros in 2007 (-24.0 per cent.);
(b) Investment banking, with net recurrent profits of 3.0 million euros in 2008, as against 12.7
million euros in 2007 (-76.3 per cent.);
(c) Insurance, with a contribution to recurrent consolidated profits of 1.5 million euros in 2008, as
against 7.7 million euros in 2007 (-80.8 per cent.);
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(d) Impact of the consolidation of Group holdings, with a negative contribution of -14.6 million
euros in 2008, as against -13.3 million euros in 2007 (-10.5 per cent.).
Interim period ended 30 September 2009
Balance Sheet 30-09-2009 31-12-2008 Variation
(Thousand euros) per cent.
Net Assets ........................................................................................................... 14,394,219 12,876,616 11.79
Loans and advances to customers ........................................................................ 11,374,572 10,336,949 10.04
Customer deposits and other loans 6,794,551 6,514,863 4.29
Total Equity ......................................................................................................... 1,168,816 862,770 11.79
Income Statement 30-09-2009 30-09-2008 Variation
(Thousand euros) per cent.
Net interest income .............................................................................................. 196,564 195,968 0.30
Other Income ....................................................................................................... 160,536 158,043 1.58
Operating Revenue .............................................................................................. 357,100 354,011 0.87
Administrative costs (personnel and overheads) ................................................. (205,064) (210,440) (2.55)
Depreciation in the period ................................................................................... (25,487) (22,207) 14.77
Provisions / Impairment ...................................................................................... (98,460) (46,855) 110.14
Negative Cons. Differences & Income from associates and joint ventures
(equity method) ..................................................................................................
28,173 4,505 525.37
Profits before Tax ................................................................................................ 56,262 79,014 (28.79)
Income Tax.......................................................................................................... (7,046) (23,196) (69.62)
Profit before Tax and before Minority Interest .................................................... 49,216 55,818 (11.83)
Minority Interest .................................................................................................. (8,294) (5,738) 44.55
Consolidated Net Profit for the period ................................................................. 40,922 50,080 (18.29)
The following table shows the unaudited capitalisation of Banif - SGPS, S.A. as at 30 September 2009
30-09- 2009
(Thousand euros)
Total Liabilities 13,225,403
Short-term liabilities .................................................................................................................................... 8,777,656
Long-term liabilities..................................................................................................................................... 4,447,747
Total Stockholders' Equity 1,168,816
Share Capital ................................................................................................................................................ 490,000
Issue Premiums ............................................................................................................................................ 104,114
Other equity instruments .............................................................................................................................. 95,900
Revaluation reserves .................................................................................................................................... (12,759)
Other reserves and retained earnings ............................................................................................................ 186,361 (Treasury Shares) ........................................................................................................................................ (1,035)
Profit for the Period ..................................................................................................................................... 40,922 Interim dividends ......................................................................................................................................... -
Minority Interests ........................................................................................................................................ 265,313
Total Capitalisation .......................................................................................................................................... 14,394,219
Corporate Governance
Banif - SGPS, S.A., complies with the Corporate Governance rules as set forth in Regulation 1/2007 of
the Securities Market Commission ("CMVM") and article 245-A of the Securities Code. The Company is
not subject to any specific corporate governance codes or codes of conduct with which it has voluntarily
undertaken to comply.
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Banif - SGPS, S.A. controls two other holding companies: Banif Comercial SGPS, S.A. and Banif
Investimentos SGPS, S.A., which operate essentially as sub-holdings for commercial banking and for
investment banking and international operations, respectively.
The Board of Directors of Banif - SGPS, S.A. includes members of the Board of Directors of the main
Group companies, from the two business areas referred to above; this assures coordination and centralised
management of the companies making up the Banif Financial Group.
In 2007, to adjust the Group’s governance model to enable it to respond to the new challenges of business
growth and development, the directors of Banif – SGPS, S.A. have reviewed and redesigned the
allocation of responsibilities and management procedures within the Group, with a view to effective and
efficient coordination of its business portfolio.
The process of restructuring the Banif Financial Group’s corporate governance model took place over
much of 2007 and was based on assessment of the performance of the existing model, analysis of best
practice in the governance and senior management of comparable financial institutions and on a set of six
key principles for the Group:
• Creation of ideal conditions for sustained development of the Group in line with the approved
strategic goals: strong growth and risk control;
• Maintenance of the autonomy and flexibility of the business units, and their capacity for
innovation, assigning them to the responsibility of professional managers;
• A stronger role for the executive chairman of the Group, supporting this role with the solutions
needed in the light of the growth and increasing complexity of the business portfolio;
• Equiping the holding company with its own structure with the skills and size needed to provide
essential support for the Group;
• Alignment of the model with the recommendations of the capital markets and codes of good
conduct, reinforcing a Group image of transparency, rigour and risk control; and
• Improved capacity to exploit revenue and cost synergies, through cross-sector procedures.
With a view to these desired aims, a Governance Model has been designed with the following features:
(i) The Board of Directors of Banif - SGPS, S.A. remains the Group’s sole executive body, with a
more hands-on model of business supervision, and more structured organisation and internal
procedure;
(ii) The Board of Directors of Banif – SGPS, S.A. will be supported by a corporate centre,
comprising ten areas of responsibility with a light structure but high standard of expertise, each
area reporting to a member of the Board of Directors.
(iii) The work of the corporate centres will also be coordinated by three cross-sector committees
responsible for key issues relating to the Group’s competitiveness and risk management;
(iv) Effective implementation of a new governance model will mean a new model for the relationship
between the holding company and the business units.
The committees constitute the means for promoting coordination between the Group’s business units (and
its component companies). The committees are more formally organised, working on the basis of rules of
procedure, activities plans and budgets approved by the Board of Directors of Banif, SGPS. Each
committee will be chaired by a member of the Board of Directors of Banif, SGPS. The committee
members will be directors and managers of the companies in the Group’s different business units, taking
part on the basis of consensus with the respective boards of directors and executive boards. The
committees will specifically produce proposals for initiatives and follow through their implementation;
they will also communicate the agreement adopted, to the boards of directors or executive boards of the
companies taking part, by circulating minutes. All initiatives are executed through the business units and
companies, and require internal hierarchical approval – in accordance with the applicable internal
decision-making models.
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Regulations have been drawn up for the Board of Directors of Banif – SGPS, S.A., with a view to it
achieving maximum effectiveness as the executive body for the Group, covering all its responsibilities.
The main changes introduced by the regulations include:
• The Board’s responsibilities for managing the Group’s affairs are explicitly defined and are: (i) to
decide on the Group’s strategic options, in terms of business sectors and geographical expansion;
(ii) to establish the Group’s general policies (such as on compliance and human resources); (iii)
to define process which take place across the Group (such as planning, management control or
risk control); (iv) to establish the structure of the Group’s business units; (v) to assess the
business units’ strategic plans, operating plans and investment plans; (vi) to decide on the annual
and multi-annual objectives for the Group and the business units; (vii) to decide on measures
significantly affecting business units (for instance, extension or reduction of business, mergers,
acquisitions, strategic partnerships or share issues).
• Formal distribution of responsibilities between directors, facilitated by assignment of
responsibility for corporate functions cross sector committees.
• Formalisation of the procedural rules for the Board of Directors, requiring an annual plan of
activities, rules for notice of meetings, preparation and participation in meetings and also rules on
communication and implementation of resolutions.
At the same time, a substantial package of measures was launched with the aim of aligning different
aspects of the Group’s governance model with best practices and recommendations in Portugal and
internationally. These include measures for compliance with best practice and CMVM recommendations.
The aims of these measures are to increase the provision of information to the market, to encourage
participation in general meetings, to provide better conditions for the work of the Audit Board and to
adopt a policy for notification of irregularities. It were also adopted measure aiming to the clarification of
the responsibilities of the Company Secretary of Banif - SGPS, SA.
In terms of the corporate governance model, work continued on the process which started in 2007 for
implementation of a corporate centre, comprising corporate functions and corporate committees, which is
designed to equip Banif – SGPS, S.A., as the entity at the head of the Banif Financial Group, with a
structure with the expertise and size appropriate for conducting its corporate and commercial business in a
concerted manner across the entire group.
This led to implementation, in early 2008, of the Corporate Risk Function, whose main mission is to
advise the Board of Directors of Banif – SGPS, S.A. on integrated management of the risks involved in
the activities of the Banif Financial Group, in line with the requirements and recommendations of the
supervisory authorities, with a view to mitigating these risks and incorporating them into decision making
at all levels throughout the Group.
The essential purpose of this function is to monitor the various business risks to which the Group is
exposed, to design a risk policy blueprint for the entire Group and to promote and develop risk
management projects cutting across the Banif Financial Group.
In line with international recommendations from supervisory authorities and best practice in the industry,
the Group recognises the need to engage with Risk Management, both in terms of Processes and
Technologies, and at the level of People and Cultures. In the context of Banif Group Operations, this is a
relatively complex task, in view of the diversity of Group entities and the different geographical regions
in which the Group is established.
The Corporate Risk body has therefore been entrusted with the central thrust of implementing a risk
management framework in the Group. The first steps in this direction consisted of drawing up an
"Activities Plan" for implementing the function, including planning the material and human resources
required, as well as the activities and projects to be pursued in 2008, in order to achieve greater awareness
and improved control of risks within the Group.
Although only recently set up, the Corporate Risk unit has an experienced team, with the skills and
management tools needed to be able to achieve the goals set for them. Major steps were made on
structural projects such as those relating to Basle II Programme.
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In terms of identification, assessment, monitoring and control of risks, the Group’s risk management
system operates in each of its entities, a similar work is conducted at corporate levels, aggregating risks
and essentially geared to control activities. In essence, this work is proportional to the scale, nature and
complexity of business activities, and is in line with the nature and magnitude of the risks which the
Group takes on or seeks to take on.
Special attention is paid to the following risks:
• Lending Risk
• Balance Sheet Structure Risk
• Liquidity Risk
• Operating Risk
• Market Risk
• Interest and Exchange Rate Risk
In keeping with best practice in corporate governance, the Board of Directors conducts regular
assessments of the company’s corporate governance model. In connection with this, as a result of the
structural evaluation conducted in 2007 with the help of an external consultant the governance model of
the Banif Financial Group was redesigned at the end of that period.
The governance model resulting from this process is based on five pillars:
• The Board of Directors of Banif – SGPS, S.A. remains the Group’s sole executive body, taking a
more hands-on approach to business supervision, and with more clearly structured organisational
support and procedures;
• The Banif Financial Group will take a number of steps to assure further alignment with best
practice and recommendations in the field of corporate governance;
• The Board of Directors of Banif – SGPS, S.A. will be supported by a corporate centre,
comprising nine areas of responsibility with a light structure but high standard of expertise, each
area reporting to a member of the Board of Directors;
• The work of the corporate centres will also be coordinated by four cross-sector committees
responsible for key issues relating to the Group’s competitiveness and risk management; and
• Effective implementation of a new governance model will mean a new model for the relationship
between the holding company and the business units.
The pillars of the new model are gradually have been implemented through initiatives taking in the
various aspects of Group governance.
With regard to the corporate centre, in addition to the gradual process of implementation of the corporate
functions, the Board of Directors identified the opportunity to carry the Group’s governance model
further and resolved, in July 2008, to include the corporate function of Health and Safety at Work.
Activities in the field of health and safety at work are geared to preventing occupational hazards and, as
such, reflect the Group’s concern with the well-being of its staff, their sense of motivation and
identification with the organisation’s values, and also with the physical safety of persons and property,
making it possible to assure adequate control of risks and continuous improvements in performance.
As part of the process of stepping up cross-group activities on key issues for competitiveness and risk
management, the Board of Directors also resolved to set up a Procurement Committee, whose mission is
to exploit cost synergies between the different companies in the Banif Financial Group, optimizing the
purchasing terms for goods and services and promoting standardisation and integration of procedures for
procurement activities, in line with best practice in this area.
In view of the current phase of implementation of the Group’s governance model and the developments
described above, the Board of Directors is confident that the framework in place for the governance of the
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Banif Financial Group, whilst naturally subject to a process of evolution and continuing development, is
properly suited to the real circumstances of the Group.
Social Responsibility
Banif Financial Group is based on a model of corporate governance in which business is developed and
managed through personal advancement, the creation of wealth and reduction of environmental impacts.
Whilst it is undeniable that social, environmental and governance issues are critical to corporate
management affairs, contributing to business performance in the long term, the Group nonetheless
recognises the important role it can play in promoting the principles of sustainability, by incorporating
social and environmental aspects in the allocation of capital, in the different business sectors and markets
in which it operates.
The Group is aware of the distance which needs to be travelled in order to incorporate sustainability into
business management processes and into the services it offers to society at large, therefore it has taken its
social responsibilities seriously since the earliest days, regarding this as a key component of its mission
and strategy. This commitment is visible in various measures adopted, both internally and externally.
With the Workforce
At the internal level, the Group's employees are provided with a set of benefits and privileges designed to
promote a balance between personal and professional life. The Group's human resources policy also
recognises training as an important management tool for developing and furthering the skills of its
workforce, on an ongoing basis.
The combination of a youthful workforce with a policy of permanent contracts means that specific
ongoing training continues to be an effective management tool for upgrading human resources, through
training in new skills aligned with the Group's strategic values and guiding principles.
With the Community
The Group's social policy strategy has been reflected in its sponsorship of a range of social, arts and
sports events and organisations.
Each Group company has adopted measures to meet its social responsibilities in the communities in
which it operates, identifying priority stakeholders who have been the main focus of their activities over
recent years.
The challenge of new environmental responsibilities
In terms of internal environmental impact, deriving from the work carried out within the Group buildings,
investment has been made to minimise consumption of IT materials, such as toners and ink cartridges,
which are mostly disposed of through appropriate recycling processes. Improvements have also been
achieved in power and water consumption in certain Group companies. However, in order to establish
systematic measures for eco-efficient energy consumption, a joint methodology will be developed for
gathering environmental information from all Group companies.
Trends
Currently, Banif develops its activities in a growingly competitive environment, with tougher market
conditions, new supervision rules, increased funding costs and a deterioration of the loan portfolio credit
quality that results of the national and international economic crisis.
In the last three years, Banif has strongly focused on the broadening of its client base. In Portugal, Banif
has the objective of achieving a 5 per cent. market share, estimating that credit portfolio and deposits
from customers will grow at a stronger pace than the estimates for the market. Banif intends to continue
to expand its branches network, to increase the number of customers and the number of products sold to
each customer.
As to individual customers, Banif intends to increase the amount of funding obtained with this segment,
based on initiatives to enlarge and retain customers, including commercial initiatives, improvement of the
level and quality of services.
- 115 -
In the Corporate segment, Banif intends to reinforce its market share and results obtained in this segment.
Aiming to reduce operating costs, avoiding the duplication of functions and structures, in the end of 2008
the merger of Banif and Banco Banif e Comercial dos Açores, S.A. was concluded.
The current market conditions may bring risks to Banif, namely the compression of the financial margin
and a further deterioration of the loan portfolio credit quality. In order to overcome this situation, the
Bank is redefining its origination policies and pricing policies, reinforcing supervision mechanisms and
asset – liabilities management and diversification of funding sources.
In the future years, Banif intends to increase its client basis in order to reinforce its market share in
Portugal, also through an expansion of its branches.
The future development and the prospects of Banif – Banco Internacional do Funchal, S.A., Banif
Finance Ltd., Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira
Exterior (External Financial Branch) and Banif Financial Group substantially depend on Portuguese and
international economic development as well as the evolution of international capital markets.
Banif Finance Ltd. ("Banif Finance") Incorporation and Main Activities
Banif Finance is an exempted limited liability company registered and incorporated in the Cayman
Islands (acting under its laws) on 6 August 2003 for an unlimited duration and has its registered office at
the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-
1104, Cayman Islands (telephone number: + 1 345 949 8066). It is entered in the register maintained for
such purpose by the Registrar of Companies in the Cayman Islands under registration number 127987.
Main Activities
Banif Finance has unrestricted objects pursuant to Article 3 of its Amended and Restated Memorandum
and Articles of Association (as amended and restated on 30 June 2009). Banif Finance's sole business
activity is to participate in capital markets transactions to provide Group funding.
Capital and Shares
On 29 December 2008, Banif Finance issued 20,000 preference shares of Euro 0.01 par value each, at an
issue price of Euro 1,000 per share and an aggregate price of Euro 20,000,000 and 20,000 preference
shares of US$ (United States Dollars) 0.01 par value each, at an issue price of US$ 1,000 per share and an
aggregate price of Euro 20,000,000.
On 31 December 2008, Banif Finance issued 25,000 preference shares of Euro 0.01 par value each, at an
issue price of Euro 1,000 per share and an aggregate price of Euro 25,000,000.
On 30 June 2009, Banif Finance issued 10,000 preference shares of Euro 0.01 par value each, at an issue
price of Euro 1,000 per share and an aggregate price of Euro 10,000,000 and 15,000 preference shares of
US$ (United States Dollars) 0.01 par value each, at an issue price of US$ 1,000 per share and an
aggregate price of Euro 15,000,000.
The share capital of the Company is US$1,500 and €1,550 divided into 1,000 ordinary shares of a par
value of US$1.00 each, 155,000 preference shares of a par value of €0.01 each and 50,000 preference
shares of a par value of US$0.01 each. The issued ordinary share capital of Banif Finance is US$ 1,000.
Banif holds 100 per cent. of the issued ordinary shares of Banif Finance. Citivic Nominees Limited,
acting as registered holder for the issue of 130,000 Preference Shares, holds 63.41 per cent. of Banif
Finance Preference Shares and Citigroup Global Markets Deutschland AG & Co. KGaA, acting as
Registrar for the issue of 75,000 Preference Shares, holds 36.59 per cent. of Banif Finance Preference
Shares.
- 116 -
Main Financial Indicators
Balance Sheet 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Net Assets ............................................................................................................... 1,183,293 1,354,054 (12.61)
Loan Portfolio ......................................................................................................... 1,137,343 1,147,997 (0.93)
Customer Funds ...................................................................................................... 816,784 1,031,023 (20.78)
Total Shareholders’ Equity ..................................................................................... 168,499 98,265 71.47
Income Statement 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Financial Margin ..................................................................................................... 6,564 4,727 38.86 Dividend income ..................................................................................................... - - -
Other Income .......................................................................................................... 521 - -
Banking revenue ..................................................................................................... 7,085 4,727 49.88
Total Overheads (including depreciation) ............................................................... (194) (59) 228.81
Provisions / Impairment .......................................................................................... - - - Income Tax ............................................................................................................. - - -
Net Profit ................................................................................................................ 6,891 4,668 47.62
Balance Sheet 30-09-2009 31-12-2008 Variation
(Thousand euros) per cent.
Net Assets ........................................................................................................... 908,006 1,183,293 (23.26)
Loan Portfolio ..................................................................................................... 799,965 1,137,343 (29.66)
Customer Funds................................................................................................... 552,722 816,784 (32.33)
Total Shareholders’ Equity .................................................................................. 208,755 168,499 23.89
Income Statement 30-09-2009 30-09-2008 Variation
(Thousand euros) per cent.
Financial Margin ................................................................................................. 7,485 5,285 41.63
Dividend income ................................................................................................. - - -
Other Income ....................................................................................................... 21,360 - -
Banking revenue .................................................................................................. 28,845 5,285 445.79
Total Overheads (including depreciation) ........................................................... (54) (194) (72.16)
Provisions / Impairment ...................................................................................... - - -
Income Tax.......................................................................................................... - - -
Net Profit ............................................................................................................. 28,791 5,091 465.53
- 117 -
The following table shows the unaudited capitalisation of Banif Finance as at 30 September 2009:
30-09-2009
(Thousand euros)
Total Liabilities 699,251
Short Term Liabilities .................................................................................................................................... 1,054
Long Term Liabilities ..................................................................................................................................... 698,197
Total Stockholders' Equity .............................................................................................................................. 208,755
Share Capital .................................................................................................................................................. 3
Issue Premiums .............................................................................................................................................. 187,269
Reserves and Retained Earnings ..................................................................................................................... 99
Profit for the Period ........................................................................................................................................ 28,791
Interim Dividends ........................................................................................................................................... (7,407)
Total Capitalisation ......................................................................................................................................... 908,006
Investments
Banif Finance has not carried out any investments since the date of the last published financial statements.
Directors
The Directors of Banif Finance are:
• Joaquim Filipe Marques dos Santos (Chairman)
• Carlos David Duarte de Almeida (Managing Director)
• António Manuel Rocha Moreira (Managing Director)
The above Directors have their business address at the registered office of Banif.
Conflicts of Interest
To the knowledge of Banif Finance the above Directors and their private interests do not comprise any
potential conflicts of interest between any duties of Banif Finance.
Audit Committee
Banif Finance does not have an Internal Audit Committee.
Employees
Banif Finance has no employees.
Indebtedness
Banif Finance has issued five series of notes under the Programme, of which two are outstanding, in a
global amount of Euro 300,000,000 (November 2006) and Euro 300,000,000 (May 2007). Additionally,
Banif Finance has issued two series of Lower Tier II subordinated notes in a global amount of Euro
50,000,000 (December 2004) and Euro 50,000,000 (December 2006) and one series of Upper Tier II
subordinated notes in a global amount of Euro 125,000,000 (December 2006).
Financial Year
The financial year-end of Banif Finance is 31 December.
Accounts
Banif Finance prepares annual audited accounts. The first accounts were prepared in respect of the period
from 23 October 2003 to 31 December 2003.
- 118 -
No Material Adverse Change
Since the date of Banif Finance's incorporation (other than as set out above), there has been no material
adverse change, or any development reasonably likely to involve any material adverse change in the
condition, financial or otherwise, of Banif Finance.
Corporate Governance
There is no specific corporate governance regime in Cayman, save that the Directors of the Issuer are
required to observe their fiduciary duties of the Company, principally of good faith in the interests of the
Issuer, not acting for a collateral purpose and not to make a secret profit.
Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch) ("Banif Madeira")
Establishment and Main Activities
Banif Madeira is a branch of Banif established in the Zona Franca da Madeira (the Madeira International
Business Centre) and as such benefits from a corporate tax exemption as experienced in the Taxation
Section, under the paragraph "Notes issued on guarantee by Banif Madeira" at page 125 of this
Prospectus. As a branch of Banif, Banif Madeira is not a separate legal entity from Banif and accordingly
Banif will be ultimately responsible for actions of Banif Madeira carried out by Banif Madeira's duly
authorized representatives.
Banif Madeira was established in Madeira on the 3 April 1989 (registered under number
00111/1990.09.21-CIPC-911005005) and acts under the laws of Portugal. Its registered office is at Rua
João Tavira, no. 30, 9004-509 Funchal, Madeira, Portugal and its registered telephone number is +351
291 222 162.
The object of Banif Madeira is the carrying out of international banking and finance operations with non-
residents of Portugal.
Representatives
The Representatives of Banif Madeira are:
• Horácio da Silva Roque
• Joaquim Filipe Marques dos Santos
• Carlos David Duarte de Almeida
• António Manuel Rocha Moreira
• José Marques de Almeida
• Joaquim Francisco Silva Pinto
• João Ramiro Arede Pereira Reis
• Vitorino Adriano de Sousa Gouveia
• Daniela Maria de Castro Fernandes Pereira Agostinho
The representatives are granted all powers for the management of Banif Madeira and Banif Madeira is
bound by the joint signature or joint act of two representatives.
Attorneys
The following are appointed as Attorneys of Banif Madeira:
• José António Machado de Andrade
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• José Carlos de Oliveira Rôlo
• Marco António Figueira da Silva Noronha Jardim
• David Máximo Correia
• Daniela Maria de Castro Fernandes Pereira Agostinho
• João Ramiro Arede Pereira Reis
• Vitorino Adriano de Sousa Gouveia
The attorneys are authorised to manage and administer Banif Madeira upon specific powers granted by
the Representatives, and carrying out all acts necessary. Two attorneys signing jointly can bind Banif
Madeira.
Conflicts of Interest
To the knowledge of Banif Madeira the above Directors and their private interests do not comprise any
potential conflicts of interest between any duties of Banif Madeira.
Audit Committee
Banif Madeira does not have an internal Audit Committee.
Corporate Governance
Pursuant to the Corporate Governance Regulation, only companies which have its shares admitted to
trading in a regulated market must issue a statement regarding compliance with the corporate governance
regime set out in the Regulation. Given the fact that Banif Madeira is a full branch of Banif and Banif is
not a company with shares admitted to trading in a regulated market, there is no such requirement for
Banif Madeira to comply with such corporate governance regime.
Main Financial Indicators
Balance Sheet 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Net Assets ........................................................................................................... 2,091,644 2,003,689 4.39
Loan Portfolio ..................................................................................................... 16,909 21,109 (19.90)
Customers' Funds ................................................................................................ 1,758,112 1,698,788 3.49
Total Shareholders’ Equity .................................................................................. 28,893 23,105 25.05
Income Statement 31-12-2008 31-12-2007 Variation
(Thousand euros) per cent.
Financial Margin ................................................................................................. 6,550 2,616 150.38
Net Profit on Financial Operations ...................................................................... (5) (882) (99.43)
Other Income ....................................................................................................... 597 541 (10.35)
Gross Margin ....................................................................................................... 7,142 2,275 (213.93)
Total Overheads (including depreciation)............................................................ (7) (2) (250.00)
Provisions / Impairment ...................................................................................... (1,347) (168) (701.79)
Income Tax.......................................................................................................... 0 0 -
Net Profit ............................................................................................................. 5,788 2,105 (174.96)
Balance Sheet 30-09-2009 31-12-2008 Variation
(Thousand euros) per cent.
Net Assets ........................................................................................................... 1,957,930 2,091,644 (6.39)
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Loan Portfolio ..................................................................................................... 13,565 16,909 (19.78)
Customers' Funds ................................................................................................ 1,400,694 1,758,112 (20.33)
Total Shareholders’ Equity .................................................................................. 40,361 28,893 39.69
Income Statement 30-09-2009 30-09-2008 Variation
(Thousand euros) per cent.
Financial Margin ................................................................................................. 13,261 3,260 306.78
Net Profit on Financial Operations ...................................................................... 165 (128) 228.9
Other Income ....................................................................................................... 479 300 (59.67)
Gross Margin ....................................................................................................... 13,905 3,432 305.16
Total Overheads (including depreciation)............................................................ (9) (5) 80.00
Provisions / Impairment ...................................................................................... (746) 65 (1,247.69)
Income Tax.......................................................................................................... 0 0 -
Net Profit ............................................................................................................. 11,468 2,070 454.00
The following table shows the unaudited capitalisation of Banif Madeira as at 30 September 2009:
30-09-2009
(Thousand euros)
Total Liabilities 1,917,569
Short Term Liabilities 1,193,564
Long Term Liabilities 724,005
Total Shareholders' Equity 40,361
Share Capital ................................................................................................................................................... 0
Issue Premiums ............................................................................................................................................... 0
Reserves and Retained Earnings ...................................................................................................................... 28,893
Profit for the Period ......................................................................................................................................... 11,468
Total Capitalisation .......................................................................................................................................... 1,957,930
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TAXATION
The following is a general description of certain Cayman Islands, Portugal, Luxembourg and EU tax
considerations relating to the Notes. It does not purport to be a complete analysis of all tax considerations
relating to the Notes, whether in those countries or elsewhere. Prospective purchasers of Notes should
consult their own tax advisers as to which countries' tax laws could be relevant to acquiring, holding and
disposing of Notes and receiving payments of interest, principal and/or other amounts under the Notes
and the consequences of such actions under the tax laws of those countries. This summary is based upon
the law as in effect on the date of this Base Prospectus and is subject to any change in law that may take
effect after such date.
Cayman Islands
The following discussion of certain Cayman Islands tax consequences of an investment in the Notes is
based on the advice of Maples and Calder as to Cayman Islands law. The discussion is a general summary
of present law, which is subject to prospective and retroactive change. It assumes that Banif Finance will
conduct its affairs in accordance with assumptions made by, and representations made to, counsel. It is
not intended as tax advice, does not consider any investor's particular circumstances, and does not
consider tax consequences other than those arising under Cayman Islands law.
Under existing Cayman Islands law:
(a) payments of principal and interest in respect of the Notes will not be subject to taxation in the
Cayman Islands and no withholding will be required on such payment to any Holder of a Note
and gains derived from the sale of Notes will not be subject to Cayman Islands income or
corporate tax. The Cayman Islands currently have no income, corporation or capital gains tax and
no estate duty, inheritance tax or gift tax; and
(b) the Holder of any Note (or the legal personal representative of such Holder) whose Note is
brought into the Cayman Islands may in certain circumstances be liable to pay stamp duty
imposed under the laws of the Cayman Islands in respect of such Note. In addition, an instrument
transferring title to a Note, if brought into or executed in the Cayman Islands, would be subject to
Cayman Islands stamp duty.
Banif Finance has been incorporated under the laws of the Cayman Islands as an exempted company and,
as such, has obtained an undertaking from the Governor In Cabinet of the Cayman Islands in the
following form:
The Tax Concessions Law
(1999 Revision)
Undertaking as to Tax Concessions
In accordance with Section 6 of the Tax Concessions Law (1999 Revision) the Governor In Cabinet
undertakes with Banif Finance Ltd. (the "Company"):
(a) that no law which is hereinafter enacted in the Islands imposing any tax to be levied on profits,
income, gains or appreciations shall apply to the Company or its operations; and
(b) in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the
nature of estate duty or inheritance tax shall be payable
(i) on or in respect of the shares, debentures or other obligations of the Company; or
(ii) by way of the withholding in whole or in part of any relevant payment as defined in
Section 6(3) of the Tax Concessions Law (1999 Revision).
These concessions shall be for a period of twenty years from 19 August 2003.
- 122 -
Acting Governor in Cabinet.
Portugal
Notes issued by Banif
The following is a summary of the material Portuguese tax consequences with respect to the Notes. The
summary does not purport to be a comprehensive description of all the tax consequences that may be
relevant to any particular Noteholder, including tax considerations that arise from rules of general
application or that are generally assumed to be known to Noteholders. This discussion is based on
Portuguese law as it stands at the date of this Base Prospectus and is subject to any change in law that
may take effect after such date. Prospective investors in the Notes should consult their professional
advisers with respect to particular circumstances and the effects of state, local or foreign laws to which
they may be subject. Noteholders who are in doubt as to their tax position should consult their
professional advisers.
Economic benefits derived from interest, amortisation, reimbursement premiums and other types of
remuneration arising from the Notes are designated as investment income for Portuguese tax purposes.
Investment income on the Notes paid to a holder of Notes (who is the effective beneficiary thereof (the
"Beneficiary")) considered to be resident for tax purposes in the Portuguese territory or to a non-
Portuguese resident having a permanent establishment in the Portuguese territory to which the income is
imputable, is subject to withholding tax at a prima facie rate of 20 per cent. except where the Beneficiary
is either a Portuguese resident financial institution (or a non-resident financial institution having a
permanent establishment in the Portuguese territory to which the income is imputable) or benefits from a
reduction or a withholding tax exemption as specified by Portuguese tax law. In relation to Beneficiaries
that are corporate entities resident in the Portuguese territory (or non-residents having a permanent
establishment therein to which the income is imputable), withholding tax is treated as a payment in
advance and, therefore, such Beneficiaries are entitled to claim appropriate credit against their final
corporate income tax liability. In relation to Beneficiaries that are individuals resident in the Portuguese
territory, withholding tax shall be considered as final.
Investment income on the Notes paid to Beneficiaries considered as non-residents in the Portuguese
territory (and not having a permanent establishment therein to which the income is imputable) is also
subject to withholding tax at a flat rate of 20 per cent. This withholding tax rate may be reduced in
accordance with any applicable double taxation treaty entered into by the Republic of Portugal, subject to
compliance with certain procedures and certification requirements of the Portuguese tax authorities for
the purpose of verifying the non-resident status and eligibility for the respective tax treaty benefits.
Pursuant to Decree Law 193/2005 of 7 November (as amended from time to time) ("DL 193/2005"),
investment income paid to Noteholders in respect of debt securities registered with a centralised system
recognised by the Portuguese Securities Code, as well as capital gains resulting from a sale or other
disposal of such Notes, will be exempt from Portuguese income tax, provided that the following
requirements are met.
In order for the withholding tax exemption to apply in relation to the investment income derived on the
Notes, DL 193/2005 requires that the Noteholders are: (i) not resident in the Portuguese territory (nor
having any registered or deemed permanent establishment therein to which interest is imputable); (ii) not
resident in any of the territories included in the list of jurisdictions with a clearly more favourable tax
regime as set out in Portaria 150/2004 of 13 February, with the exception of central banks and
governmental agencies of those jurisdictions; and (iii) in the case of legal entities, provided that not more
than 20 per cent. of its share capital is held, directly or indirectly, by Portuguese resident entities.
In order for such tax exemption to apply in relation to capital gains in relation to the Notes, DL 193/2005
requires that: (i) such capital gains are realised by non-Portuguese resident entities having no permanent
establishment located in the Portuguese territory to which such capital gains are imputable; (ii) the non-
resident entities are not resident in any of the territories included in the list of jurisdictions with a clearly
more favourable tax regime as set out in Portaria 150/2004 of 13 February; and (iii) in the case of legal
entities, the share capital of any such non-resident entity is not held, directly or indirectly, in more than 20
per cent. by Portuguese residents, as required by Article 26 of the Portuguese Tax Benefits Statute.
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For the purpose of application at source of this tax exemption regime, DL 193/2005 requires compliance
with certain procedures and certifications. Pursuant to these procedures (which are aimed at verifying the
non-resident status of the Noteholders), the Noteholder is required to hold the Notes through an account
with one of the following entities: (i) a direct register entity, which is an entity affiliated with the clearing
system recognised by the Portuguese Securities Code; (ii) an indirect register entity, which, although not
assuming the role of the direct register entities, is a client of the latter; or (iii) entities managing an
international clearing system, which are entities operating with the international market to clear and settle
securities transactions. For the purposes of this tax exemption, the Portuguese Government has
recognised each of Euroclear and Clearstream, Luxembourg as entities which manage an international
clearing system.
• Domestic Cleared Notes — held through a direct registering entity
For the purposes of DL 193/2005, direct registering entities are required to register the Noteholders in one
of two accounts: (i) an exempt account or (ii) a non-exempt account.
Registration of the Notes in an exempt account is crucial for the exemption to apply. For this purpose, the
registration of the non-resident Noteholder in an exempt account, allowing an upfront application of the
tax exemption, requires evidence of the non-resident status to be provided by the Noteholder to the direct
registering entity prior to or at the Income Payment Date (as defined below), as follows:
(a) if the Noteholder is a central bank, public institution, international body, credit or financial
institution, pension fund or insurance company, with its head office in any OECD country or in a
country with which the Republic of Portugal has entered into a double tax treaty, the Noteholder
will be required to prove its non-resident status by providing: (i) its tax identification; or (ii) a
certificate issued by the entity responsible for its supervision or registration, confirming the legal
existence of the Noteholder and its head office; or (iii) a declaration of tax residence issued by
the Noteholder itself, duly signed and authenticated, if the Noteholder is a central bank, a public
law entity taking part in the public administration (either central, regional or peripheral, indirect
or autonomous of the relevant country) or an international body; or (iv) evidence of non-
residency pursuant to the terms of paragraph (c) below;
(b) if the Noteholder is an investment fund or other collective investment scheme domiciled in any
OECD country or in a country with which the Republic of Portugal has entered into a double tax
treaty, it shall prove its non-resident status by providing any of the following documents: (i) a
declaration issued by the entity responsible for its supervision or registration or by the relevant
tax authority confirming its legal existence, domicile and law of incorporation; or (ii) evidence of
non-residency pursuant to the terms of paragraph (c) below;
(c) other investors will be required to provide evidence of their non-resident status by means of: (i) a
certificate of residency or equivalent document issued by the relevant tax authorities; (ii) a
document issued by the relevant Portuguese Consulate certifying its residency abroad; or (iii) a
document specifically issued by an official entity which forms part of the public administration
(either central, regional or peripheral, indirect or autonomous) of the relevant country. The
Noteholder must provide an original or a certified copy of such documents and, as a rule, if such
documents do not refer to a specific year and do not expire, they must have been issued within
the three years period prior to the relevant payment or maturity dates or, if issued after the
relevant payment or maturity dates, within the following three months.
"Income Payment Date" means any date on which the Noteholders are entitled to receive interest or
other investment income, either in the form of accrued interest or coupon.
• Internationally cleared Notes held through an entity managing an international clearing system
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If the Notes are registered in an account with an international clearing system (either Euroclear or
Clearstream, Luxembourg) and the management entity of such international clearing system undertakes
not to provide registration services in respect of the Notes to (i) Portuguese tax residents that do not
benefit from either an exemption or waiver from Portuguese withholding tax, and (ii) non-resident entities
for tax purposes which do not benefit from the above Portuguese income tax exemption, the evidence
which is required in order for a Noteholder to benefit from the tax exemption will be made prior to or at
the Income Payment Date as follows:
(a) by means of the presentation of a certificate, on an annual basis, with the name of each beneficial
owner, address, tax payer number (if applicable), identification of the securities, amount of
securities held and the reference to the relevant legislation supporting the exemption or the
waiver from Portuguese withholding tax. The form of the certificate is set out in Annex 2 to this
"Taxation" section (which corresponds to the wording and contents of the form of certificate for
exemption from Portuguese withholding tax on income from debt securities which is set out in
Despacho (Order) 4980/2006 published in the Portuguese official diary, second series, no. 45, of
3 March 2006 and issued by the Portuguese Minister of Finance and Public Administration); or
(b) alternatively, by means of annual declaration stating that the beneficial owners are exempt or not
subject to withholding tax. This declaration must be complemented with a disclosure list, on each
coupon payment date, of each beneficial owner's identification setting out the name of each
beneficial owner, address, tax payer number (if applicable), identification of the securities,
amount of securities held and reference to the legislation supporting the exemption or the waiver
from Portuguese withholding tax. The form of the declaration is set out in Annex 3 to this
"Taxation" section (which corresponds to the wording and contents of the form of statement for
exemption from Portuguese withholding tax on income from debt securities which is set out in
Aviso (Regulatory Notice) 3714/2006 published in the Portuguese official diary, second series, no
59, of 23 March 2006 and issued by the Portuguese Secretary of State for Tax Affairs).
The two documents referred to in (i) or (ii) above, the forms of which are set out in Annexes 2 and 3,
must be provided by the participants (i.e. the entities that operate in the international clearing system) to
the direct registering entities through the international clearing system management entity and must take
into account the total accounts under their management relating to each Noteholder that is tax exempt or
benefits from the waiver from Portuguese withholding tax.
The delivery of the documents referred to in (i) or (ii) above, the forms of which are set out in Annexes 2
and 3, by the participants to the respective international clearing system management entities shall follow
the procedures that are from time to time applicable for this purpose by such international clearing system
management entities.
The international clearing system management entities shall inform the direct registering entity of the
income paid to each participant for each security payment.
No Portuguese withholding tax exemption shall be granted under DL 193/2005 if the requirements set
forth therein are not duly complied with and, consequently, the general Portuguese tax provisions shall
apply as described above. This will be the case whenever the Notes are not integrated in/cleared through
Interbolsa or in any other centralised depositary system for securities recognised under the Portuguese
Securities Code and complementary legislation.
Notes issued or guaranteed by Banif Madeira
The Madeira International Business Centre is a free trade zone, established as part of the taxation system
in the Republic of Portugal. Investment income paid by Banif Madeira benefits from a tax exemption
provided that Banif Madeira is financing its balance sheet liabilities and the Noteholders and
Couponholders, as beneficiaries of the income, are individuals or corporate entities resident, or with
registered offices, outside, and without permanent establishments located in, the Republic of Portugal
(with the exception of the Madeira International Business Centre). This exemption is not applicable when
the beneficiaries of the income are credit or financial institutions or financial branches located in the
Madeira International Business Centre, which carry out their activity with residents in the Republic of
Portugal's mainland or with permanent establishments of non-resident entities therein.
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Therefore, under current Portuguese law, investment income on the Notes paid by Banif Madeira is
exempt from taxation and consequently from withholding tax where the beneficiaries of the income are:
(a) individuals or entities operating within the Madeira International Business Centre which are not
credit institutions or financial companies or financial branches which carry out operations in the
scope of their activities with residents in the mainland of the Republic of Portugal or with
permanent establishments of non-resident entities in the mainland of the Republic of Portugal; or
(b) individuals not resident for tax purposes in the Republic of Portugal pursuant to section 16 of the
Portuguese Income Tax Code (Código do Imposto sobre o Rendimento de Pessoas Singulares) or
entities with registered offices outside the Republic of Portugal and without permanent
establishments located in the Republic of Portugal, or other entities whose registered office or
effective management is not located in the Republic of Portugal.
It should be noted that permanent establishments in the Republic of Portugal of entities with registered
offices outside the Republic of Portugal and companies and other entities with a registered office or
effective management located in the Republic of Portugal, are considered residents in the Republic of
Portugal and therefore do not benefit from the tax exemption set out in Article 33(6) of the Estatuto dos
Benefícios Fiscais (as amended from time to time) (the "Portuguese Tax Benefits Statute"). Under
Portuguese law, a permanent establishment is defined as a fixed installation through which an activity
(other than an activity of a preparatory or ancillary nature) of a commercial, industrial or agricultural
nature is carried on. A permanent establishment is also deemed to exist when a person other than an
independent agent acts within the territory of Portugal on behalf of a foreign enterprise and has, and
habitually exercises, the authority to negotiate and conclude contracts related to the activities of the
enterprise. In this situation a permanent establishment is not deemed to exist if a company operates in
Portugal through a commission agent, or any other type of independent agent, provided that such persons
are acting in the ordinary course of their business and bear the risk of the activity.
The aforementioned tax exemption, and the consequent withholding tax exemption, will apply to the
specified category of Noteholders and/or Couponholders, as the case may be, so long as they are able to
provide the Issuer with (i) the Residency Information (as defined below); and (ii) a statement of non-
Portuguese beneficial ownership substantially as set out in Annex 1 to this "Taxation" section (the
"Statement of non-Portuguese Beneficial Ownership") prior to the Income Payment Date.
"Residency Information" means appropriate evidence that the relevant Noteholder and/or Couponholder,
as the case may be, is not resident in the Republic of Portugal and does not have any registered or deemed
permanent establishment in the Republic of Portugal in accordance with the following provisions as set
out in Article 33(14) of the Portuguese Tax Benefits Statute in respect of the residency certification of
payees of interest that are exempt from Portuguese withholding tax:
(a) if the Noteholder or Couponholder, as the case may be, is a central bank, public institution,
international body, credit institution, financial company, property investment fund, collective
investment scheme, pension fund or insurance company with its head office in any OECD
country or in a country with which the Republic of Portugal has entered into a double taxation
treaty and is subject to a special supervision regime or administrative registration, certification
shall be made by means of the following: (i) its tax identification; or (ii) a certificate issued by
the entity responsible for such supervision or registration confirming the legal existence of the
Noteholder or Couponholder and its head office; or (iii) a declaration of tax residence issued by
the Noteholder or Couponholder itself, duly signed and authenticated, if a central bank, public
law entity taking part of the public administration (either central, regional or peripheral, indirect
or autonomous of the country of the relevant Noteholder or Couponholder) or an international
body; or (iv) evidence of non-residence pursuant to the terms of paragraph (c) below, so long as
the Noteholder or Couponholder provides a form of confirmation referred to in such paragraph
(c);
(b) if the Noteholder or Couponholder, as the case may be, is a working emigrant it must prove its
status by way of the applicable documents which are approved by decision (despacho) of the
Minister of Finance regulating the emigrant savings system;
(c) in any other case, information provided in accordance with the following rules: confirmation
must be made by the relevant Noteholder or Couponholder, as the case may be, by way of: (i) a
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certificate of residence or equivalent document issued by the relevant tax authorities; or (ii) a
document issued by the relevant Portuguese Consulate certifying its residence abroad; or (iii) a
document specifically issued by an official entity taking part in the public administration (either
central, regional or peripheral, indirect or autonomous) of the relevant country. For these
purposes, an identification document such as a passport or an identification card or document by
means of which it is indirectly possible to presume the relevant tax residence (such as a work or
permanent residency permit) are not acceptable.
There are specific rules relating to the originality and validity of the document, namely that the
Noteholder or Couponholder must provide an original or a certified copy of the residency certificate or
document and, as a rule, (i) if such document does not refer to a specific residency year and has not
expired, it must have been issued within the three years period prior to the relevant payment date or the
relevant Maturity Date; or (ii) such document must have been issued in the year of the relevant payment
date or the relevant Maturity Date and refer to the residency status in that year or in the previous one.
"Tax Identification" means a document provided by the relevant tax authority which evidences the status
of the Noteholder or Couponholder, as the case may be, as a tax payer in the applicable jurisdiction,
which may be a copy of a pre-existing tax identification or other document or similar effect.
Guarantee of Banif Madeira
Pursuant to Article 33 (11) of the Portuguese Tax Benefits Statute, documents, books, papers, contracts,
operations, acts and products, as set out in the Tabela Geral do Imposto de Selo (the general stamp tax
table), relating to entities licensed to operate in the Madeira International Business Centre are exempt
from Portuguese stamp tax. Although not specifically stated in Article 33 (11) of the Portuguese Tax
Benefits Statute, and in the absence of court decisions in relation to this matter, the Portuguese tax
authorities are of the view that this exemption of stamp tax is only applicable to the provision of a
guarantee by an entity licensed to operate in the Madeira International Business Centre in the event that
the guarantor directly benefits from the provision of the guarantee, or in situations in which the entity
having the benefit of the guarantee is licensed to operate in the Madeira International Business Centre.
If the Portuguese tax authorities take the view that in the case in question there is no direct benefit to
Banif Madeira, the guarantee given by Banif Madeira as guarantor of Notes issued by Banif Finance will
be subject to Portuguese stamp duty at the following rates: (i) 0.04 per cent. per month or fraction thereof
if the guarantee is given for a period of less than 1 year; (ii) 0.5 per cent. if the guarantee is given for a
period of 1 year or more and less than 5 years; and (iii) 0.6 per cent. if the guarantee is given for a period
of 5 years or more or without a fixed term. This stamp duty will only be payable upon enforcement of the
guarantee in Portugal. The stamp duty will be due from Banif Finance as beneficiary of the guarantee.
Pursuant to Article 280 of the Código de Processo Civil (the Civil Procedural Code) enforceability of the
guarantee will not be prejudiced by non-payment of Portuguese stamp duty in relation to the guarantee.
Luxembourg Taxation
The following is a general description of certain Luxembourg tax considerations relating to the Notes. It
specifically contains information on taxes on the income from the Notes withheld at source and provides
an indication as to whether the issuer assumes responsibility for the withholding of taxes at the source. It
does not purport to be a complete analysis of all tax considerations relating to the Notes, whether in
Luxembourg or elsewhere. Prospective purchasers of the Notes should consult their own tax advisers as
to which countries' tax laws could be relevant to acquiring, holding and disposing of the Notes, payments
of interest, principal and/or other amounts under the Notes and the consequences of such actions under
the tax laws of Luxembourg. This summary is based upon the law as in effect on the date of this Base
Prospectus. The information contained within this section is limited to withholding taxation issues, and
prospective investors should not apply any information set out below to other areas, including (but not
limited to) the legality of transactions involving the Notes.
Withholding Tax
(i) Non-resident holders of Notes
Under Luxembourg general tax laws currently in force and subject to the laws of 21 June 2005 (the
"Laws") mentioned below, there is no withholding tax on payments of principal, premium or interest
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made to non-resident holders of Notes, nor on accrued but unpaid interest in respect of the Notes, nor is
any Luxembourg withholding tax payable upon redemption or repurchase of the Notes held by non-
resident holders of Notes. Under the Laws implementing the Council Directive 2003/48/EC of 3 June
2003 on taxation of savings income in the form of interest payments and ratifying the treaties entered into
by Luxembourg and certain dependent and associated territories of EU Member States (the
"Territories"), payments of interest or similar income made or ascribed by a paying agent established in
Luxembourg to or for the immediate benefit of an individual beneficial owner or a residual entity, as
defined by the Laws, which are resident of, or established in, an EU Member State (other than
Luxembourg) or one of the Territories will be subject to a withholding tax unless the relevant recipient
has adequately instructed the relevant paying agent to provide details of the relevant payments of interest
or similar income to the fiscal authorities of his/her/its country of residence or establishment, or, in the
case of an individual beneficial owner, has provided a tax certificate issued by the fiscal authorities of
his/her country of residence in the required format to the relevant paying agent. Where withholding tax is
applied, it will be levied at a rate of 15 per cent. during the first three-year period starting 1 July 2005, at a
rate of 20 per cent. for the subsequent three-year period and at a rate of 35 per cent. thereafter.
Responsibility for the withholding of the tax will be assumed by the Luxembourg paying agent. Payments
of interest under the Notes coming within the scope of the Laws would at present be subject to
withholding tax of 15 per cent. (unless the beneficiary has opted for the disclosure of information
described above).
(ii) Resident holders of Notes
Under Luxembourg general tax laws currently in force and subject to the law of 23 December 2005 (the
"Law") mentioned below, there is no withholding tax on payments of principal, premium or interest made
to Luxembourg resident holders of Notes, nor on accrued but unpaid interest in respect of Notes, nor is
any Luxembourg withholding tax payable upon redemption or repurchase of Notes held by Luxembourg
resident holders of Notes. Under the Law payments of interest or similar income made or ascribed by a
paying agent established in Luxembourg to or for the immediate benefit of an individual beneficial owner
who is resident of Luxembourg will be subject to a withholding tax of 10 per cent. Such withholding tax
will be in full discharge of income tax if the beneficial owner is an individual acting in the course of the
management of his/her private wealth. The 10 per cent. withholding tax applies to interest accrued as
from 1 July 2005 and paid as from 1 January 2006. Responsibility for the withholding of the tax will be
assumed by the Luxembourg paying agent. Payments of interest under the Notes coming within the scope
of the Law would be subject to withholding tax of 10 per cent.
EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is
required to provide to the tax authorities of another Member State details of payments of interest (or other
similar income) paid by a person within its jurisdiction to, or collected by such a person for, an individual
resident or certain limited types of entity established in that other Member State. However, for a
transitional period, Belgium, Luxembourg and Austria may instead apply a withholding system in relation
to such payments, deducting tax at rates rising over time to 35 per cent. The transitional period is to
terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the
exchange of information relating to such payments. Belgium will replace this withholding tax with a
regime of exchange of information to the member state of residence as from 1 January 2010. A number of
non-EU countries, and certain dependent or associated territories of certain Member States, have adopted
similar measures (either provision of information or transitional withholding) in relation to payments
made by a person within its jurisdiction to, or collected by such a person for, an individual resident or
certain limited types of entity established in a Member State. In addition, the Member States have entered
into provision of information or transitional withholding arrangements with certain of those dependent or
associated territories in relation to payments made by a person in a Member State to, or collected by such
a person for, an individual resident or certain limited types of entity established in one of those territories.
On 13 November 2008 the European Commission published a proposal for amendments to the Directive
which included a number of suggested changes which if implemented, would broaden the scope of the
requirements described above. The European Parliament approved an amended version of this proposal
on 24 April 2009. Investors who are in any doubt as to their position should consult their professional
advisers.
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Annex 1
STATEMENT OF NON-PORTUGUESE BENEFICIAL OWNERSHIP
The undersigned beneficiary:
Name: []
Address: []
Tax identification number: []
holding via the following financial intermediary:
Name of the financial intermediary: []
Account number:
the following securities: []
Common/ISIN code: []
Security name: []
Payment date: []
Nominal amount: []
1. Hereby declares that he/she/it is the beneficial owner of the above-mentioned securities and
nominal amount at the payment date ...../...../......; and
2. Hereby declares that he/she/it is not subject to withholding tax, in accordance with the applicable
legislation, indicated hereinafter.
Article 33 of the Portuguese Tax Benefits Statute (Estatuto dos Benefícios Fiscais) — Zona Franca da
Madeira e Zona Franca da ilha de Santa Maria.
This document is to be provided to the Portuguese tax authorities, if requested by the latter, as foreseen in
section b), no. 2 and section b), no. 7, of Article 119 of CIRS.
Authorised signatory:
Name: []
Title []
Signature []
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Annex 2
CERTIFICATE FOR EXEMPTION FROM PORTUGUESE WITHHOLDING TAX ON
INCOME ARISING FROM DEBT SECURITIES (PARAGRAPH 1 OF ARTICLE 17 OF THE
SPECIAL TAX REGIME APPROVED BY DECREE-LAW 193/2005 OF 7 NOVEMBER)
The undersigned Participant hereby declares that he holds debt securities covered by the special tax
regime approved by Decree-Law 193/2005 of 7 November (the "Securities"), in the following securities
account number .................. (the "Account") with ……............... (name and complete address of the
international clearing system management entity).
We will hold these Securities in our capacity as beneficial owner or in our capacity of intermediary,
holding Securities on behalf of one or more beneficial owners, including ourselves, if applicable, all of
whom are eligible for exemption at source from Portuguese withholding tax according to Portuguese
legislation.
1. We are:
Name:….......……………………………………………………………………………………….
Residence for tax purposes (full address):........………………………………...………………….
Tax ID Number: ..........................……………………………………………….…………………
2. We hereby certify that, from the date hereof until the expiry date of this certificate:
A. We are the Beneficial Owner of the following Securities:
Security ISIN or Common Code Security description Nominal position
____________________________ _______________________ ____________________
And we hereby declare that we are not liable to Portuguese withholding tax, in
accordance with the applicable legislation, indicated hereafter:
• Special Tax Regime approved by Decree Law 193/2005 of 7 November
• Art. 90 of CIRC (Corporate Income Tax Code) — Exemption from withholding
tax
B. We are intermediaries of the following Securities:
Security ISIN or Common Code Security description Nominal position
____________________________ __________________________ ____________________
3. We hereby undertake to provide the ................................... (name of the international clearing
system management entity) with a document proving the exemption of personal or corporate
income tax referred in the attached statement of beneficial ownership, whenever the beneficial
owner is not a central bank, public institution, international body, credit institution, financing
company, pension fund and insurance company resident in any OECD country or in a country
with which Portugal has concluded a Convention for the Avoidance of International Double
Taxation, on behalf of which we hold Portuguese debt securities in the Account.
4. We hereby undertake to notify the ................................... (name of the international clearing
system management entity) promptly in the event that any information contained in this
certificate becomes untrue or incomplete.
5. We acknowledge that certification is required in connection with Portuguese law and we
irrevocably authorise ................................... (name of the international clearing system
management entity) and its Depositary to collect and forward this certificate or a copy hereof,
any attachments and any information relating to it, to the Portuguese authorities, including tax
authorities.
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6. This certificate is valid for a period of twelve months as from the date of signature:
Place: __________________ Date: __________________
_______________________ _______________________ _______________________
Authorised Signatory Name Title/Position
_______________________ _______________________ _______________________
Authorised Signatory Name Title/Position
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APPENDIX
STATEMENT OF BENEFICIAL OWNERSHIP
The undersigned beneficiary:
Name:……………………………………………………………………………………………………..…
Address:…………………………………………………………………………………………………..…
……………………………………………………………………………………………………………....
Tax identification number:………………………………………………………………………………….
Holding via the following financial intermediary:
Name of the financial intermediary:………………………………………………………………………..
Account number:.............................................................................................................. ...............………..
The following securities:
Common/ISIN code:………………………………………………………………………………………..
Security name:………………………………………………………………………………………………
Payment date:……………………………………………………………………………………………….
Nominal position:……………………………………………………………………………………………
Hereby declares that he/she/it is the beneficial owner of the above-mentioned securities and nominal
position at the payment date ___________ / ___________ / ___________; and
Hereby declares that he/she/it is not liable to withholding tax, in accordance with the applicable
legislation, indicated hereinafter (tick where applicable):
• Special Tax Regime approved by Decree Law 193/2005 of 7 November
• Art. 90 of CIRC (Corporate Income Tax Code) — Exemption from withholding tax
• Art. 9 of CIRC — State, Autonomous Regions, local authorities, their associations governed by
public law and social security federations and institutions
• Art. 10 of CIRC — general public interest companies, charities and other non-governmental
social entities; exemption by the Ministerial Regulation no .............., published in Diário da
República..............
• Art. 16 of EBF (Tax Incentives Statute) — pension funds and assimilated funds
• Art. 21 of EBF — retirement savings funds (FPR), education savings funds (FPE), retirement and
education savings funds (FPR/E)
• Art. 23 of EBF — venture capital investment funds
• Art. 26 of EBF — stock savings funds (FPA) Other legislation (indicate which)
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This document is to be provided to the Portuguese tax authorities, if requested by the latter, as foreseen in
the Article 17 of the Special Tax Regime approved by Decree Law 193/2005 of 7 November.
Authorised signatory:
Name: …………………………………………
Function: ………………………………………
Signature: ………………………………………
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Annex 3
STATEMENT FOR EXEMPTION FROM PORTUGUESE WITHHOLDING TAX ON INCOME
ARISING FROM DEBT SECURITIES (PARAGRAPH 2 OF ARTICLE 17 OF THE SPECIAL
TAX REGIME APPROVED BY DECREE LAW 193/2005 OF 7 NOVEMBER)
The undersigned Participant hereby declares that he holds or will hold debt securities covered by the
special tax regime approved by Decree Law 193/2005 of 7 November (the "Securities"), in the following
securities account number ................. (the "Account") with .............. (name and complete address of the
international clearing system management entity).
We hold or will hold these Securities in our capacity of beneficial owner or in our capacity of
intermediary, holding Securities on behalf of one or more beneficial owners, including ourselves, if
applicable, all of whom are eligible for exemption at source from Portuguese withholding tax according
to Portuguese legislation.
1. We are:
Name:……………………………………………………………………………………………….
Residence for tax purposes (full address):…………………………...……………………………..
Tax ID Number:……………………………………………………………………………………
2. We hereby undertake to provide the ................. (name of the international clearing system
management entity) with a list of Beneficial Owners at each relevant record date containing the
name, residence for tax purposes, tax identification number and nominal position of Portuguese
debt Securities for each Beneficial Owner, including ourselves if relevant, on behalf of which we
hold or will hold Portuguese debt securities in the Account.
3. We hereby undertake to notify the ................. (name of the international clearing system
management entity) promptly in the event that any information contained in this certificate
becomes untrue or incomplete.
4. We acknowledge that certification is required in connection with Portuguese law and we
irrevocably authorise ................. (name of the international clearing system management entity)
and its Depositary to collect and forward this certificate or a copy hereof, any attachments and
any information relating to it, to the Portuguese authorities, including tax authorities.
5. This certificate is valid for a period of twelve months as from the date of signature:
Place: __________________ Date: __________________
_______________________ _______________________ _______________________
Authorised Signatory Name Title/Position
_______________________ _______________________ _______________________
Authorised Signatory Name Title/Position
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APPENDIX
LIST OF BENEFICIAL OWNERS
For:
Interest due __/___/____
Security code (ISIN or Common Code): _______________
Security description: _____________________
Securities Clearance Account Number: __________________
We certify that the above Portuguese debt securities are held on behalf of the following Beneficial
Owners:
(*) Indicate the legal basis of the exemption from withholding tax in accordance with the following
table:
Code Legal basis of the exemption
1 Special tax Regime approved by Decree-Law 193/2005 of 7 November
2 Art. 90 of CIRC (Corporate Income Tax Code) — Exemption from withholding tax
3 Art. 9 of CIRC — State, Autonomous Regions, local authorities, their associations governed by
public law and social security federations and institutions
4 Art. 10 of CIRC — general public interest companies, charities and other non-governmental
social entities
5 Art. 16 of EBF (Tax Incentives Statute) — pension funds and assimilated funds
6 Art. 21 of EBF — retirement savings funds (FPR), education savings funds (FPE), retirement and
education savings funds (FPR/E)
7 Art. 23 of EBF — venture capital investments funds
8 Art. 26 of EBF — stock savings funds (FPA)
9 Other legislation
(**) The fulfilment of this column is mandatory when the code ''9'' is indicated in the previous
column.
Name
Tax Identification
Number
Residence for
Tax purposes
Amount of
Securities
Legal basis of the
exemption from
withholding tax
Code(*) Legislation (**)
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SUBSCRIPTION AND SALE
Notes may be issued from time to time by an Issuer to any one or more of Banif – Banco de Investimento,
S.A., Caixa – Banco de Investimento, S.A., Citigroup Global Markets Limited, Barclays Bank PLC, BNP
Paribas, Credit Suisse Securities (Europe) Limited, Deutsche Bank AG, London Branch and Merrill
Lynch International (the "Dealers"). The arrangements under which Notes may from time to time be
agreed to be issued by the Issuer to, and subscribed by, Dealers are set out in an Amended and Restated
Dealer Agreement dated 16 December 2009 (the "Dealer Agreement") and made between the Issuer, the
Guarantor and the Dealers. Any such agreement will, inter alia, make provision for the form and terms
and conditions of the relevant Notes, the price at which such Notes will be subscribed by the Dealers and
the commissions or other agreed deductibles (if any) payable or allowable by the Issuer in respect of such
subscription. The Dealer Agreement makes provision for the resignation or termination of appointment of
existing Dealers and for the appointment of additional or other Dealers either generally in respect of the
Programme or in relation to a particular Tranche of Notes.
United States of America: Regulation S Category 2; TEFRA D or TEFRA C as specified in the relevant
Final Terms or neither if TEFRA is specified as not applicable in the relevant Final Terms.
The Notes have not been and will not be registered under the Securities Act and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S. persons except in certain
transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph
have the meanings given to them by Regulation S.
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the
United States or its possessions or to a United States person, except in certain transactions permitted by
U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the United States
Internal Revenue Code and regulations thereunder.
Each Dealer has agreed that, except as permitted by the Dealer Agreement, it will not offer, sell or deliver
Notes, (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the
distribution of the Notes comprising the relevant Tranche, as certified to the Fiscal Agent or the Issuer by
such Dealer (or, in the case of a sale of a Tranche of Notes to or through more than one Dealer, by each of
such Dealers as to the Notes of such Tranche purchased by or through it, in which case the Fiscal Agent
or the Issuer shall notify each such Dealer when all such Dealers have so certified) within the United
States or to, or for the account or benefit of, U.S. persons, and such Dealer will have sent to each dealer to
which it sells Notes during the distribution compliance period relating thereto a confirmation or other
notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for
the account or benefit of, U.S. persons.
In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, any
offer or sale of Notes within the United States by any dealer (whether or not participating in the offering)
may violate the registration requirements of the Securities Act.
Selling restrictions addressing additional United Kingdom Security Laws
Each Dealer represents and agrees that:
(a) No deposit-taking: in relation to any Notes having a maturity of less than one year:
(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of its business; and:
(ii) it has not offered or sold and will not offer or sell any Notes other than to persons:
whose ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses; or
who it is reasonable to expect will acquire, hold, manage or dispose of investments (as
principal or agent) for the purposes of their businesses,
where the issue of the Notes would otherwise constitute a contravention of Section 19 of the
FSMA by the Issuer;
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(b) Financial promotion: it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the FSMA) received by it in connection with the
issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to
the Issuer or the Guarantor; and
(c) General compliance: it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to any Notes in, from or otherwise
involving the United Kingdom.
Japan
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Law No. 25 of 1948, as amended) and, accordingly, each Dealer has undertaken and each further
Dealer appointed under the Programme will be required to undertake that it will not offer or sell any
Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under
Items, Paragraph 1, article 6 of the Foreign Exchange and Foreign Trade Control Law (Law No. 228 of
1949, as amended) or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the
benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of, and
otherwise in compliance with, the FIFA and any other applicable laws, regulations asnd ministerial
guidelines of Japan.
Cayman Islands
Each Dealer has agreed that it has not made and will not make any invitation to the public in the Cayman
Islands to subscribe for any of the Notes.
Portugal
Each Dealer has agreed that:
(i) no document, circular, advertisement or any offering material in relation to the Notes has
been or will be subject to approval by the Portuguese Securities Market Commission
(Comissão do Mercado de Valores Mobiliários, the "CMVM");
(ii) it has not, without the prior approval of the CMVM, directly or indirectly taken any
action or offered, advertised, submitted to an investment gathering procedure, sold or
delivered and will not, without the prior approval of the CMVM, directly or indirectly
offer, advertise, submit to an investment gathering procedure, sell, re-sell, re-offer or
deliver any Notes in circumstances which could qualify as a public offer (oferta pública)
of securities pursuant to the Portuguese Securities Code (Código dos Valores
Mobiliários, the "CVM");
(iii) it has not, directly or indirectly, distributed and will not, directly or indirectly, distribute
to the public in the Republic of Portugal the Base Prospectus or any document, circular,
advertisements or any offering material in relation to the Notes, without the prior
approval of the CMVM; and
(iv) it will comply with all applicable provisions of the CVM and any applicable CMVM
Regulations and all relevant Portuguese laws and regulations, in any such case that may
be applicable to it in respect of any offer or sales of Notes by it in the Republic of
Portugal.
Each Dealer has represented and agreed that it shall comply with all applicable laws and regulations in
force in the Republic of Portugal and with the Prospectus Directive regarding the placement of any Notes
in the Portuguese jurisdiction or to any entities which are resident in the Republic of Portugal, including
the publication of a Prospectus, when applicable, and that such placement shall only be authorised and
performed to the extent that there is full compliance with such laws and regulations.
For the avoidance of doubt, Madeira falls within the jurisdiction of the Republic of Portugal.
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Public Offer Selling Restriction Under the Prospectus Directive
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a "Relevant Member State"), each Dealer represents, warrants and agrees, and each
further Dealer appointed under the Programme will be required to represent, warrant and agree, that with
effect from and including the date on which the Prospectus Directive is implemented in that Relevant
Member State (the "Relevant Implementation Date") it has not made and will not make an offer of
Notes which are the subject of the offering contemplated by the Base Prospectus as completed by the
Final Terms in relation thereto (or are the subject of the offering contemplated by a Drawdown
Prospectus, as the case may be) to the public in that Relevant Member State except that it may, with
effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in
that Relevant Member State:
(a) Approved prospectus: if the Final Terms or Drawdown Prospectus in relation to the Notes
specify that an offer of those Notes may be made other than pursuant to Article 3(2) of the
Prospectus Directive in that Relevant Member State (a "Non-exempt Offer"), following the date
of publication of a prospectus in relation to such Notes which has been approved by the
competent authority in that Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that Relevant Member State,
provided that any such prospectus which is not a Drawdown Prospectus has subsequently been
completed by the Final Terms contemplating such Non-exempt Offer, in accordance with the
Prospectus Directive, in the period beginning and ending on the dates specified in such
prospectus or final terms, as applicable;
(b) Authorised institutions: at any time to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to
invest in securities;
(c) Significant enterprises: at any time to any legal entity which has two or more of (1) an average of
at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR
43,000,000 and (3) an annual net turnover of more than EUR 50,000,000, all as shown in its last
annual or consolidated accounts;
(d) Fewer than 100 offerees: at any time to fewer than 100 natural or legal persons (other than
qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent
of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or
(e) Other exempt offers: at any time in any other circumstances falling within Article 3(2) of the
Prospectus Directive.
provided that no such offer of Notes referred to in (b) to (e) above shall require the Issuer or any Dealer to
publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus
pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any
Notes in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State and the expression "Prospectus
Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each
Relevant Member State.
General
Other than with respect to the admission to listing, trading and/or quotation by such one or more listing
authorities, stock exchanges and/or quotation systems as may be specified in the Final Terms, no action
has been or will be taken in any country or jurisdiction by the relevant Issuer, if applicable, the Guarantor
or the Dealers that would permit a public offering of Notes, or possession or distribution of any offering
material in relation thereto, in any country or jurisdiction where action for that purpose is required.
Persons into whose hands the Base Prospectus or any Final Terms comes are required by the relevant
Issuer, if applicable, the Guarantor and the Dealers to comply with all applicable laws and regulations in
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each country or jurisdiction in or from which they purchase, offer, sell or deliver Notes or have in their
possession or distribute such offering material, in all cases at their own expense.
The Dealer Agreement provides that the Dealers shall not be bound by any of the restrictions relating to
any specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of change(s) or
change(s) in official interpretation, after the date hereof, of applicable laws and regulations, no longer be
applicable but without prejudice to the obligations of the Dealers described in the paragraph headed
"General" above.
Selling restrictions may be supplemented or modified with the agreement of the relevant Issuer. Any such
supplement or modification will be set out in the relevant Final Terms (in the case of a supplement or
modification relevant only to a particular Tranche of Notes) or (in any other case) in a supplement to this
document.
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GENERAL INFORMATION
Listing and Admission to Trading
Application has been made for Notes issued under the Programme to be admitted to listing on the official
list of the Luxembourg Stock Exchange and to trading on the Regulated Market of the Luxembourg Stock
Exchange.
However, Notes may be issued pursuant to the Programme which will not be admitted to listing, trading
and/or quotation by the Luxembourg Stock Exchange or any other stock exchange or which will be listed
on such stock exchange as the relevant Issuer and the relevant Dealer(s) may agree.
Authorisations
The establishment and update of the Programme was authorised by board resolutions of Banif Finance
dated 23 October 2003 and 25 November 2009 and the establishment of the Programme and the giving of
the guarantee contained in the Trust Deed was authorised by board resolutions of Banif (in relation to
Banif as Issuer and Banif Madeira as Issuer and Guarantor) dated 29 September 2003 and 25 November
2009. Each Issuer and the Guarantor has obtained or will obtain from time to time all necessary consents,
approvals and authorisations in connection with the issue and performance of the Notes and the giving of
the guarantee relating to them.
Clearing of the Notes
The Notes (other than Interbolsa Notes) have been accepted for clearance through Euroclear and
Clearstream, Luxembourg. The appropriate common code and the International Securities Identification
Number in relation to the Notes of each Series will be specified in the Final Terms relating thereto. The
Interbolsa Notes will be cleared through LCH Clearnet, S.A., the clearing system operated by Interbolsa;
the appropriate identification reference for a Tranche of Interbolsa Notes will be specified in the
applicable Final Terms. At the date hereof Interbolsa only accepts to clear notes denominated in euros.
The relevant Final Terms shall specify any other clearing system as shall have accepted the relevant
Notes for clearance together with any further appropriate information.
Use of proceeds
The net proceeds of the issue of each Tranche of Notes will be applied by the relevant Issuer and/or the
Guarantor to meet part of their general financing requirements.
Litigation
Save as disclosed in this Base Prospectus, there are no governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which the Issuers or the Guarantor
are aware), during a period covering at least the previous 12 months which may have, or have had in the
recent past, significant effects on the Issuers', the Group's or the Guarantor's financial position or
profitability.
No significant change
Save as disclosed in this Base Prospectus and since 30 September 2009, being the last day of the financial
period in respect of which the most recent consolidated and unconsolidated audited financial statements
of Banif and Banif SGPS, S.A. (holding company of the Banif Group) and the most recent unconsolidated
and unaudited financial statements of Banif Madeira (acting as both Issuer and Guarantor) have been
prepared, there has been no significant change in the financial or trading position of any Issuer or any of
its Subsidiaries or, as the case may be, the Guarantor or any of its Subsidiaries.
Material Information
Save as disclosed in this Base Prospectus there has been no material adverse change in the prospects of
each Issuer or any of its Subsidiaries since 31 December 2008, being the date of its last established
audited financial statements.
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Change of Control
Each Issuer is not aware of any circumstance or event that would result in a change of control in that
Issuer.
Auditors
Ernst & Young Audit and Associados – SROC, S.A., Registered with the Stock Market Board under no.
9011, Associates, a member of Ordem dos Revisores Oficiais de Contas under nr. 178, have been
appointed as auditors of each Issuer and the Guarantor for the years ended 31 December 2008 and 31
December 2007. Their registered office is in Avenida de Republica 90-60, 1600-206 Lisbon, Portugal.
Ernst & Young Audit and Associados - SROC, S.A. audited the accounts of Banif-Banco Internacional do
Funchal, S.A. and Banif Finance, without qualification, in accordance with generally accepted accounting
standards in Portugal for the financial years ended on 31 December 2008 and 31 December 2007.
Post-issuance information
Each Issuer does not intend to provide post-issuance information, if not otherwise required by any
applicable laws and regulations.
Documents available for inspection
For so long as the Programme remains in effect or any Notes shall be outstanding, copies and, where
appropriate, English translations of the following documents may be inspected during normal business
hours at the specified office of the Principal Paying Agent and the Paying Agent in Luxembourg, namely:
(a) the Agency Agreement;
(b) the Trust Deed (which contains the forms of the Notes in global and definitive form and the form
of guarantee);
(c) the Programme Manual;
(d) the Interbolsa Notes Agency Agreement;
(e) any Final Terms relating to Notes which are admitted to listing, trading and/or quotation by any
listing authority, stock exchange and/or quotation system. (In the case of any Notes which are not
admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or
quotation system, copies of the relevant Final Terms will only be available for inspection by the
relevant Noteholders); and
(f) the memorandum and articles of association of each Issuer.
Financial statements available
For so long as the Programme remains in effect or any Notes shall be outstanding, copies and, where
appropriate, English translations of the following documents may be obtained during normal business
hours at the specified office of the Principal Paying Agent and the Paying Agent in Luxembourg, namely
the most recent publicly available audited consolidated and unconsolidated financial statements of Banif
and Banif SGPS, SA (holding of Banif Group) beginning with such financial statements for the years
ended 2008 and 2007 and the most recent audited statutory financial statements of Banif Finance for the
years ended 2008 and 2007 and the most recent financial statements of Banif Madeira, for the years ended
2007 and 2007.
Banif, acting as Issuer, also produces semi-annual financial statements, besides the interim financial
statements as incorporated by referenece herein.
Banif Madeira, acting as Guarantor, do not publish interim financial statements, other than as
incorporated by reference herein.
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Existing and future Dealer transactions
Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment
banking and/or commercial banking transactions and may perform services for the Issuer and its affiliates
in the ordinary course of business.
- 142 -
REGISTERED OFFICE OF THE ISSUERS
Banif – Banco Internacional do Funchal, S.A.
Rua de João Tavira, no. 30
9004-509 Funchal
Portugal
Banif Finance, Ltd.
Maples Corporate Services Limited
PO Box 309
Ugland House
Grand Cayman
KY1-1104
Cayman Islands
Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch) Rua de João Tavira, no. 30
9004-509 Funchal
Portugal
REGISTERED OFFICE OF THE GUARANTOR
Banif – Banco Internacional do Funchal, S.A., acting through its Sucursal Financeira Exterior
(External Financial Branch)
Rua de João Tavira, no. 30
9004-509 Funchal
Portugal
ARRANGERS
Banif – Banco de Investimento, S.A.
Rua Tierno Galvan, Torre 3-14 piso
1070-274 Lisboa
Portugal
Caixa – Banco de Investimento, S.A.
Rua Barata Salgueiro, no 33
1269-057 Lisboa
Portugal
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
DEALERS
Banif – Banco de Investimento, S.A.
Rua Tierno Galvan, Torre 3-14 piso
1070-274 Lisboa
Portugal
Barclays Bank PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
United Kingdom
BNP Paribas
10 Harewood Avenue
London NW1 6AA
United Kingdom
Caixa – Banco de Investimento, S.A.
Rua Barata Salgueiro, no 33
1269-057 Lisboa
Portugal
- 143 -
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 4QJ
United Kingdom
Credit Suisse Securities (Europe) Limited
One Cabot Square
Canary Wharf
London E14 5LB
United Kingdom
Deutsche Bank AG, London Branch
Winchester House
1 Great Winchester Street
London EC2N 2DB
United Kingdom
Merrill Lynch International
2 King Edward Street
London EC1A 1HQ
United Kingdom
PRINCIPAL PAYING AGENT
Citibank, N.A.
21st Floor,
Citigroup Centre.
Canary Wharf
London E14 5LB
United Kingdom
LUXEMBOURG PAYING AND LISTING
AGENT
Dexia Banque Internationale à Luxembourg 69, route d'Esch
L – 1470 Luxembourg
PORTUGUESE PAYING AGENT
Citibank International plc, Sucursal em
Portugal
Rua Barata Salgueiro, 30-4º
1269-056 Lisbon
Portugal
TRUSTEE
Citicorp Trustee Company Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
LEGAL ADVISERS
To the Issuers and the Guarantor as to
Portuguese law
To the Issuers and the Guarantor as to
Cayman Islands law:
Sociedade Rebelo de Sousa & Advogados
Associados, RL
Rua D. Francisco Manuel de Melo, 21
1070 - 085 Lisboa
Portugal
Maples and Calder
PO Box 309
Ugland House
Grand Cayman
KY1-1104
Cayman Islands
- 144 -
To the Dealers and Trustee as to English law:
Clifford Chance LLP
10 Upper Bank Street
London E14 5JJ
United Kingdom
AUDITORS TO THE ISSUERS AND THE GUARANTOR
Ernst & Young Audit & Associados - SROC, S.A.
Av Da República, 90-60
1600-206 Lisboa
Portugal