Tel.

+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange

www.iirgroup.com Regulated and

LSE: IIR authorised by

Unibanco-Uniao de Bancos Brasileiros S.A. 03 July 2008

Company News Alert

Significant decline in common stock price since our last update report

Common HOLD The Unibanco-Uniao de Bancos Brasileiros S.A. (Unibanco) common stock price has declined
Direct access
significantly since ourto the full
previous report
update report, free of global
reflecting charge at market weakness and investor
equity
Stock concerns over the impact of central bank policies on the banking sector in the context of rapidly rising
http://www.iirgroup.com/researchoracle/viewreport/show/20184
inflation. We are also concerned that a slowing Brazilian economy might result in slowing credit
growth. We expect to lower our estimates and target price when we revalue the bank in our next full
Ticker: UBBR11.SA update report. Therefore, although our current target price suggests a BUY, we maintain our HOLD
rating for the common stock.
Target price: BRL26.62
Current price: BRL19.60
Price change since We will reassess our common stock rating for Unibanco in our next full update report.
(20.5%)
last report:

GDR BUY We continue to expect a significant positive currency impact on the GDR over our investment horizon.
Therefore, we maintain our BUY rating for the GDR.

Ticker: UBB
Target price: US$204.78
Current price: US$121.87
We will reassess our GDR (1GDR=10 common shares) rating for Unibanco in our next full update
Price change since report.
(10.8%)
last report:

Supervisor: Somnath Banerjee

Analyst: Akhil A Nair Investment horizon - short term actionable trading strategies
Editor: Heloise Capon
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Global Research Director: report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
Satish Betadpur, CFA short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.
Next news due:
2Q 08 results, August 2008
In our 3Q 07 update report, dated 19 December 2007, we upgraded the Unibanco common stock
from a SELL to a HOLD on fundamental grounds, with a 6-12 month target price of BRL26.62
indicating a potential upside of 8%. The GDR was also upgraded from a SELL to a BUY, with a 6-12
month target price of US$204.78 indicating a potential upside of 50%.

The Unibanco common stock price has declined 20.5% since our last update report, closing at a 52-
week low of BRL19.60 on 02 July 2008. In the context of ongoing volatility in global financial markets,
we believe that the decline in the common stock price is partly attributable to investor concerns that
credit offtake will slow due to worsening economic conditions in Brazil led by high inflation and slowing
GDP growth. If the central bank continues to increase interest rates in order to curb inflation,
consumer loan demand will be impacted. Moreover, the central bank’s January 2008 decision that
banks’ must hold 25% of interbank deposits in government bonds not only directly increases their
finance costs and restricts access to cheaper sources of funds but also leads to concerns over
potential further measures that might be taken.

In view of these factors, we expect to lower our estimates and target price when we revalue the bank
in our next full update report. Therefore, we maintain our HOLD rating for the common stock even
though our current target price supports a BUY.

Page 1