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Annual Report 2015

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Corporate Governance

We adopt good governance practices to guarantee transparency and equality in the relations with shareholders and other stakeholders

In Banco do Brasil (BB), adoption of the best practices in corporate governance is guaranteed by mechanisms and tools that are constantly improved to guarantee equal rights to the shareholders, transparency in the management and rendering of accounts to the investors and to the society, ethics in the relations with the several stakeholders and business sustainability. Our administration follows the guidelines of the Code of Corporate Governance and of the Code of Ethics, both available at the Investors Relations site. The governance is supported by monitoring tools that align the executives’ behavior to the interests of the Bank’s stakeholders and shareholders and of the society as a whole. GRI G4-56

The Federal Government is BB’s major shareholder, compliant with the determination from the Decree-Law no. 200/67 for the mixed economy companies. Since 2006, the Bank integrates BM&FBOVESPA’s New Market, besides being listed in the Corporate Sustainability Indexes (ISE), Carbon Efficient (ICO2), Shares with Differentiated Tag-Along (ITAG) and Shares with Differentiated Corporate Governance (IGC). In addition, since 2012, we participate in the DJSI Index of the New York Exchange. GRI G4-7

Governance Structure

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The Board of Directors holds the most relevant position in our corporate governance structure and it is advised by the Audit and Compensation Committees. Besides those three instances, we have the Fiscal Board and the Executive Board (comprised by the Board of Officers and Statutory Officers). For general board decision making, the decision making process is continuously supported by superior committees and executive committees.

Performance Assessment

The members of the Board of Directors complete, on an annual basis, a performance self-assessment, besides analyzing the actions of the Executive Board, of the advisory committees and of the Internal Audit. The Bank also has an individual assessment instrument, with competences criteria, which weight is defined by the Compensation Committee. The process is headed by the very statutory executive and his/her superior report. GRI G4-44

Conflicts of Interest

Pursuant to Law No. 6,404/76, a shareholder has to refrain from participating in deliberations by which he/she may be benefit or wherein he/she has an interest that conflicts with the Bank’s interests. Cases of conflict are administered by the Chairman of the Board of Directors, and the decisions made can be subject to annulation.

BB’s Bylaws is an instrument to avoid eventual conflicts of interest. According to article 14, members of the Management’s instrumentalities must not participate in matters related to operations wherein they are interested parties. In article 18, which refers to composition of the Board of Directors, there is express impediment for the participation of advisor representing the employees during the deliberations that involve union relations, compensation, benefits and advantages, including those referring to complementary pension fund and social security. GRI G4-41


General Shareholders’ Meeting GRI G4-34

Main Duties | Discusses eventual changes in the Bank’s corporate capital composition, either by subscription of shares or by issuance of other instruments and securities; incorporation opportunities; approval of the Accounting Statements; election of the members of the Board of Directors; corporate governance practices and remuneration of the members of the Administrative instrumentalities. GRI G4-53

Periodicity | The ordinary meeting is held once a year, until the end of the month of April, pursuant to the Law No. 6,404/76. Extraordinary meetings can be called upon deliberation of the Board of Directors, and to meet the other conditions set forth in the Law.

Participation | All the shareholders have the right to vote, as the Bank only has common shares. The invitation observes what is set forth in the Law and it has been made, in average, with 30-day precedence, since 2005, with rare exceptions.

Board of Directors GRI G4-34G4-38G4-45G4-46

Main Duties | The members of the Board of Directors approve the policies, the investment plan, the master plan, the general budget and the Corporate Strategy of Banco do Brasil (ECBB), which guides the decisions for the five-year period and sets forth actions and targets for the economic, social and environmental performance. They also define targets to assure correct remuneration of the own capital, monthly follow-up the economic-financial performance of the Bank, and deliberate on the dividends distribution and the Bank’s interests in companies of the Country and abroad. Another important function is the approval of the Risk Policies; Capital Management Policy; Declaration of Risk Appetite and Tolerance; and Budget and Capital Plan. The Board of Directors has met 23 times in 2015 to discuss subjects such as the 2016-2019 Corporate Strategy and the changes in the Bank’s macrostructure. GRI G4-42

Composition | Eight members form the Board of Directors: four of them are appointed by the Minister of Finances, one by the Minister of Planning, Budget and Management (MPOG), two by the minority shareholders and one by the employees of BB. The advisors elected by the Minister of Finances are responsible for electing the Chairman and Vice-Chairman of the Board of Directors, which positions cannot be held by the Bank’s President. GRI G4-34G4-38G4-39G4-40G4-EC6

Contact channels | The shareholders make recommendations to the members of the Board of Directors during the Shareholders’ Meeting and the employees’ demands are forwarded by their representative in the Board. Another channel available for the stakeholders is the Ombudsman, responsible for delivering to the Board of Directors six-monthly reports with denouncements, complaints and suggestions presented by customers, employees and general audience, proposing corrective actions. On a monthly basis, relevant information is reported to the Board of Directors generated by different areas of the company.

Today, 16 themes are registered in the follow-up tool and address miscellaneous matters: macroeconomic scenario, legal demands and/or audit demands and risk assessments. GRI G4-37G4-45G4-46G4-49G4-50

Remuneration | It is fixed, pursuant to Law No. 9,292/96, and it is not linked to the Bank’s performance. GRI G4-51G4-52

Board of Directors’ Advisory Committees
Main Duties
Term of Office
Audit Review of the Accounting Statements and assessment of the internal control systems’ effectiveness as well as of the Internal and Independent Audits.
Maintenance of the channel Talk to the Audit Committee to receive denouncements and information about non-compliance with the legal and regulatory provisions applicable to the Bank, provided with tools to protect confidentiality and secrecy of the information rendered and the identity of the informing individual.
To oversee and assess the independent auditors’ activities, which member are elected by the Board of Directors.
Periodical review of the policies related to risk management that encompasses, among others, environmental and social risks.
Four members elected by the Board of Directors, two of which are members of this Board (one of the major shareholder and another one of the minor shareholders) One year, renewable for up to five years
Compensation Establishment and review of the compensation policy for the Bank’s officers. Four members, elected by the Board of Directors, one of them independent One year, renewable for up to ten years

Internal Audit GRI G4-34G4-38G4-45G4-46

This area, directly reporting to the Board of Directors, has the duty of adjusting the internal control system based on diagnoses of quality, sufficiency, compliance and effectiveness. The principal is elected among the employees working for the Bank, appointed and dismissed by the Board of Directors.

Fiscal Board GRI G4-45G4-46

Main Duties | Bearing permanent character, it holds monthly meetings to inspect the acts of the management, in order to protect the interests of the shareholders. It is also responsible for issuing opinion about the Management Report and to analyze the quarterly financial statements and those of the fiscal year.

Composition | It is comprised by five members and their substitutes, defined during the Shareholders’ Meeting, with one-year term of office. Two of them are elected by the minority shareholders.

Compensation | Compensation of the members is fixed, defined by the Shareholders’ Meeting, compliant with the Law No. 6,404/76.

Strategic Units

The Strategic Units participate in the Strategic Committees’ deliberations and are accountable for managing the processes and supporting the business of Banco do Brasil.

Board of Officers GRI G4-45G4-46

Main Duties | The members of the Board of Officers are responsible for execution of the policies, corporate strategy, investments plan, master plan and the general budget established by the Board of Directors, for approving and executing the marketing plan and the Labor Agreement and for deciding about the Bank’s internal organization, the administrative structure of the Executive Boards and the creation, extinction and operation of the committees, within the range of the Executive Board. It meets at least on a weekly basis. GRI G4-35G4-36

Composition | The Board of Officers is a directive instrumentality, comprised by the President and by the Vice-Presidents of the Bank. The President of Banco do Brasil is appointed by the President of the Republic. The Vice-Presidents and Directors are elected by the Board of Directors, by appointment of the Bank’s President.

CHALLENGE 23 – To enhance the employees’ variable remuneration system, including the High Management, encompassing the individual performance.

Executive Board GRI G4-45G4-46

Main Duties | The executive directors guarantee compliance with the Bylaws and deliberations of the Shareholders’ Meeting and of the Board of Directors, always observing the principles of good banking practices and corporate governance. GRI G4-35G4-36

Composition | The Executive Board is comprised by members of the Board of Officers and by the Statutory Officers. The Officers are employees currently working for Banco do Brasil, holding three-year term of office, with the right to be reelected. GRI G4-45

Compensation | Compensation of the Officers is composed by a fixed portion and a variable one, linked to the fiscal year results. Since 2012, the Officers Variable Compensation Program (RVA) is being improved to be used as an instrument of incentive, reward and alignment with the short, medium and long term goals of the Bank. The RVA meets the guidelines of the CMN Resolution No. 3,921/2012. Among other aspects, analysis of the corporate and of the unit’s performance is considered and the minimum percentage of 50% of the variable compensation paid in shares or instruments based on those. At least 40% of the amount has to be deferred for future payment, and this portion can increase according to the officer’s responsibility level. GRI G4-51G4-52

Socioenvironmental Responsibility Governance

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Specific Policy on BB’s Socioenvironmental Responsibility

In February, 2015, BB’s entire Conglomerate put into practice the Specific Policy on Socioenvironmental Responsibility (PRSA), created to adjust our practices to CMN Resolution No. 4,327/2014. The document of the Brazilian Monetary Board provides the guidelines for establishment and implementation of the Policy on RSA by the financial institutions and by the other institutions authorized to operate by Bacen.

The change enhances BB’s RSA governance, created more than ten years ago and continuously revised. The Letter of Socioenvironmental Responsibility Principles, approved in 2003 and the Sustainability Plan – BB Agenda 21, adopted since 2005, are examples of this evolution. Refer to BB’s Specific Policy on Socioenvironmental Responsibility clicking here.

Challenge 1 – To enhance the sustainability governance structure involving the High Management (Board of Directors and Executive Board) emphasizing the Bank’s commitment towards the subject.

The RSA permeates management of our business and the organizational structure, contributing for its enhancement. It expresses our mission, values, policies, corporate strategy and volunteer commitments, the RSA is taken into account during the decision making process, which means to weight the economic, social and environmental variables when designing and developing our products and services.

We are world references in sustainability, included into internationally recognized indexes, such as the DJSI indexes, of the New York Exchange and the ISE, of BM&FBOVESPA. We believe in the feasibility of conciliating our shareholders’ interests with the development of socially and environmentally sustainable business, by consolidation of ethically responsible relations with our various stakeholders.

Main pacts, commitments and initiatives, volunteer, undertaken by Banco do Brasil

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  • OECD Guidelines for Multinational Companies (2014);
  • Soja Plus Program (2014);
  • Business Letter for the Human Rights and for Promotion of Decent Labor, by the Instituto Ethos de Empresas e Responsabilidade Social (2012);
  • Business Pact for Integrity and Against Corruption, by the Instituto Ethos de Empresas e Responsabilidade Social with PATRI Relações Governamentais & Políticas Públicas (2012);
  • World Water Council (2011);
  • Organizational Stakeholder GRI (2011);
  • Principles of Women Empowerment (2010);
  • Principles for Responsible Investment (2010);
  • Adhesion to Soya Moratorium (2010);
  • The CEO Water Mandate (2010);
  • Platform EPC – Empresas pelo Clima (2009);
  • The Global Compact – Caring for Climate (2009);
  • Brazilian Program GHG Protocol (2008);
  • Sustainable Amazon Forum (2008);
  • Pro-Gender Equality Stamp (2007);
  • Global Reporting Initiative (2006);
  • Pact for Fighting of Slave Labor (2005);
  • Principles of Equator (2005);
  • Carbon Disclosure Project (2005);
  • Millenium Goals (2004);
  • BB Agenda 21 (2004);
  • Fundação Abrinq – Empresa Amiga da Criança (2004);
  • Child and Youth Rights Funds (2003);
  • Global Pact (2003);
  • Ibase Balance Sheet (1997);
  • Green Protocol (1995).


The policies that comprise our governance architecture and guide our behavioral standard include socioenvironmental aspects. This subject is taken into account in business and administrative practices, such as credit and investment operations, relationship with suppliers and employees.

In 2015, we approved our PRSA and the respective action plan, in compliance with CMN Resolution No. 4,327/2014 and FEBRABAN Bank Self-Regulation System Norm No. 14. The PRSA guides the Bank’s behavior related to the socioenvironmental responsibility and its guidelines permeate strategies, other policies and normative instructions.

This change enhances socioenvironmental responsibility governance, created more than ten years ago and continuously revised. The Letter of Socioenvironmental Responsibility Principles, approved in 2003 and the Sustainability Plan – BB Agenda 21, adopted since 2005, are examples of this evolution.

The PRSA is extended to the financial conglomerate and to the connected entities, which were advised to adhere to our policy or to prepare their own document. The document is available at

Organizational Structure

The relevance of the RSA for the Bank has resulted into creation of a structure dedicated to coordination and dissemination of the subject. This composition includes the Vice-Presidency of Agribusiness and Micro and Small Companies and the Social Business and Sustainable Development Unit, a strategic instrumentality that outlines the orientations in this subject and supports business emphasizing the sustainable development for the entire Bank.

At the tactical and operational levels, we have the operation of the Sustainable Development Market segments existing in the State Superintendences and the RSA module located in the Personnel Regional Managements.

There is also the Sustainability Forum, an instance composed by 23 members of Federal Units, besides FBB, which gets together to align and disseminate the concepts and practices within the range of our Conglomerate.

Sustainability Plan – BB Agenda 21

In order to complete our sustainability strategy, we have prepared, in 2005, the first version of the Sustainability Plan – BB Agenda 21. This instrument assists with the enhancement of our business and processes, aligning them to the best practices in the world, and contributes for the socioenvironmental responsibility’s guiding BB as a whole in the search for generation of sustainable results.

To keep updated and aligned to the demands of the stakeholders, the BB Agenda 21 is revised every two years. The updating and implementation of the actions are a systematic process that involves all the areas of the Bank and representatives from our main stakeholders, such as employees, customers, suppliers, shareholders/investors, civil society and experts on sustainable development.

Performance of the initiatives is followed-up on a quarterly basis by the Sustainability Forum and goes up to the highest administrative instances. The Board of Officers approves and follows-up performance of the actions by six-monthly rendering of accounts. The Board of Directors assesses BB’s socioenvironmental performance and the initiatives in progress through the annual report submitted to the instrumentality, during the ordinary meeting held in October, when the main progresses, challenges, opportunities and actions to be developed are presented.


Follow-up and Management

The sustainability directions are evaluated by indicators defined according to the Corporate Strategy, ranging from the strategic level, with the Master Plan, up to the operational level, in the premises’ Labor Agreement.

The indicators include assessment of results in the operational plans of the premises, impacting the variable compensation of the statutory officers and employees. The assessment of results, hence, observes the financial and non-financial performance, encompassing contribution to the society, environmental concern and organizational behavior.

The Officers Variable Compensation Program (RVA) is conditioned to distribution of Sharing of Profits and Results (PLR) to the employees, which amount varies according to the performance observed in 13 indicators, two of which refer to socioenvironmental policies.

The variable compensation of the employees is linked to the Labor Agreement (BB and ATB Synergy) and includes indicators related to efficient user of resources (water, energy, paper and selective waste collection) and to expansion of the employees’ engagement in volunteer causes. The model measures performance of the premises management concerning the defined targets and impacts the variable compensation through payment of Sharing of Profits and Results, which receipt is conditioned to minimum score in the Labor Agreement.

The performance of our employees is formally followed-up and assessed, by means of the Professional Performance Management by Competences and Results (GDP) program, carried through on six-monthly frequency and considering five perspectives: financial; customers, internal processes, learning and development and socioenvironmental. Besides assessing competences, the model also measures the individual contributions to accomplish the defined targets. This measure stimulates the accomplishment of organizational goals and contributes for valorization of merit in professional growth.

Rendering of Accounts

In order to leverage transparency in rendering of accounts to our several stakeholders, we produce and disclose the Annual Report, which lists the actions developed by our areas and it is guaranteed by KPMG Auditores Independentes.

Sustainability in the Entities Connected to Banco do Brasil (ELBB)

GRI G4-DMA Products portfolio G4-DMA Active shareholder control

Our Connected Entities authorized to operate by the Central Bank of Brazil and, therefore, subject to CMN Resolution No. 4,327/2014 approved, in 2015, their Socioenvironmental Responsibility Policies (PRSA) and respective action plans.

Nevertheless, BB Agenda 21 expects alignment of our socioenvironmental concepts and practices with the connected entities. As they have their own legal personality, the decisions related to the business and other operations must be made by their managerial instrumentalities. Therefore, our deliberations are used as guidance for the decisions made by those companies and institutions.

During the year, we have set targets and actions to promote such alignment. One of them was the document named Institutional Alignment in Sustainability, which includes the essence of our organization’s RSA management and will be disseminated in the ELBB, in 2016. Another initiative was the mapping of the practices found in the connected entities, with the following highlights:

Banco Votorantim | BV revised its RSA Policy, which addresses subjects such as climate changes, sustainable credit concession, social ethics and transparency. Votorantim Asset Management, BV’s Colligated Company is a signor of the Principles for Responsible Investment (PRI).

Cielo S.A. | Cielo’s PRSA was revised in June, 2015 and addresses subjects such as climate changes, reduction of greenhouse gases, agenda for the sustainable development, volunteering and eco-efficiency. Cielo is included in the Corporate Sustainability Index (ISE) of BM&FBOVESPA, signor of the Brazilian Program GHG Protocol of the UN’s Global Pact. It also uses the standards of the Global Reporting Initiative (GRI) to disclose the sustainability reports.

BB Turismo: The company addresses the sustainability subject in its code of ethics, which has one specific item on the environment, referring to themes like the rational use of water, electrical energy, selective waste collection and use of low environmental impact material. It declares the adhesion of the Principles of UN’s Universal Declaration of Human Rights.

Ativos: The subject matter is part of the Risks Management Policy. Ativos adopts preventive and socioenvironmental view and includes the definition of “socioenvironmental risk”, including its observation in its business.

Alelo: The company adopted the sustainable business model in its corporate strategy and describes the adopted sustainability actions in its site.

BB TS: The RSA is part of the strategic planning, which provides for the promotion of actions and programs focused on the subject. The site addresses the subject, listing BB TS’ actions.

Risks Management

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Banco do Brasil’s Risk Management follows the best international practices in the Market and complies with the Basel III Accord. The processes are continuously enhanced and encompass, among others, the credit, market, liquidity and operational risks. The management is carried through by specialized structures and according to the rules defined for each risk, totally separated from the business units.

Challenge 19 – To enhance the socioenvironmental risk management based on the provisions of CMN Resolution No. 4,327/2014.

Our risk management policies are approved by the Board of Directors and formalized by the Global Risk Superior Committee (CSRG), a forum composed by President and Vice-Presidents. The actions for performance and follow-up of the guidelines prepared by the CSRG will be performed in specific committees (Credit, Market and Liquidity and Operational), constituted by Statutory Officers.

The Risks Panel, document that gathers the main risk and capital management indicators, is verified every month by the Executive Committees and the CSRG, and on a quarterly basis by the Board of Officers and Board of Directors. Other reports are forwarded to the process managers as subside for their activities, which contributes for speeding up information dissemination. The Investors Relations site publishes, every three months, a report on the BB’s risk management policies, structure and processes.

Main Risks

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BB’s Specific Policy on Socioenvironmental Responsibility

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Among the progresses accomplished in 2015, it is important to highlight approval of the PRSA and review of the socioenvironmental risk management structure, which guidelines and processes emphasize our commitment with the RSA and meet the requisites of CMN Resolution No. 4,327, dated April 25, 2014, and the FEBRABAN Banking Self-Regulation System Norm No. 14, dated August 28, 2014.

Implementation of the PRSA is combined with action plan which monitoring is carried through integrated with the BB Agenda 21, guaranteeing publicity and timely decision making by the governance instrumentalities.

The process for constant risk assessment of the PRSA enables the identification, classification, assessment, monitoring, mitigation and control of the socioenvironmental risk in Banco do Brasil, in each one of its dimensions.

We constantly map and update the list of the main risks to which we are exposed. For further details, consult the Reference Form and the Report on Risk Management, both available at

Market risk | Lists the possibilities of occurrence of loss resulting from market values floating of market positions held by the Bank. It includes the risks of the operations subject to the foreign exchange variance, the interest rates, the prices of shares and the prices of commodities. BB’s proprietary positions are segregated in Tradable and Non-Tradable Portfolios defined by the CSRG. The main types of adopted limits are the Value at Risk – VaR) and the stress test.

Liquidity Risk | Indicates possible unbalances between tradable assets and demandable liabilities that might affect the institution’s payment capacity, taking into account the different currencies and liquidation terms of its rights and liabilities. We maintain liquidity levels adequate to the commitments undertaken in Brazil and abroad, and which reflect the broad and diversified basis of depositing parties, the quality of the assets, the network spreading and the access to the capital international market.

Credit Risk | Provides for the possibility of losses associated to the borrower’s non-compliance with credit or counterpart of its respective financial obligations, under the contracted terms; the devaluation of the credit agreement resulting from deterioration of the borrower’s risk classification; reduction of gains or remunerations; the advantages granted during the deal and the recovery costs. Management of this risk is performed based on specific policy and strategies, with proprietary customers’ risk assessment methodologies aligned with the best market practices and to the concepts of the Basel Accord. GRI G4-2

Operational Risk | Derives from the possible losses resulting from failure, deficiency or inadequacy of the internal processes, personnel and systems or external events. This definition includes the possibility of losses derived from the legal risk. The current structure for managing that risk is aimed at enhancing the management and meeting the regulatory requirements for BB’s application to use internal models that encompass, mainly, the integrated risk management and segregation of the second control layer.

Strategy Risk | Refers to the possibility of losses generated by adverse changes in the business environment or election of inadequate assumptions for the decision making. The management of this risk occurs in three complementary assessments: the global strategy approved by the Board of Directors, of the products and customer groups specific for each business segment and possible purchases, partnerships, investments and entry in new markets.

Reputation risk | Possibility of negative perception about the institution, by the customers, counterparts, shareholders, investors, governmental instrumentalities, community or supervisor that may have negative impact on the business sustainability. Management of this risk involves assessment of the impact on BB’s brand, monitoring of press News and the follow-up of the investors’ and regulators’ perception.

Socioenvironmental Risk | Possibility of losses derived from exposure to socioenvironmental damages generated by the Bank’s activities, subdivided into two risk categories. The first one is social, referring to the possibility of losses derived from social impacts generated by the institution’s activities on the well-being of employees, customers, shareholders, suppliers, creditors, competitors, Government and community. The second one is environmental, corresponding to the possibility of losses derived from environmental impacts generated by the institution’s activities, directly or indirectly. The procedures to generate socioenvironmental risk encompass the dimensions of credit operations, operational losses, strategy risk, reputation risk and administrative activities. Hence, the socioenvironmental pacts for granting and conducting of financing, on the operational losses, mainly the ones linked to the legal risk, on formulation of the corporate strategy, on the events linked to our reputation and on the process of purchases, contracting and management of logistic resources. Assessment of the socioenvironmental risk on the controlled companies and on the partner companies follows the procedures set forth in the Risks and Capital Oversight Corporate Manual of the ELBB (the 2015 assessment cycle adopted the qualitative assessment). GRI G4-14

Specifically concerning the risk associated to the climate changes, we emphasize that it is considered as a component of the socioenvironmental risk, with its identification, assessment, mitigation and control procedures defined according to the approved management model. We believe that it may generate greater impacts on credit operations, operational losses and administrative activities of the socioenvironmental risk management.

Progress in the Socioenvironmental Risks Control

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The challenges included in the Sustainability Plan – BB Agenda 21 consider BB’s strategic planning. The defined challenges include enhancing the socioenvironmental risk management, based on the provisions of CMN Resolution No. 4,327/2014. In 2015, we concluded two actions of the Agenda 21. The first one refers to analysis of the feasibility of incorporating the environmental variables in the econometric modeling of the Agricultural Technical Risk Assessment (RTA), so that it shall support identification and assessment of socioenvironmental risks in the Farming Credit. And the second one proposes registration of the socioenvironmental risks behavior so that it shall guarantee maintenance of that risk’s exposure, according to the defined tolerance level. This control is performed by definition and implementation of control models of the socioenvironmental responsibility level, associated to investment and participations, according to the region, economic sectors and projects; and establishment of management system of socioenvironmental impacts analysis of the activities we participate in.

The impacts derived from climate changes on the credit operations are mostly observed in the granting of financing for customers that use natural resources. The challenges to be faced include definition of socioenvironmental rating for customers or operations that orient pricing of the credit according to the changes in the regional climate changes or in the potential of each region’s economic activities.

In the operational losses, the challenge of the climate changes is related to the changes in the laws that might impose new environmental restrictions and result into judicial losses for guaranteeing the socioenvironmental responsibility.

In the administrative activities, the climate changes will require the Bank’s operational adequacy to guarantee efficient consumption of paper, cartridge, tonner, electrical energy, water, sustainable waste disposal, besides actions with suppliers to include criteria related to the good environmental practices in the purchases and contracting processes.

We understand that the impacts of the climate changes can be identified and monitored. The use of indicators and rules for exposure limits allow adopting proactive measures to mitigate the socioenvironmental risk, providing credit facilities adequate to the customers’ needs.

Other risks | We manage the risks derived from the exposures arising out of the shareholdings, in the sponsored complementary pension fund entities and in the operators of private healthcare plans to employees. The model risk is monitored as well, related to the inadequate use of models due to inaccuracy or insufficiency of data or incorrect formulation during the construction thereof. Also credit concentration risks are assessed, which result into losses derived from significant exposure to one counterparty, risk factor or groups of counterparties, or yet the non-compliance with obligations related to liquidation of operations that involve trading of financial assets, including the ones related to liquidation of derivative financial instruments.

Emerging Risks | We monitor the uncertainties related to the economic macro-environment and to the financial industry, considering subjects such as the integration across the markets, the arrival of new transactions and products, the increase in the technological sophistication and the new regulations, the growth of the digital financial services, the increment of the crimes against financial system institutions, the aging of the population, the energetic sector, management of water resources and climate changes, among others.

Those changes to the world financial environment make the financial activities and their risks increasingly complex. Aiming at guaranteeing strong capacity to identify and assess new risks (emerging risks), we have a process to identify the relevant risks for the corporate set and the ones that will compose the inventory. Those two documents are revised every year, considering the risks incurred in the several business segments explored by us or by our subsidiaries. Classification of the relevant risks is based on quantitative and qualitative criteria.

Concerning the risk of climate changes, we define the socioenvironmental risk as the possibility of losses derived from the exposure to socioenvironmental risks generated by our activities, segregating this risk into the social and environmental categories. Hence, the risk of climate changes is treated as a component of the socioenvironmental risk.

In addition, we adopt socioenvironmental risk management structure and base our actions on the policies and processes approved by the High Management. We periodically report and control the risk and the results are informed to the competent instances. In adherence to the requisites of CMN Resolution No. 4,327, dated April 25, 2014, and FEBRABAN Banking Self-Regulation System Norm (Sarb) No. 14, dated August 28, 2014, our Specific Policy on Socioenvironmental Responsibility permeates activities related to the risk management. GRI G4-2

Security Management

GRI G4-DMA Fighting of corruptionG4-DMA Customer’s health and safetyG4-DMA Customer’s privacyG4-DMA Compliance

We make frequent investments in systems, policies and processes to guarantee safety of the installations and information, assessing the external environment and possible causes to create control mechanisms. Our employees are trained during events and campaigns to strengthen the culture of institutional safety. In 2015, we held Institutional Safety Seminars in 12 states.

Measures to guarantee information safety | We create strategies, standards, norms and procedures, besides researching and ascertaining the risks involved in the processes, products and services. We try to identify points of frailty and potential threats that might compromise the availability, reliability and integrity of the corporate information.

Risk Assessment Mechanisms

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Banco do Brasil’s strategic planning begins with the competitive intelligence studies, whereby we monitor the financial industry, the competitors and other players outside the industry, analyzing their positioning and the strategies under the most varied business and processes. Also, external analyses of the macro-environment are prepared, identifying trends, emerging subjects and uncertainties that might impact the financial environment and influence the organization’s competitive dynamics.

Those pieces of information give rise to different scenarios, which combine views of the macro-economy, financial industry and relevant markets in the five-year time horizon. Those prospections serve as the basis for strategic discussion in order to define the Bank’s main challenges, together with the diagnosis of the internal environment, define the organization’s strategic goals.

Based on such information, the challenges directly impacting the Bank were identified. Among those, profitability and capital management, efficiency, digital business and improved customers’ experience can be highlighted.

Planning of the future and to what point it is possible was the theme of the Workshop BB 300 years, which gathered members of the Executive Board from several areas of the Bank. One of the discussed questions was the need to extend the limit of the perception of the future when elaborating corporate strategies, using information that is not subject to major variations as the years go by, such as the population size and profile, environmental changes, impacts of the technological evolution on the daily routine, on the consumption needs and on the labor division in the society, political and economic trends for the next decades, international relations and conflicts.

In 2015, we invested in actions to reduce operational losses with electronic frauds, mainly cloning of cards, promoting replacement of over 12 million plastic cards with magnetic stripe by others with chip technology, which guarantees greater safety in the banking transactions. This initiative allowed 86% sharp reduction with losses from this type of fraud. During the year, we have also conquered the E-Finance award in the Education and Training category, with the Information Safety Awareness Program [Programa de Conscientização em Segurança da Informação] case.

We also continuously monitor processes, services and products to avoid their use in illicit practices related to Money laundry, financing of terrorism and corruption. Among the several initiatives, it is Worth highlighting the improvement of the controls made over the registration of provisions for withdrawals in cash in amounts equal to or higher than R$100 thousand, by new technological solutions.

Another action was the change in the Specific Policy on Prevention and Fighting of Money Laundry and Financing of Terrorism to include the subject Prevention and Fighting of Corruption and Compliance, pursuant to Law No. 12,846/2013 and to the Decree No. 8,420/2015.GRI G4-SO4

Since 2013, employees are qualified in the course Information Safety Fundamentals, available in Portuguese, English and Spanish. In the last period, no proven complaints of violation or privacy or loss of customer data has been recorded. GRI G4-PR8

Measures to guarantee safety of people and installations | To reduce the impacts of shutdowns in the strategic processes, we adopt the methodology of Management of Business Continuity and Crises (GCN), which guarantees the operation of essential services even during critical situations and it is based on the best practices of the market. During the year, we structured an action plan with BB’s several areas to mitigate the impact of the water and energy crisis, mainly in the State of São Paulo. Another measure was the culture dissemination in the several organizational levels, such as the holding of seminars, elaboration of handbooks, GCN tips, publication of e-books in UniBB and supporting material for safety certification, besides benchmarking with other institutions.

To reduce incidents such as thefts, abductions and depredation of terminals, we have adopted the following actions:

  • Strengthening of monitoring and safety of the critical facilities during payment periods;
  • Review of the Retail Services Network, adopting strategy to assess the facilities with recurrent casualties, based on a decision making matrix for adoption of corrective measures;
  • Management of the processes of prospection, specification, registration and investments related to the safety equipment, aiming at assigning to the sites an apparatus capable of hindering criminal actions;
  • Prospecting and implementation of physical safety solutions for the Self-Service Terminals (TAA), in order to provide them with devices capable of avoiding criminal actions and losses. Some examples of that are the armoring of TAA vaults and the dying of bills;
  • Review and creation of courses, besides publication of periodical newsletter aimed for the branches network, all of those addressing the operational risk in the business environment and the personal safety of the employees;
  • Implementation of the Operational Risk Assessment to identify and follow-up the non-compliances related to the safety equipment functionality and the preventive processes, which allows speeding up adoption of corrective measures, mitigating the eventual frailties;
  • Despite performance of this set of actions, increase in the events of external robberies by 23.8% compared to 2014 has been recorded (from 908 in 2014 to 1,124 in 2015). GRI G4-PR1G4-PR2

Ethics Management

GRI G4-56G4-57G4-58G4-SO3FS15G4-DMA Non-discriminationG4-DMA Fighting of corruption
Challenge 10 – To establish mechanisms that emphasize the employees’ commitment towards the Code of Ethics and Standards of Behavior.

Our commitment with the ethic and responsible conduct is expressed in the Bank’s values and formalized in the Code of Ethics and Standards of Behavior, which documents provide moral guidelines and the behaviors expected from the employees. The two norms are to be read and electronically accepted by the employees, both in Brazil and abroad. The administrators also have to follow the Code of Conduct of the Federal High Management.

The Code of Ethics provides specific guidelines on fighting of corruption and money laundry, listing illicit practices such as subornation, extortion and bribery. We hold periodical training sessions on the subject for the employees and several mechanisms are adopted to detect, analyze and communicate suspicious situations, including in the linked entities in the Country and abroad. Externally, the Bank integrates forums and establishes partnership with entities aiming at improving the national system for fighting of this type of crime.

The non-compliance with the guidelines of BB’s Code of Ethics and the Standards of Behaviors may result into sanctions according to the severity of the occurrence, its circumstances and the level of participation of each involved party, from signature of term of awareness up to severance for cause. When identifying signs of corruption, the competent authorities are duly notified. In 2015, a new exclusive channel has been created to receive denouncements. In April, the Information Safety Board became the manager of the subject matter. During the year, four administrative proceedings were concluded, with verification of responsibilities in occurrences that involved charging or receipt of undue commission by rendered service, resulting into motivated severance of the authors of the torts and disciplinary sanctions for the indirectly engaged parties. GRI G4-SO5

We have a specific program to deal with the subject name as Corporate Ethics Management, it assures dissemination of ethical values to the employees, raising their awareness about their essential character, inhibiting deviations, dealing with and informing eventual occurrences. We were recognized, in 2014 and 2015, by the US institute Ethisphere, global reference on the subject, as the only institution in Latin America among the most ethic companies in the world. GRI G4-56

The good results have the contribution of initiatives such as the course Conta Mais – Ser Ético é BOM-PRATODOS [Tell me More – Being Ethical is GOODFOREVERYONE] which is part of the Ethic Trail and includes the video Being ethical means to refute corruption. It is one of the requisites for the employees’ enrollment into opportunities of professional growth and it has already been followed by 96,906 stakeholders, since 2014.

Contact Channels

In Banco do Brasil, we have External Ombudsman responsible for collection, review and forwarding of customers’ complaints. And the Audit Committee provides a direct channel for the customers, via Internet, for presenting denouncements of eventual frauds or non-compliance with the law or standards, and in such cases, confidentiality of the information and protection of the denouncing party’s identity are duly protected, when so requested. We also have Internal Ombudsman, which is the direct communication channel for the current employees, trainees, apprentices, and employees of contracted companies. The contact can be made by anonymous means or identified, preserving the secrecy and confidentiality when dealing with the demands, through several channels: e-mail, corporate intranet, telephone, letter or in person. GRI G4-57G4-58

Training GRI G4-43

In 2015, we held courses on ethics for the high management, composed by officers, executive managers, general managers of strategic units and regional superintendents. From the 229 employees that composed the high management non December 31, 2015, 38 attended courses on the subject matter, representing 16.5% of the total.

One of the courses was Corporate Governance, addressing anti-corruption laws, main instrumentalities of the SFN and securities, besides the regulation and self-regulation agents.

According to the scope developed for the training, the Managers’ responsibility involves the following subject matters: regulation and self-regulation (Law No. 6,404/76, Law No. 6,385/76 and Law No. 10,303/2001); companies and the roles of the shareholders and managers (New Brazilian Civil Code – Law No. 10,406/2002); rights and duties of controlling and minor shareholders; Manager’s responsibilities; Law No. 12,846 (Anti-Corruption Act); and legal impacts from issuance of American Depository Receipts (ADRs) on the New York Exchange. In 2015, 29 members of the Bank’s high management participated in the training.

Employees that were Trained on the Fighting of Corruption by functional level
Name Course/Certification Number of Employees (1)
40374 UNDER CONTROL, COURSE (2) 3,185
 Total   33,287
(1) This total refers to all the employees that attended, along 2015, the qualification actions described in the Summary Chart, irrespective of their status in the Bank (active x retired) on 12.31.2015.
(2) The Under Control course was excluded from the Courses Catalogue in April, 2015 and replaced by the Internal Controls course.

High Management 229 11 4.8
Advisory 7,989 1,410 17.7
Management Others 36,059 8,819 24.5
Operational 60,779 16,078 26.5
Technical 4,135 555 13.4
Total 109,191 26,873 100.0
(1) This total refers only to the employees that, on 12.31.2015, were currently working with the Bank.

Employees that were Trained on the Fighting of Corruption by region
MID-WEST 17,342 3,907 22.5
ABROAD 44 4 9.1
NORTHEAST 18,207 4,458 24.5
NORTH 4,948 1,708 34.5
SOUTHEAST 49,393 12,262 24.8
SOUTH 19,257 4,534 23.5
Total 109,191 26,873 100.0
(1) This total refers only to the employees that on 12.31.2015, were currently working with the Bank.

Internal Controls and Audits

For Banco do Brasil, the internal control means are essential to accomplish the strategic objectives and to meet the expectations of the regulating agencies, of the customers, of the employees, of the investors and of the society. The priorities are continuously discussed and defined according to information such as financial relevance, actual losses, reports from regulating agencies and the internal and external audits.

The instruments used include the assessment of the controls efficacy and non-structured data; validation of the risks models; operational compliance in the strategic units and in the facilities; self-assessment of internal controls and compliance; and compliance electronic monitoring.

The Bank’s Internal Audit carries through, every year, assessment of the entire risks process, also subject to external audits and inspections by Bacen. The financial statements are verified by independent auditors, respecting the five-year term for replacement of the technicians in charge of this process and other obligations set forth by the CMN Resolution No. 3,606/2008 and its further amendments.

Within this scope of the Internal Audit, the main action performed was the work for assessment of the RSA and Sustainability Strategy sub-process, which resulted into identification of frailty, already resolved by the audited area.

In 2015, we performed some actions to enhance the processes:

  • Enhancement of the Defense Line Reference Model, clarifying and evidencing essential governance aspects, with expansion of the duties of the second line of defense (risks management, controls and compliance) with safety and organization corporate functions. The model preserves the authority and Independence of the Internal Controls Board (Dicoi) as responsible for the consolidated assessment of the Internal Controls System;
  • Development of Internal Controls Specific Policy, which will compose BB’s governance architecture;
  • Development of integrated methodology that will assist with Dicoi’s new model of operation, the Works performed by the main office and its Internal Controls Regional Managements Network (Gecoi).

Fiscal Strategy

Our Fiscal Strategy considers the specific needs of the companies and the legal and regulatory aspects to which they are subject, applied to business plans, investments in other countries, shareholding structuring projects, companies acquisition, contracting of services, establishment of partnerships and launching of banking and financial products.

Another focus of our activities is the adequate payment of taxes, in accurate values and timely, to avoid fines and accumulation of tax liabilities. Through the deep knowledge of the laws, we adopt alternatives that allow reducing impacts and mitigating tax risks, obtaining greater tax effectiveness to maintain the tax load at the levels required by the laws, which has positive reflect on our results.

Safety and adequacy of our Fiscal Strategy are guaranteed by actions continuously performed and with the global and integrated practice among the several areas, activities and businesses. Carried through in a conscious and safe manner, the fiscal affairs follow the tax rules and are guided by principles which aim at maintaining our credibility and maintain a transparent and cooperative relation with the fiscal authorities of the locations wherein we hold operations.

For us, at BB, the correct management of the fiscal affairs is a fundamental part of the business culture and practice. Policies, procedures and programs take into account the fiscal governance for the perfect adequacy to the laws in all the countries wherein we have activities.

Besides observing and following the terms of the law, our management of the fiscal obligations considers the jurisprudential and doctrinarian understanding about the intentions of the law. The transactions involving fiscal aspects are carried through such as to clearly demonstrate the commercial results and the fiscal impacts, without priority dependency on those impacts for the business feasibility.

Focus of control of tax risks

Performance and dissemination of our Fiscal Strategy are guaranteed by specific technical and legal structures, which central focuses are:

  • The preventive identification of tax risks, their mitigation and maintenance of proper levels of fiscal compliance and good standing, in order to mitigate losses through standardized routines, adequate and timely procedures, directed to the ascertainment, payment, withholding and collection of taxes and contributions. Those actions integrate the strategies associated to the Bank’s operational risk management;
  • Monitoring of efficacy of the measures for tax risks treatment, in order to continuously improve processes and systems and reduce losses;
  • The support for the decision making process and to define the strategy to mitigate those risks;
  • The detection of changes in the legal and regulatory environment that might impact BB;
  • The monitoring, identification and report of the inspections and assessments of the National, State and City Finances Departments, by analysis and follow-up of fiscal procedures and processes such as Inspection Procedures Orders (MPF), Fiscal Verification Terms (TVF), Fiscal Reports and Tax Assessment Notes drafted by those instrumentalities;
  • The relationship with the Brazilian Internal Revenue Office (RFB) and other administrative inspection instrumentalities with the purpose of preventing and resolving tax matters in defense of BB’s direct and indirect interests;
  • The Consulting services for the Bank’s strategic areas and in the shareholding structuring and investment projects, such as presentation of information related to tax adjustment. Therefore, it is possible to subsidize and orient the use of exemptions in payment of taxes, proper aliquots, special taxation regimes, tax credits, incentives and fiscal benefits, besides allowing adoption of corrective measures aimed at the adjustment and compliance, as needed;
  • The adoption of administrative and judicial litigation measures, in order to defend BB’s rights and interests;
  • Studies in order to ascertain and pay the taxes and contributions (Bank as the taxpayer); withheld and collected (Bank as the tax responsible party) in an adequate manner, at accurate values and on due time, aiming at the tax efficiency and strict compliance with the applicable legal and regulatory standards, and at the fiscal good standing.


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