Banco do Brasil S A : Recovery Plan - Review 2022

Recovery Plan

Review 2022

CMN Resolution 4.502/16

Public Section

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Banco do Brasil's Recovery Plan 2022
TABLE OF CONTENTS
1.	Introduction ------------------------------------------------------------------------------------------------------------------------	3
2.	Governance ------------------------------------------------------------------------------------------------------------------------	3
2.1.	Recovery Plan Responsibility -------------------------------------------------------------------------------------------------	3
2.2.	Governance Structure -----------------------------------------------------------------------------------------------------------	3
2.2.1.	The Recovery Plan Governance----------------------------------------------------------------------------------------------	4
2.3.	Recovery Plan Involved Areas ------------------------------------------------------------------------------------------------	5
3.	Banco do Brasil -------------------------------------------------------------------------------------------------------------------	6
3.1.	Risks Profile -----------------------------------------------------------------------------------------------------------------------	7
3.1.1.	Relevant Risks --------------------------------------------------------------------------------------------------------------------	7
3.1.2.	Risks Appetite and Tolerance -------------------------------------------------------------------------------------------------	7
4.	Critical Functions and Essential Services ----------------------------------------------------------------------------------	8
4.1.	Critical Functions -----------------------------------------------------------------------------------------------------------------	8
4.1.1.	Critical Functions Definition and Criticality Assessment ----------------------------------------------------------------	8
4.2.	Essential Services----------------------------------------------------------------------------------------------------------------	9
4.2.1.	Essential Services Definition and Assessment----------------------------------------------------------------------------	9
5.	Monitoring Program --------------------------------------------------------------------------------------------------------------	9
5.1.	Indicators Framework -----------------------------------------------------------------------------------------------------------	9
5.2.	Deterioration Indicators Definition -------------------------------------------------------------------------------------------	10
5.3.	Recovery Indicators Definition -----------------------------------------------------------------------------------------------	10
6.	Stress Scenarios Development ----------------------------------------------------------------------------------------------	11
7.	Recovery Strategies ------------------------------------------------------------------------------------------------------------	13
7.1.	Recovery Strategies Definition and Analysis Process------------------------------------------------------------------	13
7.2.	Recovery Strategies ------------------------------------------------------------------------------------------------------------	14
7.3.	Recovery Strategies Application under Stress Scenarios -------------------------------------------------------------	15
8.	Conclusion ------------------------------------------------------------------------------------------------------------------------	15
9.	Bibliographic References ------------------------------------------------------------------------------------------------------	16
TABLE OF FIGURES
FIGURE 1 - CORPORATE GOVERNANCE STRUCTURE-------------------------------------------------------------------------	4
FIGURE 2 - RECOVERY PLAN GOVERNANCE STRUCTURE -------------------------------------------------------------------	5
FIGURE 3 - SERVICE NETWORK ABROAD ---------------------------------------------------------------------------------------	6
FIGURE 4 - INDICATORS FRAMEWORK ----------------------------------------------------------------------------------------	10
FIGURE 5 - STRESS SCENARIOS DEFINITION PROCESS--------------------------------------------------------------------	12
FIGURE 6 - RECOVERY STRATEGIES DEFINITION PROCESS ---------------------------------------------------------------	13

Banco do Brasil's Recovery Plan 2022	3

1. Introduction

In Brazil, the Recovery Plan regulation was published by the Central Bank of Brazil (Bacen) by means of the Resolution n° 4,502, issued by the National Monetary Council (CMN) on 06/30/2016, which rules on the recovery plan elaboration and operation, aiming to reestablish capital and liquidity adequate levels and preserve the feasibility of financial institutions and others whose functioning was authorized by Bacen, as a response to stress situations, by contributing with the maintenance of the National Financial System (NFS) soundness, stability and regular operation.

The Recovery Plan goal, whose scope covers the Prudential Conglomerate entities, is to evaluate if the Institution`s available options to face crises are enough consistent before a series of shocks of different types. In order to be more adequate and timely to eventual crises, the answers must be detected or anticipated by the monitoring of the diverse businesses and risks the Institution may be subject to.

2. Governance

2.1. Recovery Plan Responsibility

At Banco do Brasil (BB), the Risk Management Directorship (Diris) is responsible for meeting the Recovery Plan requirements, which were established by CMN Resolution n° 4,502/16.

2.2. Governance Structure

Banco do Brasil`s corporate governance covers:

1. the Board of Directors (CA), assisted by the Audit Committee (Coaud), by the Remuneration and Eligibility Committee (Corem), by the Risks and Capital Committee (Coris), by the Technology, Strategy and Innovation Committee (Cotei), by the Entrepreneurial Sustainability Committee (Cosem) and by the Internal Audit (Audit);
2. the Executive Board (Direx), composed by the Board of Officers (CD), consisting of the President and the Vice-Presidents, and Statutory Directors1; and
3. the Fiscal Council (CF).

1 Exclusively BB's current employees (Bylaws, Art. 24), considering the exception defined in Art. 64.

Banco do Brasil's Recovery Plan 2022	4

Figure 1 - Corporate Governance Structure

The decisions are communicated to the intervening areas by means of documents that objectively express the position taken by Management, ensuring its applicability in all of the Bank`s levels.

2.2.1. The Recovery Plan Governance

The Recovery Plan governance model covers executive committees structure, which is integrated by several areas of the Bank and which the Bank`s president, vice-presidents and key executive managers take part in.

CMN Resolution n° 4,502/16, Art. 21 establishes that the directorship and the CA should:

1. ensure the timely identification of the personnel who is responsible for the operation of the recovery plan;
2. have a broad and integrated comprehension on the critical functions and the essential services, indicators and other pieces of information that are part of the monitoring program, stress scenarios, recovery strategies, barriers and risks associated to the plan, by ensuring its consistency with the institution`s strategic planning; and
3. ensure the elaboration of feasible and efficient recovery strategies, including the ones that refer to other companies that integrate the economic group.

Banco do Brasil's Recovery Plan 2022	5

The previously mentioned Resolution, in its Art. 22, quotes that the directorship and the CA are responsible for using the strategies that are set in the Recovery Plan.

The Recovery Plan governance structure role is to keep the corporate and transparency responsibility in operating the plan, being related to the decision-making processes of using, or not, the recovery strategies set in it.

The following figure presents the governance structure that is defined for the Recovery Plan:

	CA
COAUD	CORIS
	CD
	CEGRC

Capital Forum

Scenarios Forum

StressTest Forum

CA - Board of Directors COAUD - Audit Committee CORIS - Risks and Capital Committee CD - Board of Officers CEGRC - Risks, Internal Controls, Assets, Liabilities, Liquidity and Capital Management Executive Committee

Figure 2 - Recovery Plan Governance Structure

As soon as issues and processes concerning the Plan permeate the Bank`s Strategic Committees essence and purposes, mainly the ones associated to the relevant risks and assets and liabilities management (ALM), the simplifying of governance aims to promote promptness and better flow to deliberations concerning the Plan and the areas bearing institutional responsibilities linked to the Plan must take part, in such committees, even as non-permanent members, ensuring alignment to the model adopted by the Bank and the corporate governance fundamental principles.

2.3. Recovery Plan Involved Areas

The areas that are involved in Banco do Brasil`s Recovery Plan are divided into signatory (proponent), intervening and reviser.

The Recovery Plan signatory areas main roles are to prospect, articulate with intervening areas, develop and propose adequate definitions to the Recovery Plan and they are responsible for the sufficiency and accuracy of the information that is presented.