II.FINANCIAL STATEMENTS AND NOTES II.FINANCIAL AND NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013 AS AT 31 DECEMBER 2013

These financial statements are a free translation into English of the original Portuguese version. In case of doubt or misinterpretation the Portuguese version will prevail.

II. Consolidated Financial Statements

1. Consolidated Financial Statements and Notes to the Financial Statement 3
Error! Bookmark not defined. 2. Appendix -
3. Auditors' Report on the Consolidated Financial Statements 180
4. Report of the Audit Committee 183

1. Consolidated 1. ConsolidatedFinancial Statements Financial Statementsand Notes to the Financial Statement and Notes to Statement

GRUPO B ANCO E SPÍRITO SANTO

CONSOLIDATED INCOME STATE MENT FOR THE YE ARS E NDE D 31 DECE MB E R 201 3 AND 201 2

(in thousands of euro) Interest and similar income 5 3 467 01 7 3 91 4 1 09 Interest expense and similar charges 5 2 432 709 2 733 601 Net interest income 1 034 308 1 1 80 508 034 308 1 1 508 Dividend income 58 498 72 604 Fee and commission income 6 865 81 5 975 062 Fee and commission expenses 6 ( 200 1 78) ( 1 81 1 44) Net gains / (losses) from financial assets at fair value through profit or loss 7 ( 299 422) ( 59 408) Net gains / (losses) from available-for-sale financial assets 8 441 1 1 2 600 206 Net gains / (losses) from foreign exchange differences 9 ( 4 203) ( 23 788) Net gains/ (losses) from the sale of other assets 1 0 ( 68 61 6) ( 42 1 59) Insurance earned premiums net of reinsurance 1 1 355 329 62 257 Claims incurred net of reinsurance 1 2 ( 245 351 ) ( 362 973) Change on the technical reserves net of reinsurance 1 3 32 799 301 423 Other operating income and expense 1 4 ( 69 1 52) 1 1 8 246 Operating income 1 900 939 2 640 834 900 939 2 640 Staff costs 1 5 575 025 598 883 General and administrative expenses 1 7 454 086 442 1 20 Depreciation and amortisation 30 and 31 1 07 861 1 08 074 Provisions net of reversals 40 ( 1 0 264) 56 978 Loans impairment net of reversals and recoveries 25 1 005 092 81 4 832 Impairment on other financial assets net of reversals and recoveries 23, 24 and 26 1 04 1 08 1 06 727 Impairment on other assets net of reversals and recoveries 28, 31 and 34 323 953 220 893 Operating expenses 2 559 861 2 348 507 559 861 2 348 507 Gains on disposal of investments in subsidiaries and associates 1 - 383 Losses arising on business combinations achieved in stages 1 and 55 - ( 89 586) Share of profit of associates 32 1 091 8 31 2 ( Loss) / profit before income tax ( 657 831 ) 21 1 436 657 ) 21 1 436 Income tax Current tax 41 1 47 349 1 35 350 Deferred tax 41 ( 31 9 888) ( 52 434) ( 1 72 539) 82 91 6 1 72 ( 485 292) 1 28 520 485 292) 1 28 520 Discontinued operations 28 ( 29 579) ( 8 684) (Loss) / Profit for the year ( 51 4 871 ) 1 1 9 836 4 ) 1 1 9 836 Attributable to equity holders of the B ank ( 51 7 558) 96 1 01 7 Attributable to non-controlling interest 45 2 687 23 735 2 23 735 ( 51 4 871 ) 1 1 9 836 4 ) 1 1 9 836 E arnings per share of profit attributable to the equity holders of the Bank Basic ( in Euro) 1 8 (0.1 3) 0.03 Diluted ( in E uro) 1 8 (0.1 3) 0.03 Basic earnings per share from continuing activities (in E uro) 1 8 (0.1 2) 0.04 Diluted earnings per share from continuing activities (in Euro) 1 8 (0.1 2) 0.04 31 .1 2.201 3 Notes 31 .1 2.201 2 Notes 31 .1 2.201 2

GRUPO BANCO E SPÍRITO SANTO

CONSOLIDATE D STATE ME NT OF COMPRE HE NSIVE INCOME FOR THE YE ARS E NDE D AS AT 31 DE CE MB E R 201 3 AND 201 2

			(in thousands of euro)
	Notes	31 .1 2.201 3 .1 3	31 .1 2.201 2 2.201
(Loss) / profit for the period
Attributable to equity holders of the Bank		( 51 7 558)	96 1 01
Attributable to non-controlling interest	45	2 687	23 735
		( 51 4 871 ) 4	1 1 9 836 1 1 9 836
Other comprehensive income for the period
Items that wont be reclassified into the Income Statement
Long-term benefit	1 6	( 1 00 066)	( 1 91 768)
Income taxes on actuarial gains and losses from defined benefit obligations	a)	1 71 2	1 8 71 8
		( 98 354)	( 1 73 050)
Items that may be reclassified into the Income Statement
Exchange differences	a)	( 75 1 59)	( 57 21 6)
Income taxes on exchange differences on translating foreign operations	a)	( 6 663)	3 247
Other comprehensive income from associates	a)	1 502	( 9 800)
		( 80 320)	( 63 769)
Available-for-sale financial assets
Gains arising during the period	45	1 64 927	1 248 383
Reclassification adjustments for losses included in the profit or loss	45	( 336 552)	( 500 898)
Deferred taxes	45	43 946	( 1 31 438)
		( 1 27 679)	61 6 047
Total comprehensive income/(loss) for the period		( 821 224)	499 064 499 064
Attributable to equity holders of the B ank		( 794 71 7) 7)	492 21 6 492 21 6
Attributable to non-controlling interest		( 26 507) (	6 848 6 848
		( 821 224)	499 064 499

a) See Note 1 - Consolidated statement of changes in equity

GRUPO BANCO E SPÍRITO SANTO

CONSOLIDATE D BALANCE SHE E T AS AT 31 DE CE MB E R 201 3 AND 201 2

			(in thousands of euro)
	Notes Notes	31 .1 2.201 3 3 31	31 .1 2.201 2 2.201
Assets
Cash and deposits at central banks	1 9	1 71 9 363	1 377 541
Deposits with banks	20	542 945	681 077
Financial assets held for trading	21	2 507 932	3 925 399
Other financial assets at fair value through profit or loss	22	3 874 347	2 821 553
Available-for-sale financial assets	23	8 486 605	1 0 755 31 0
Loans and advances to banks	24	5 431 464	5 426 51 8
Loans and advances to customers	25	46 334 896	47 706 392
Held-to-maturity investments	26	1 499 639	941 549
Derivatives for risk management purposes	27	363 391	51 6 520
Non-current assets held for sale	28	3 567 01 1	3 277 540
Investment properties	29	395 855	441 988
Other tangible assets	30	925 438	931 622
Intangible assets	31	455 352	555 326
Investments in associates	32	536 666	580 982
Current income tax assets		36 399	24 648
Deferred income tax assets	41	1 034 31 8	728 905
Technical reserves of reinsurance ceded	33	1 0 435	3 804
Other assets	34	2 885 960	2 994 1 54
Total Assets		80 608 01 6 80 6	83 690 828 83 690 828
Liabilities
Deposits from central banks	35	9 530 1 31	1 0 893 320
Financial liabilities held for trading	21	1 284 272	2 1 22 025
Deposits from banks	36	4 999 493	5 088 658
Due to customers	37	36 830 893	34 540 323
Debt securities issued	38	1 1 91 9 450	1 5 424 061
Derivatives for risk management purposes	27	1 30 71 0	1 25 1 99
Investment contracts	39	4 278 066	3 41 3 563
Non-current liabilities held for sale	28	1 53 580	1 75 945
Provisions	40	1 92 452	236 950
Technical reserves of direct insurance	33	1 754 655	1 577 408
Current income tax liabilities		1 01 868	221 1 99
Deferred income tax liabilities	41	97 1 29	1 54 01 5

Subordinated debt Other liabilities	42 43	1 066 298 1 21 9 723	839 81 6 1 1 45 602
Total Liabilities		73 558 720 73 720	75 958 084 75 958 084

E quity Share capital	44	5 040 1 24	5 040 1 24
Share premium	44	1 067 596	1 069 51 7
Other equity instruments	44	29 1 62	29 295
Treasury stock	44	( 858)	( 6 991 )
Preference shares	44	1 59 342	1 93 289
Other reserves, retained earnings and other comprehensive income	45	468 885	641 964
(Loss) / Profit for the year attributable to equity holders of the Bank		( 51 7 558)	96 1 01
Total Equity attributable to equity holders of the Bank		6 246 693 6 693	7 063 299 063 299
Non-controlling interest	45	802 603	669 445
Total Equity		7 049 296 7 296	7 732 744 7 732 744
Total Equity and Liabilities		80 608 01 6 80 6	83 690 828 83 690 828

^B ANCO E SPÍRITO SANTO, S.A.

CONSOLIDATE D STATE ME NT OF CHANGE S IN E QUITYFOR THE PE RIODS E NDE D AS AT 31 DE CE MBE R 201 3 AND 201 2

												(in th nds o f eur o) ousa
						Othe ined , reta r res erves	ings and othe preh earn r com	ensiv e inc ome	Profi for t / (L oss)
	Shar ital e cap	ity instr Othe r equ Othe Shar mium k Prefe e sh r res erves Trea stoc e pre sury renc ares , nts ume retai ned e arnin nd gs a Fair value rese rve othe preh ensiv r com e inco me			l Tota	the y ear year attrib utab le to of equi ty ho lders the B ankthe B ank	Tota l equ ity attrib utab le to equi ty f the hold Ban k ers o	rollin Non- cont g inter estinter inter est est	l equ ity Tota
Bala s at 3 1 De ber 2 01 1 nce a cem	4 03 4 030 0 232 232	1 081 663 663	29 50 5 505	7) ( 99 ( 99 7)( 99 7)	21 1 91 3	1 75) ( 1 75)( ( 445	805 645 805 6 45	70 360 4 360 4 70	758) ( 08 758)( ( 1 08	5 60 604 0 4 028 28	588 4 47	475 6 92 6 1 92 475
Othe prehe nsive inco r com me:
s in f air va et of Ch lue, n taxes ange	-	-	-	-	-	61 6 0 25	-	61 6 0 25	-	61 6 0 25	22	61 6 0 47
Actua rial d eviat ions, f taxe net o s	-	-	-	-	-	-	( 1 73 1 71 )	( 1 7 3 1 71 )	-	( 1 73 1 71 )	1 2 1	( 1 73 050)
Ot her c ehen sive incom ropria te fro socia tes, n et of taxes ompr e app m as	-	-	-	-	-	-	( 9 8 00)	( 9 8 00)	-	( 9 8 00)	-	( 9 8 00)
E x chan ge di ffere of tax , net nces es	-	-	-	-	-	-	( 36 939)	( 36 939)	-	( 36 939)	( 1 7 030)	( 53 969)
Profit for t he ye ar	-	-	-	-	-	-	-	-	96 1 0 1	96 1 0 1	23 73 5	1 1 9 8 36
l com preh ensiv e inc in th riod Tota ome e pe	-	-	-	-	-	61 61 6 0 025 25	( 21 9 91 0) 10) 219	396 1 1 5 396 1	96 1 0 1 1	1 6 492 492 2 6	6 848	64 499 0 499 0 64
Capi tal in creas e	1 009 892	( 1 2 1 46)		-	-	-	-	-	-	997 7 46	-	997 7 46
- iss ue of share 2 55 6 688 387 new s	1 00 9 892	-	- -	-	-	-	-	-	-	1 009 892	-	1 009 892
ith ca pital incre sts w - co ase		( 1 2 1 46)								( 1 2 1 46)		( 1 2 1 46)
hase of p refere hares (See 44) Purc Note nce s	-		-	-	- ( 1 8 624)	-	- 4 478	- 4 478	-	( 1 4 1 46)	-	( 1 4 1 46)
Purc hase of ot her c apita l inst nts rume	-	-	- ( 21 0)	-		-			-	( 21 0)	-	( 21 0)
sacti ith no trollin g inte Tran rests ons w n-con	-	-		-	-	-	- 497	- 497	-	497	-
Tran sfer t o res erves	-	-	-	-	-	-	( 1 08 758)	( 1 0 8 758 )	- 1 08 758		-	497
Divid refere of tax ends hares , net es (a ) on p nce s	-	-	-	-	-	-	( 6 1 37)	( 6 1 37)		- ( 6 1 37)	-	- ( 6 1 37)
Varia tions ck (S 4) on t ee N ote 4	-	-	-	- ( 5 9 94)	-	-			-	( 5 9 94)	-	( 5 9
ry sto reasu Intere othe ity ins et of (b) st on trume nts, n taxes	-	-	-		-	-	- 64)	-	-		-	94)
r equ nsolid Perim	-	-	-	-	-	-	( 1 8	( 1 8 64)	-	( 1 8 64)	-	( 1 8 64)
Chan n Co ated eter ( See Note 45) ges o Othe	-	-	-	-	-	-	-	-	-	-	74 29 3	74 29 3
ts r mov emen Othe r cha in m inorit See	-	-	-	-	-	-	( 2 8 37)	( 2 8 37)	-	( 2 8 37)	-	( 2 8 37)
y inte rest ( Note 45) nges	-	-	-	-	-	-	-	-	-	-	( 1 4 3)	( 1 4 3)
Bala s at 3 1 De ber 2 01 2 nce a cem	5 04 5 040 0 1 24 24	1 069 1 069 51 7 069 7 51 7	5 29 29 29 29 5 295 295	91 ) ( 6 9 91 )( 6 9 ( 6 9 91)6 991	1 93 289 1 93 2 89 93	50 1 70 8 50 18 1 70 8 50	1 4 471 1 1 4 471 471 1 4	64 641 9 64 641 9 641 9 64	1 96 1 0 96 1 0 1 1 1	299 7 063 7 063 299 063 2 99	45 669 4 669 4 45	744 7 732 7 732 744
Othe prehe nsive inco r com me:
s in f et of Ch air va lue, n taxes ange	-	-	-	-	-	( 1 30 854)	-	( 1 30 854)	-	( 1 30 854)	3 1 75	( 1 27 679)
Actua rial d eviat ions, f taxe net o s	-	-	-	-	-	-	( 97 982)	( 97 982)	-	( 97 982)	( 37 2)	( 98 354)
her c ehen sive incom ropria te fro socia et of Ot tes, n taxes ompr e app m as	-	-	-	-	-	-	1 502	1 502	-	1 502	-	1 502
E x chan ge di ffere of tax , net nces es	-	5	-	-	-	-	( 49 830)	( 49 830)	-	( 49 825)	( 31 997)	( 81 822)
Profit for t he ye ar	-	-	-	-	-	-	-	-	( 51 7 558)	( 51 ) 7 558	2 6 87	( 51 1 ) 4 87
Tota l com preh ensiv e inc in th riod ome e pe	-	5	-	-	-	854) ( 30 854)( ( 1 30	( 1 4 ) ( 1 6 31 0 310)	( 27 ) ( 64)( 7 1 64 64)	( 51 ) ( 51 558)( 7 558	( 79 ) ( 4 71 7 717)	( 26 507) ( 507)( 507)(	( 82 ) ( 821 1 224 ) 224
Purc hase of p refere hares (See Note 44) nce s	-	-	-	-	( 33 947)	-	6 096	6 096	-	( 27 851 )	-	( 27 851 )
Tran sacti ith no trollin g inte rests ons w n-con	-	-	-	-	-	-	1 804	1 804	-	1 804	( 1 8 04)	-
Tran sfer t o res erves	-	-	-	-	-	-	96 1 0 1	96 1 0 1	( 96 1 01 )	-	-	-
Divid refere of tax ends hares , net es (a ) on p nce s	-	-	-	-	-	-	( 6 9 50)	( 6 9 50)	-	( 6 9 50)	-	( 6 9 50)
Varia tions ck (S 4) on t ry sto ee N ote 4 reasu	-	-	-	6 1 33	-	-	4 470	4 470	-	1 0 60 3	-	1 0 60 3
Intere othe ity ins et of (b) st on trume nts, n taxes r equ	-	-	-	-	-	-	( 2 1 91 )	( 2 1 91 )	-	( 2 1 91 )	-	( 2 1 91 )
Othe ts r mov emen	-	( 1 9 26)	( 1 3 3)	-	-	-	4 755	4 755	-	2 696	-	2 696
Othe r cha in m inorit y inte rest ( See Note 45) nges	-	-	-	-	-	-	-	-	-	-	1 61 4 69	1 61 4 69
Bala s at 3 1 De ber 2 01 3 nce a cem	5 04 5 040 0 1 24 24	1 067 596 067 596	29 1 6 2 1	8) ( 85 ( 85 8)( 85 8)	1 59 342 59	39 99 6 996	89 428 8 428 8 89	85 468 8 468 8 85	558) ( 51 558)( ( 51 7	6 24 6 693 246 6 93	802 6 03	296 7 049 7 049 296

(a) Corresponds to a preferred dividend based on an annual interest rate of 5.58% related to preference shares issued by BE S Finance (See Note 44)

(b) Corresponds to a a conditioned interest payable semi-annually and calculated based on an annual rate of 8.5% (amounts issued in euro) and 8.0% (amounts issued in US dollars) related to perpetual bonds issued by BE S (See Note 44)

GRUPO B ANCO E SPÍRITO SANTO

CONSOLIDATE D CASH FLOW STATE ME NT

FOR THE YE ARS E NDE D 31 DE CE MB E R 201 3 AND 31 DE CE MBE R 201 2

			(in thousands of euro)
	Notes Notes	31 .1 2.201 3 .1 2.201 33	31 .1 2.201 2 2.201 2
Cash flows from operating activities
Interest and similar income received		3 240 956	3 866 756
Interest expense and similar charges paid		(2 1 95 1 04)	(2 761 592)
Fees and commission received		867 535	980 751
Fees and commission paid		( 209 325)	( 1 88 981 )
Insurance premiums		1 37 847	( 301 802)
Recoveries on loans previously written off		21 063	21 900
Contribution to pension fund		( 1 03 806)	( 86 41 0)
Cash payments to employees and suppliers		( 864 349)	( 845 776)
		894 81 7	684 846
Changes in operating assets and liabilities:
Deposits with central banks		(2 01 5 200)	(2 884 01 3)
Financial assets at fair value through profit or loss		( 81 1 721 )	1 433 434
Loans and advances to banks		559 1 87	1 225 370
Deposits from banks		( 80 445)	(1 296 220)
Due to customers		( 273 537)	( 388 936)
Loans and advances to customers		2 267 276	320 1 44
Derivatives for risk management purposes		63 281	226 558
Other operating assets and liabilities		86 794	( 470 973)
Net cash from operating activities before
income tax		690 452	(1 1 49 790) 790)
Income taxes paid		( 267 981 )	( 39 943)
Net cash from operating activities		422 471	(1 1 89 733) 733)
Cash flows from investing activities
Acquisition of subsidiaries and associates	1	( 37 338)	( 257 41 8)
Sale of subsidiaries and associates	1	75 054	51 61 3
Dividends received		62 758	76 027
Acquisition of available-for-sale financial assets		(53 895 369)	(69 490 051 )
Sale of available-for-sale financial assets		56 735 588	72 942 251
Held to maturity investments		( 549 501 )	648 71 2
Issued insurance investment contracts		666 355	200 849
Purchase of tangible and intangible assets and investment properties Sale of tangible and intangible assets and investment properties		( 1 63 778) 644	( 532 483) 7 489
Net cash from investing activities		2 894 41 3	3 646 989 3 646 989
Cash flows from financing activities
Capital increase		-	997 746
Capital increase in subsidiaries		1 55 908	-
Acquisition of preference shares		( 26 531 )	( 1 1 430)
Bonds issued		5 254 61 5	1 3 21 8 398
Bonds paid		(8 709 864)	(1 6 529 485)
Emissão de passivos subordinados		750 000	-
Reembolso de passivos subordinados		( 51 0 51 5)	( 21 0 096)
Treasury stock		6 1 33	( 5 994)
Interest from other equity instruments		( 2 81 5)	( 2 809)
Dividends paid on preference shares		( 8 360)	( 1 0 997)
Net cash from financing activities		(3 091 429)	(2 554 667)
Net changes in cash and cash equivalents		225 455	( 97 41 1 )
Cash and cash equivalents at the beginning of the period		1 61 5 953	1 542 251 1 542 251
Effect in integral consolidation of BE S VIDA	54	-	1 98 648
Effect of exchange rate changes on cash and cash equivalents		( 69 740)	( 27 535)
Net changes in cash and cash equivalents		225 455	( 97 41 1 )
Cash and cash equivalents at the end of the period		1 771 668	1 61 5 953

Cash and cash equivalents includes:
Cash	1 9	288 1 37	303 538
Deposits at Central Banks	1 9	1 431 226	1 074 003
of which, restricted balances Deposits with banks	20	( 490 640) 542 945	( 442 665) 681 077

Total		1 771 668	1 61 5 953

Banco Espírito Santo Espírito SantoGroup

Notes to the Consolidated Financial Notes to the Consolidated FinancialStatements as at 31 December 2013 Statements as at 31 December 2013 2013

(Amounts expressed in thousands of euro, except when indicated)

NOTE 1 – –ACTIVITY AND GROUP STRUCTURE ACTIVITY STRUCTURE

Banco Espírito Santo, S.A. (Bank or BES) is a comme S.A. BES) rcial bank headquartered in Portugal, Avenida da Liberdade, no. 195, Lisbon. The Bank is authorised by the Portuguese authorities, central banks and other regulatory authorities, to operate in Portugal and in the countries where its international branches are located.

BES's foundation dates back to the last quarter of the 19th century. The Bank began its operations as a commercial bank in 1920, following the acquisition of Espírito Santo & Cª, banking house which already performed retail banking operations. In 1937 took place the merger of Banco Espírito Santo and Banco Comercial de Lisboa, from which resulted Banco Espírito Santo e Comercial de Lisboa. On 6 July 1999, the Bank changed its name to Banco Espírito Santo, S.A.. BES is the core of a financial group – BES Group – which includes the Bank and a number of financial entities located in Portugal and abroad.

BES is listed on the NYSE Euronext Lisbon. As at 31 December 2013, the Bank's subsidiary BES Finance, Ltd had also 159 thousand preference shares listed on the Luxembourg Stock Exchange.

Since 1992, BES is part of the Espírito Santo Group, therefore its financial statements are consolidated by BESPAR SGPS, S.A., headquartered in Rua de São Bernardo, no. 62, Lisbon, and as well by Espírito Santo Financial Group, S.A. (ESFG), with headquarters in Luxembourg.

BES Group has a network of 788 branches throughout Portugal (31 December 2012: 755), international branches in London, Spain, New York, Nassau, Cayman Islands, Cape Verde, Venezuela and Luxembourg, a branch in the Madeira Free Trade Zone and ten representative offices overseas.

Group companies where the Bank has a direct or indirect holding greater or equal to 20%, over which the Bank exercises control or has significant influence, and that were included in the consolidated financial statements, are as follows:

Subsidiaries consolidated directly by the Bank:

	E stablished stablished	AcquiredAcquired Acquired	Headquartered Headquartered	ActivityActivity Activity	% economic interes tinteres t interes t	Consolidation method
BANCO E SPÍRITO SANTO, SA (BE S)	1 937	-	Portugal	Commercial banking
Banco E spírito Santo de Investimento, SA (BE SI)	1 993	1 997	Portugal	Investment bank	1 00.00%	Full Consolidation
BE S-Vida, Companhia de Seguros, SA (BE S VIDA)	1 993	2006	Portugal	Insurance	1 00.00%	Full Consolidation
Aman Bank for Commerce and Investment Stock Company	2003	201 0	Libya	Commercial banking	a) 40.00%	Full Consolidation
Avistar, SGPS, SA	2009	2009	Portugal	Holding company	1 00.00%	Full Consolidation
E spírito Santo Servicios, SA	1 996	1 997	Spain	Insurance	1 00.00%	Full Consolidation
E spírito Santo Activos Financieros, SA	1 988	2000	Spain	Asset management	95.00%	Full Consolidation
E spírito Santo Vanguarda, SL	201 1	201 1	Spain	Services provider	1 00.00%	Full Consolidation
Banco E spírito Santo dos Açores, SA (BAC)	2002	2002	Portugal	Commercial banking	57.53%	Full Consolidation
BE ST - Banco E lectrónico de Serviço Total, SA (BE ST)	2001	2001	Portugal	Internet banking	66.00%	Full Consolidation
BE S África, SGPS, SA	2009	2009	Portugal	Holding company	1 00.00%	Full Consolidation

Banco E spírito Santo Angola, SA (BE SA)	2001	2001	Angola	Commercial banking	55.71%	Full Consolidation
Banco E spírito Santo do Oriente, SA (BE SOR)	1 996	1 996	Macao	Commercial banking	99.75%	Full Consolidation
E spírito Santo Bank (E SBANK)	1 963	2000	USA	Commercial banking	99.99%	Full Consolidation
BE S Beteiligungs, GmbH (BE S GMBH)	2006	2006	Germany	Holding company	1 00.00%	Full Consolidation
BIC International Bank Ltd. (BIBL)	2000	2000	Cayman Islands	Commercial banking	1 00.00%	Full Consolidation
Parsuni - Sociedade Unipessoal, SGPS	2004	2005	Portugal	Holding company	1 00.00%	Full Consolidation
Praça do Marquês - Serviços Auxiliares, SA (PÇMARQUÊ S)	1 990	2007	Portugal	Real estate	1 00.00%	Full Consolidation
E spírito Santo, plc. (E SPLC)	1 999	1 999	Ireland	Non-bank finance company	99.99%	Full Consolidation
E SAF - E spírito Santo Activos Financeiros, S.G.P.S., SA (E SAF)	1 992	1 992	Portugal	Holding company	89.99%	Full Consolidation
E S Tech Ventures, S.G.P.S., SA (E STV)	2000	2000	Portugal	Holding company	1 00.00%	Full Consolidation
Banco E spírito Santo North American Capital Limited Liability Co. (BE SNAC)	1 990	1 990	USA	Financing vehicle	1 00.00%	Full Consolidation
BE S Finance, Ltd. (BE SFINANCE )	1 997	1 997	Cayman Islands	Issue of preference shares and other securities	1 00.00%	Full Consolidation
E S, R ecuperação de Crédito, ACE (E SRE C)	1 998	1 998	Portugal	Debt Collection	99.1 5%	Full Consolidation
E S Concessões, SGPS, SA (E S CONCE SSÕE S)	2002	2003	Portugal	Holding company	71 .66%	Full Consolidation
E spírito Santo - Informática, ACE (E SINF)	2006	2006	Portugal	Services provider	82.28%	Full Consolidation
E spírito Santo Prestação de Serviços, ACE 2 (E S ACE 2)	2006	2006	Portugal	Services provider	88.26%	Full Consolidation
E SGE ST - E sp. Santo Gestão Instalações, Aprov. e Com., SA (E SGE ST)	1 995	1 995	Portugal	Services provider	1 00.00%	Full Consolidation
E spírito Santo Representações, Ltda. (E SRE P)	1 996	1 996	Brazil	R epresentation office	99.99%	Full Consolidation
Quinta dos Cónegos - Sociedade Imobiliária, SA (CÓNE GOS)	1 991	2000	Portugal	Real estate	81 .00%	Full Consolidation
Fundo de Capital de R isco - E S Ventures II	2006	2006	Portugal	Venture capital fund	65.95%	Full Consolidation
Fundo de Capital de R isco - E S Ventures III	2009	2009	Portugal	Venture capital fund	60.85%	Full Consolidation
Fundo de Capital de R isco - BE S PME Capital Growth	2009	2009	Portugal	Venture capital fund	1 00.00%	Full Consolidation
Fundo FCR PME / BE S	1 997	1 997	Portugal	Venture capital fund	55.07%	Full Consolidation
Fundo Gestão Património Imobiliário - FUNGE PI - BE S	1 997	201 2	Portugal	R eal estate fund	60.31%	Full Consolidation
Fundo de Gestão de Património Imobiliário - FUNGE PI - BE S II	201 1	201 2	Portugal	R eal estate fund	95.33%	Full Consolidation
FUNGE R E - Fundo de Gestão de Património Imobiliário	1 997	201 2	Portugal	R eal estate fund	97.24%	Full Consolidation
ImoInvestimento – Fundo E special de Investimento Imobiliário Fechado	201 2	201 2	Portugal	R eal estate fund	1 00.00%	Full Consolidation
Prediloc Capital – Fundo E special de Investimento Imobiliáro Fechado	2006	201 2	Portugal	R eal estate fund	1 00.00%	Full Consolidation
Imogestão – Fundo de Investimento Imobiliário Fechado	2006	201 3	Portugal	R eal estate fund	1 00.00%	Full Consolidation
Arrábida - Fundo E special de Investimento Imobiliário Fechado	2006	201 3	Portugal	R eal estate fund	97.1 6%	Full Consolidation
Invesfundo VII – Fundo de Investimento Imobiliário Fechado	2008	201 3	Portugal	R eal estate fund	95.86% a)	Full Consolidation
FLITPTR E L VIII, SA	201 1	201 1	Portugal	Real estate	1 0.00%	Full Consolidation
OBLOG Consulting, SA	1 993	1 993	Portugal	Software development	66.63%	Full Consolidation
BE S, Companhia de Seguros, SA (BE S SE GUR OS)	1 996	1 996	Portugal	Insurance	25.00%	E quity method
Société Civile Immobilière du 45 Avenue Georges Mandel (SCI GM)	1 995	1 995	France	Real estate	22.50%	E quity method
E SE GUR - E spírito Santo Segurança, SA (E SE GUR)	1 994	2004	Portugal	Security	44.00%	E quity method
Locarent - Companhia Portuguesa de Aluguer de Viaturas, SA (LOCARE NT)	1 991	2003	Portugal	R enting	50.00%	E quity method
Banco Delle Tre Venezie, Spa	2006	2007	Italy	Commercial banking	20.00%	E quity method
Nanium, SA	1 996	201 0	Portugal	Industry	41 .06%	E quity method
Ascendi Pinhal Interior - E stradas do Pinhal Interior, SA	201 0	201 0	Portugal	Motorway concession	b) 1 8.57% b)	E quity method
UNICR E - Instituição Financeira de Crédito, SA	1 974	201 0	Portugal	Non-bank finance company	1 7.50%	E quity method
Ijar Leasing Argélie	201 1	201 1	Algeria	Leasing	35.00%	E quity method
E denred Portugal, SA	1 984	201 3	Portugal	Services provider	50.00%	E quity method
Multipessoal R ecursos Humanos - SGPS, S.A	1 993	1 993	Portugal	Holding company	22.52%	E quity method

a) These companies were fully consolidated, as the Group exercises control over their activities. b) The percentage in the table above represents the Group's economic interest. These companies were accounted for following the equity method, as the Group exercises a significant influence over them.

a) Sub-groups:

	E stablished E stablished	Acquired Acquired Acquired	Headquartered Headquartered	ActivityActivity Activity	% economic interestinterest interest	Consolidation method
B anco E spírito Santo de Investimento, SA (B E SI)	- 1 983 - 1 983		Portugal Portugal	Investment bank	1 00.00%	Full consolidation
E spírito Santo Investments PLC	1 996	1 996	Ireland	Non-bank finance company	1 00.00%	Full consolidation
Cominvest- SGII, S.A.	1 993	1 993	Portugal	Real estate	99.1 8%	Full consolidation
E SSI Investimentos SGPS, SA	1 998	1 998	Portugal	Holding company	1 00.00%	Full consolidation
Salgar Investments	2007	2007	Spain	Services provider	41 .69%	E quity method
E SSI SGPS, SA	1 997	1 997	Portugal	Holding company	1 00.00%	Full consolidation
E spírito Santo Investment Sp, Z.o.o.	2005	2005	Poland	Services provider	1 00.00%	Full consolidation
E spírito Santo Securities India	201 1	201 1	India	Brokerage house	75.00%	Full consolidation
Lusitania Capital, S.A.P.I. de C.V., SOFOM, E .N.R.	201 3	201 3	Mexico	Non-bank finance company	1 00.00%	Full consolidation
MCO2 - Sociedade gestora de Fundos de Investimento Mobiliário, S.A.	2008	2008	Portugal	Asset management - investment funds	25.00%	E quity method
E spírito Santo Capital - Sociedade de Capital de Risco, SA (E SCAPITAL)	1 988	1 996	Portugal	Venture capital fund	1 00.00%	Full consolidation
SE S Iberia	2004	2004	Spain	Asset management - investment funds	a) 50.00%	Full consolidation
2bCapital Luxembourg S.C.A SICAR	201 1	201 1	Luxembourg	Investment fund	42.1 2%	E quity method
Fundo E spírito Santo IBE RIA I	2004	2004	Portugal	Venture capital fund	45.93%	E quity method
HLC - Centrais de Cogeração, S.A.	1 999	1 999	Portugal	Services provider	24.50%	E quity method
Coporgest, SA	2002	2005	Portugal	Services provider	25.00%	E quity method
Synergy Industry and Technology, S.A.	2006	2006	Spain	Services provider	26.00%	E quity method
WindPart, Lda	201 3	201 3	Portugal	Holding company	a) 1 9.97%	Full consolidation
E spírito Santo Investment Holding, Limited	201 0	201 0	United Kingdom	Holding company	1 00.00%	Full consolidation
E xecution Noble & Company Limited	1 990	201 0	United Kingdom	Advisory on investments	1 00.00%	Full consolidation
E xecution Noble (Hong Kong) Limited	2005	201 0	China	Brokerage house	1 00.00%	Full consolidation
E xecution Noble Limited	2000	201 0	United Kingdom	Brokerage house	1 00.00%	Full consolidation
Noble Advisory India Private Ltd	2008	201 0	India	Research Services Provider	1 00.00%	Full consolidation
E xecution Noble Research	2003	201 0	United Kingdom	Research Services Provider	1 00.00%	Full consolidation
Clear Info-Analytic Private Ltd	2004	201 0	India	Research Services Provider	1 00.00%	Full consolidation
E spírito Santo Investimentos, SA	1 996	1 999	Brazil	Holding company	1 00.00%	Full consolidation
BE S Investimento do Brasil, SA	2000	2000	Brazil	Investment Bank	80.00%	Full consolidation
FI Multimercado Treasury	2005	2005	Brazil	Investment fund	80.00%	Full consolidation
BE S Activos Financeiros, Ltda	2004	2004	Brazil	Asset management	85.00%	Full consolidation
E spírito Santo Serviços Financeiros DTVM, SA	2009	201 0	Brazil	Asset management	80.00%	Full consolidation
BE S Securities do Brasil, SA	2000	2000	Brazil	Brokerage house	80.00%	Full consolidation
Gespar Participações, Ltda.	2001	2008	Brazil	Holding company	80.00%	Full consolidation
Fundo FIM BE S Moderado	2004	2009	Brazil	Investment fund	80.00%	Full consolidation
Fundo BE S Absolute Return	2002	2009	Brazil	Investment fund	79.07%	Full consolidation
2BCapital, SA	2005	2005	Brazil	Venture capital fund	45.00%	E quity method
2B Capital Luxembourg General Partners S.à r.l.	201 1	201 1	Luxembourg	Asset management - investment funds	45.00%	E quity method
BE S B eteiligungs, GmbH (BE S GMB H)	2006	2006	Germany Germany	Holding company companycompany	1 00.00% 1 00.00%1 00.00%	Full consolidation consolidation
Bank E spírito Santo International, Ltd. (BE SIL)	1 983	2002	Cayman Islands	Commercial banking	1 00.00%	Full consolidation
BE S África, SGPS, SA (B E S ÁFRICA)	2006	2006	Portugal PortugalPortugal	Holding company Holding companycompany	1 00.00% 1 00.00%1 00.00%1 00.00%	Full consolidation Full consolidation
Banco E spírito Santo Cabo Verde, SA	201 0	201 0	Cape Verde	Commercial banking	99.99%	Full consolidation
Moza Banco, SA	2008	201 0	Mozambique	Commercial banking	49.00%	E quity method
E SAF - E spírito Santo Activos Financeiros, S.G.P.S., SA (E SAF) P.S., SA SAF)	1 992 1 992	1 992	Portugal Portugal Portugal	Holding company Holding company company	89.99%	Full consolidation Full consolidation
E spírito Santo Fundos de Investimento Mobiliário, SA	1 987	1 987	Portugal	Asset management - investment funds	89.99%	Full consolidation
E spírito Santo International Management, SA	1 995	1 995	Luxembourg	Asset management - investment funds	89.81 %	Full consolidation
E spírito Santo Fundos de Investimento Imobiliário, SA	1 992	1 992	Portugal	Asset management - investment funds	89.99%	Full consolidation
E spírito Santo Fundo de Pensões, SA	1 989	1 989	Portugal	Asset management - investment funds	89.99%	Full consolidation
Capital Mais - Assessoria Financeira, SA	1 998	1 998	Portugal	Advisory services	89.99%	Full consolidation
E spírito Santo International Asset Management, Ltd.	1 998	1 998	British Virgin Islands	Asset management - investment funds	44.1 0%	E quity method
E spírito Santo Gestão de Patrimónios, SA	1 987	1 987	Portugal	Asset management - investment funds	89.99%	Full consolidation
E SAF - E spírito Santo Participações Internacionais, SGPS, SA	1 996	1 996	Portugal	Holding company	89.99%	Full consolidation
E SAF - International Distributors Associates, Ltd	2001	2001	British Virgin Islands	Asset management - investment funds	89.99%	Full consolidation
Banco E spírito Santo Angola, SA (BE SA)	2001	2001	Angola	Commercial banking	55.71 %	Full consolidation
BE SAACTIF - Sociedade Gestora de Fundos de Investimento, SA	2008	2008	Angola	Asset management - Investment funds	66.04%	Full consolidation
BE SAACTIF Pensões - Sociedade Gestora de Fundos de Pensões, SA	2009	2009	Angola	Asset management - Pension funds	66.04%	Full consolidation
BE SA Valorização – Fundo de Investimento Imobiliário Fechado	201 2	201 2	Angola	Real estate fund	55.71 % b)	Full consolidation
Tranquilidade Corporação Angolana de Seguros, S.A.	2007	201 2	Angola	Insurance	1 1 .70%	E quity method

	Established Established	AcquiredAcquired Acquired	Headquartered Headquartered	ActivityActivity Activity	% economic interestinterest interest	Consolidation method
ES Tech Ventures, S.G.P.S., SA (ESTV)	2000	2000	Portugal PortugalPortugal	Holding company Holding companycompany	1 00.00% 1 00.00%1 00.00%00.00%	Full consolidation Full consolidation
ES Ventures - Sociedade de Capital de Risco, SA	2005	2005	Portugal	Venture capital fund	1 00.00%	Full consolidation
Yunit Serviços, SA	2000	2000	Portugal	Management of internet portals	33.33%	E quity method
FCR E spírito Santo Ventures Inovação e Internacionalização	201 1	201 1	Portugal	Venture capital fund	50.00%	E quity method
Fundo Bem Comum, FCR	201 1	201 1	Portugal	Venture capital fund	20.00%	E quity method
Espírito Santo Contact Center, Gestão de Call Centers, SA (ESCC)	2000	2000	Portugal	Call centers management company	41 .67%	E quity method
Banque Espírito Santo et de la Vénétie, SA (ES Vénétie)	1 927	1 993	France	Commercial banking	42.69%	E quity method
Fundo de Capital de Risco - ES Ventures II	2006	2006	Portugal PortugalPortugal	Venture capital fundfund Venture capital fund	65.95%	Full consolidation Full consolidation
Atlantic Ventures Corporation	2006	2006	USA	Holding company	65.95%	Full consolidation
Sousacamp, SGPS, SA	2007	2007	Portugal	Holding company	25.79%	E quity method
Global Active - SGPS, SA	2006	2006	Portugal	Holding company	29.45%	E quity method
Outsystems, SA	2007	2007	Portugal	IT Services	b) 1 9.32%	E quity method
Coreworks - Proj. Circuito Sist. Elect., SA	2006	2006	Portugal	IT Services	21 .35%	E quity method
Multiwave Photonics, SA	2003	2008	Portugal	IT Services	b) 1 3.69%	E quity method
Bio-Genesis	2007	2007	Brazil	Holding company	b) 1 9.74%	E quity method
YDreams - Informática, SA	2000	2009	Portugal	IT Services	31 .65%	E quity method
Fundo de Capital de Risco - B ES PME Capital Growth wth	2009 2009	2009	Portugal PortugalPortugal	Venture capital fundfund Venture capital fund	1 00.00% 1 00.00%1 00.00%00.00%	Full consolidation Full consolidation
Righthour, SA	201 3	201 3	Portugal	Services provider	1 00.00%	Full consolidation
Imbassaí Participações, SA	2009	201 3	Brazil	Holding company	1 00.00%	Full consolidation
Lírios Investimentos Imobiliários, Ltda	2007	201 3	Brazil	Real estate	1 00.00%	Full consolidation
UCH Investimentos Imobiliários, Ltda	2007	201 3	Brazil	Real estate	1 00.00%	Full consolidation
UCS Participações e Investimentos, Ltda	2004	201 3	Brazil	Real estate	1 00.00%	Full consolidation
UR3 Investimentos Imobiliários, Ltda	2007	201 3	Brazil	Real estate	1 00.00%	Full consolidation
Fundo de Capital de Risco - ES Ventures III	2009	2009	Portugal PortugalPortugal	Venture capital fundfund Venture capital fund	60.85%	Full consolidation
Nutrigreen, SA	2007	2009	Portugal	Services provider	b) 1 2.1 7%	E quity method
Advance Ciclone Systems, SA	2008	2009	Portugal	Treatment and elimination of residues	24.34%	E quity method
Watson Brown, HSM, Ltd	1 997	2009	United Kingdom	Recycling rubber	21 .85%	E quity method
Domática, Electrónica e Informática, SA	2002	201 1	Portugal	IT Services	b) 1 7.90%	E quity method
Fundo Gestão Património Imobiliário - FUNGEPI - BE S BE S	1 997 1 997	201 2	Portugal PortugalPortugal	Real estate fund Real estate fundReal estate fund	60.31 % 60.31 % %	Full consolidation
Febagri-Actividades Agropecuárias e Imobiliárias SA	2006		Portugal	Real estate	60.31 %	Full consolidation

Senhora do Pilar - Soc. Imobiliária, SA	1 988		Portugal	Real estate	60.31 %	Full consolidation
Autodril - Sociedade Imobiliária, SA		201 2	Portugal	Real estate	60.31 %	Full consolidation
Fundo Gestão Património Imobiliário - FUNGEPI - BE S BE S	1 997 997	201 2	Portugal Portugal	Real estate fund Real estate fund	97.24%	Full consolidation
J CN - IP - Investimentos Imobiliários e Participações, SA	1 995		Portugal	Real estate	97.24%	Full consolidation
Portucale - Sociedade De Desenvolvimento Agro - Turistico, SA	1 990		Portugal	Farm	97.24%	Full consolidation
Rodovias do Ribatejo, Lda	1 997		Portugal	Restoration	97.24%	Full consolidation
Ribagolfe - Empreendimentos de Golfe, SA	1 995		Portugal	Exploration golf courses	97.24%	Full consolidation
Clube de Campo da Portucale, SA	1 990		Portugal	Equestrian	97.24%	Full consolidation
Portucale - Desportos Aquáticos, SA	1 986		Portugal	Water sports	97.24%	Full consolidation
Sociedade de Hotelaria da Vargem Fresca, SA	2000		Portugal	Hospitality	97.24%	Full consolidation
Sociedade de Hotelaria da Vargem Fresca II, SA	2000		Portugal	Hospitality	97.24%	Full consolidation
Portucale - Soc. Promoção Centros E xposições Comércio Integrado, SA	2000		Portugal	Various services	97.24%	Full consolidation
ImoInvestimento – Fundo Especial de Invest. Imob. Fechado echado	201 2 201 2	201 2	Portugal PortugalPortugal	Real estate fund Real estate fundReal estate fund	1 00.00% 1 00.00%1 00.00%00.00%	Full consolidation
Greenwoods Ecoresorts empreendimentos imobiliários, SA	201 2	201 2	Portugal	Real estate	50.00%	Full consolidation
Sociedade Imobiliária Quinta D. Manuel I, SA	201 2	201 2	Portugal	Real estate	1 00.00%	Full consolidation
Quinta da Areia - Sociedade Imobiliária, SA	201 2	201 2	Portugal	Real estate	1 00.00%	Full consolidation
Sociedade Agrícola Turística e Imobiliária da Várzea da Lagoa, SA	201 2	201 2	Portugal	Real estate	1 00.00%	Full consolidation
Fundo FCR PME / BE S	1 997	1 997	Portugal Portugal Portugal	Venture capital fund fund Venture capital fund	55.07%	Full consolidation
Mobile World - Comunicações. SA	2009	2009	Portugal	Telecommunications	26.98%	E quity method
MMCI - Multimédia, SA	2008	2008	Portugal	Holding company	26.98%	E quity method
TLCI 2 - Soluções Integradas de Telecomunicações, SA	2006	2006	Portugal	Telecommunications	26.98%	E quity method
Enkrott SA	2006	2006	Portugal	Management and water treatment	b) 1 6.52%	E quity method
Palexpo - Imagem Empresarial, SA	2009	2009	Portugal	Furniture manufacturing	27.26%	E quity method
Rodi - Sinks & Ideas, SA	2006	2006	Portugal	Metal industry	24.81 %	E quity method

	Established Established	AcquiredAcquired Acquired	Headquartered Headquartered Headquartered	Activity ActivityActivity	% economic interestinterest interest	Consolidation method
Espírito Santo Activos Financieros, SA	1 988 988	2000 2000	Spain	Asset management management	95.00%	Full consolidation
E spírito Santo Gestión, SA, SGIIC	2001	2001	Spain	Asset management	95.00%	Full consolidation
E spírito Santo Pensiones, S.G.F.P., SA	2001	2001	Spain	Asset management - pension funds	95.00%	Full consolidation
Espírito Santo B ank (ESBANK)	1 963 1 963	2000 2000	USA	Commercial banking Commercial banking Commercial banking	99.99%	Full consolidation
E S Financial Services, Inc.	2000	2000	USA	Brokerage house	99.99%	Full consolidation
Tagide Properties, Inc.	1 991	1 991	USA	Real estate	99.99%	Full consolidation
E S Investment Advisors, Inc.	201 1	201 1	USA	Investment consulting	99.99%	Full consolidation
BE S-Vida, Companhia de Seguros, SA (B ES VIDA)	1 993 1 993	2006 2006	Portugal PortugalPortugal	Insurance InsuranceInsurance	1 00.00% 1 00.00%1 00.00%	Full consolidation
Caravela Defensive Fund	2006	201 2	Luxembourg	Investment fund	99.73%	Full consolidation
Caravela Balanced Fund	2006	201 2	Luxembourg	Investment fund	54.95%	Full consolidation
E S Plano Dinâmico	2008	201 2	Portugal	Investment fund	97.57%	Full consolidation
E S Arrendamento	2009	201 2	Portugal	Investment fund	1 00.00%	Full consolidation
Orey R eabilitação Urbana	2006	201 2	Portugal	Investment fund	77.32%	Full consolidation
Fimes Oriente	2004	201 2	Portugal	Investment fund	1 00.00%	Full consolidation
ES Concessões, SGPS, SA (E S CONCE SSÕE S)	2002 2002	2003 2003	Portugal Portugal	Holding company Holding companycompany	71 .66% .66% .66%	Full consolidation consolidation
E S Concessions International Holding, BV	201 0	201 0	Netherlands	Holding company	71 .66%	Full consolidation
Empark - Aparcamientos y Servicios, SA	1 968	2009	Spain	Management of parking lots	b) 1 5.92%	E quity method
E sconcessions Spain Holding BV	201 3	201 3	Netherlands	Holding company	71 .66%	Full consolidation
Ascendi Group SGPS, SA	201 0	201 0	Portugal	Holding company	28.66%	E quity method
Auvisa - Autovia de los Viñedos, SA	2003	201 0	Spain	Motorway concession	35.83%	E quity method

Additionally, in accordance with SIC 12, the Group consolidates the following special purpose entities:

	E stablished stablished	Acquired Acquired	Headquarter ed	% economic interest	Consolidation method

Lusitano SME No.1 plc (*)	2006	2006	Ireland	1 00%	Full Consolidation
Lusitano Mortgages No.6 plc (*)	2007	2007	Ireland	1 00%	Full Consolidation
Lusitano Project Finance No.1 , FTC (*)	2007	201 1	Portugal	1 00%	Full Consolidation
Lusitano Mortgages No.7 plc (*)	2008	2008	Ireland	1 00%	Full Consolidation
Lusitano Leverage Finance No. 1 BV (*)	201 0	201 0	Netherlands	80,81 %	Full Consolidation
Lusitano Finance No. 3 (*)	201 1	201 1	Portugal	1 00%	Full Consolidation
IM BE S E mpresas 1 (*)	201 1	201 1	Spain	1 00%	Full Consolidation
CLN Magnolia Finance 2038	2008	2008	Ireland	1 00%	Full Consolidation

(*) E ntities set-up in the scope of securitisation transactions (See Note 43).

The consolidation of these entities had the following impact on the Group's accounts:

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Deposits with banks	1 73 426	1 95 586
Due to costumers (net of impairment)	3 253 477	3 803 343
Debt securities	61 5 201	703 797

The main changes in the Group structure that occurred in 2012 are highlighted as follows:

Subsidiaries
In March 2013 was set-up the company Righthour, entirely held by BES PME Capital Growth fund and in April 2013 this company acquired 100% of the share capital of Imbassaí Participações, S.A., which from this date was included in the consolidation perimeter;
In April 2013, ESSI SGPS, S.A. acquired 31.6% of Espírito Santo Investment Holding Limited for an amount of pounds 17 125 thousand, holding since this date 100% of the company´s share capital;
In May 2013, ESSI SGPS, S.A. subscribed integrally the capital increase of Espírito Santo Investment Holding Limited in the amount of pounds 10 000 thousand;
In July 2013, took place the merger of R Invest Ltda and R Consult Participações Ltda into Espírito Santo Serviços Financeiros DTVM;
In August 2013, took place the merger of ESSI Comunicações, S.A. into Banco Espírito Santo de Investimento, S.A..
Associates (see Note 32)
In June 2013, following the sale of the business associated with BES À La Card meal banking card, the Bank acquired a 50% interest in Edenred Portugal, S.A., this company being currently included in the consolidated financial statements under the equity method. The acquisition cost, amounting to euro 928 thousand, was determined based on the fair value of the business transferred net of the elimination of the unrealised profit in the extend of BES interest in Edenred;
As at 30 June 2013, BES África acquired 23.9% of Moza Banco share capital by an amount of euro 24 856 thousand, becoming to hold 49% of this associate. The acquisition generated an additional goodwill of euro 16 872 thousand. Following this transaction total goodwill amounts to euro 21 065 thousand and is accounted under associates;
In June 2013, ES Concessões sold to Ascendi Group the participation it held in Concessionaria Autopista Perote-Xalapa;
In December 2013, Banco Espírito Santo and Espírito Santo Capital, Sociedade de Capital de Risco sold its shareholdings in Apolo Films, S.L., BRB International and Prosport – Comercializaciones Desportivas, S.A..

The main changes in the Group structure that occurred during 2012 are highlighted as follows:

Subsidiaries (see Note 54)
In May 2012, BES acquired an additional 50% of the capital of BES Vida, becoming to hold the total share capital of the company and started to consolidate this entity under the full consolidation method;
In November 2012, BES acquired participation units in the real estate funds, Fungepi, Fungere and Imoinvestimento, and started to consolidate those entities under the full consolidation method.
Associates (see Note 32)

• In April 2012, ES Capital acquired 42.99% of 2BCapital Luxembourg S.C.A SICAR for the amount of euro 854 thousand. In May 2012, following the capital increase of the company, ES Capital invested an additional euro 15 619 thousand;

In June 2012, ES Concessões transferred its shareholding in SCUTVIAS Autoestradas da Beira Interior, SA and Portvias – Portagem de Vias, SA to Ascendi Group, SGPS, SA, this operation generated a loss in the amount of euro 2 170 thousand;
In December 2012, BESI sold the participation it held in Polish Hotel Company, Sp, generating a gain in the amount of euro 2 509 thousand.

During the years 2013 and 2012, the movements on acquisitions, disposals and other investments in subsidiaries and associated companies are as follows:

				31 .1 2.201 3			(in thousands of euro)
		Acquisitions			Disposals
		Acquisition cost Other investments (a)	Total Total	Disposal value value	Other reimbursements (a)	Total	Gains/(losses) from sales/disposals
Subsidiaries
BE S África	-	35 000	35 000	-	-	-	-
BE S Açores	-	654	654	-	-	-	-
ES Tech Ventures	-	6 500	6 500	-	-	-	-
Rigthour	50	-	50	-	-	-	-
Fundo BES Absolute Return	-	-	-	-	( 3)	( 3)	-
Fundo FIM BES Moderado	-	-	-	-	( 27)	( 27)	-
Espírito Santo Securities India	-	1 753	1 753	-	-	-	-
Espírito Santo Investment Holding, Limited	20 281	1 1 71 4	31 995	-	-	-	-
Lusitania Capital, S.A.P.I. de C.V., SOFOM, E.N.R.	-	59	59	-	-	-	-
Espírito Santo Serviços Financeiros DTVM, SA	207	1 842	2 049	-	-	-	-
BE S Activos Financeiros, Ltda	-	61 4	61 4	-	-	-	-
R Consult Participações, Ltda	-	-	-	-	( 1 43)	( 1 43)	-
R Invest, Ltda	-	-	-	-	( 23)	( 23)	-
ESSI Comunicações SGPS, SA	-	-	-	-	( 50)	( 50)	-
FI Multimercado Treasury	58	-	58	-	-	-	-
	20 596	58 1 36	78 732	-	( 246)	( 246)	-
Associates
Moza Banco	-	24 91 6	24 91 6	-	-	-	-
Autopista Perote Xalapa	-	-	-	( 60 201 )	-	( 60 201 )	-
Domática	-	350	350	-	-	-	-
BRB Internacional	-	-	-	( 1 0 659)	-	( 1 0 659)	-
Apolo Films	-	-	-	( 791 )	-	( 791 )	-
Prosport	-	-	-	( 274)	-	( 274)	-
Espírito Santo Iberia I	958	-	958	-	( 73)	( 73)	-
Edenred	8 1 1 3	-	8 1 1 3	( 3 1 29)	-	( 3 1 29)	-
Ascendi Douro Interior	-	-	-	-	( 1 0)	( 1 0)	-
Tranquilidade Angola	-	2 901	2 901	-	-	-	-
Multipessoal	-	1 00	1 00	-	-	-	-
	9 071	28 267	37 338	( 75 054)	( 83)	( 75 1 37)	-
	29 667	86 403	1 1 6 070 6	( 75 054) ( 054)	( 329) 329)( 329)	( 75 383) 383)	-

(a) Increases / decreases in capital, additional services and supplies

							(thousands of euro)
				31 .1 2.201 2
		Acquisitions			Disposals
	Acquisition cost Other investments	(a)	Total Total	Disposal value Disposal value	Other reimbursements (a)	Total	Gains/(losses) from sales/disposals
Subsidiaries
BES Vida (b)	225 000	-	225 000	-	-	-	( 89 586)
	225 000	-	225 000	-	-	-	( 89 586)
Associates
Moza Banco	-	2 991	2 991	-	-	-	-
Empark	-	-	-	-	( 2 584)	( 2 584)	-
Portvias	-	-	-	( 1 067)	-	( 1 067)	91 3
Scutvias	-	-	-	( 49 783)	-	( 49 783)	( 3 083)
Ascendi Group	-	1 1 462	1 1 462	-	-	-	-
Coreworks	-	-	-	-	( 286)	( 286)	-
Sousacamp	-	-	-	-	( 3 700)	( 3 700)	-
Fin Solutia	-	-	-	( 1 21 9)	-	( 1 21 9)	( 6)
2B Capital Luxembourg	854	1 5 61 9	1 6 473	-	-	-	-
Nova Figfort	-	-	-	( 71 9)	-	( 71 9)	-
Sopratutto Cafés	-	-	-	( 1 334)	-	( 1 334)	50
Ydreams	-	204	204	-	( 71 1 )	( 71 1 )	-
MCO2	1 1 3	1 1 75	1 288	-	-	-	-
MRN - Manutenção de Rodovias Nacionais, SA (c)	-	-	-	-	( 1 1 )	( 1 1 )	-
Polish Hotel Company	-	-	-	2 509	-	2 509	2 509
	967	31 451	32 41 8	( 51 61 3)	( 7 292)	( 58 905)	383
	225 967 225	31 451 31	257 41 8	( 51 61 3) 3)3)	( 7 292) 7 292)292)	( 58 905) ( 905)	( 89 203) ( 203)

(a) Increases / decreases in capital, additional services and supplies (b) E ntity that became part of the Group's consolidation scope.

(c) E ntity that is no longer part of the Group's consolidation scope, due to the loss of significant influence, becoming to be recorded in the available-for-sale portfolio.

NOTE 2 – –SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES SUMMARY OF SIGNIFICANT PRINCIPLES

2.1. Basis of preparation 2.1. Basis preparation

In accordance with Regulation (EC) no. 1606/2002 of 19 July 2002 from the European Council and Parliament, Banco Espírito Santo, S.A. ("BES" or "the Bank") is required to prepare its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").

IFRS comprise accounting standards issued by the International Accounting Standards Board ("IASB") and its predecessor body as well as interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") and its predecessor body.

These consolidated financial statements as at and for the year ended 31 December 2013 were prepared in accordance with the IFRS effective and adopted by the EU until 31 December 2013.

The accounting policies applied by the Group in the preparation of its consolidated financial statements as at 31 December 2013 are consistent with the ones used in the preparation of the consolidated financial statements as at and for the year ended 31 December 2012.

However, as referred to in Note 55, the Group adopted in the preparation of its consolidated financial statements as at 31 December 2013, the accounting standards issued by IASB and IFRIC interpretations, effective since 1 January 2013. The accounting policies used by the Group in the preparation of these Consolidated Financial Statements, described in this Note, were modified accordingly. The adoption of these new standards and interpretations had no material effect in the Group's Consolidated Financial Statements.

The accounting standards and interpretations recently issued but not yet effective and that the Group has not yet adopted in the preparation of its financial statements can also be analysed in Note 55.

In May 2012, BES acquired the remaining 50% interest in BES Vida and the control over its activities. Therefore, from that date, BES Vida, which previously qualified as an associate and was included in the consolidated financial statements up to 2011 under the equity method, is being fully consolidated by the Group. Further details are provided in Note 54.

These consolidated financial statements are expressed in thousands of euro, rounded to the nearest thousand, and have been prepared under the historical cost convention, except for the assets and liabilities accounted at fair value, namely, derivative contracts, financial assets and financial liabilities at fair value through profit or loss, available-forsale financial assets, recognised assets and liabilities that are hedged, in a fair value hedge, in respect of the risk that is being hedged.

The preparation of financial statements in conformity with IFRS requires the application of judgement and the use of estimates and assumptions by management that affects the process of applying the Group's accounting policies and the reported amounts of income, expenses, assets and liabilities. Actual results in the future may differ from those reported. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

These consolidated financial statements were approved in the Board of Directors meeting held on 17 March 2014.

2.2. Basis of consolidation 2.2. Basis consolidation consolidation

These consolidated financial statements comprise the assets, liabilities, gains and losses of BES and its subsidiaries ("the Group" or "BES Group"), and the results attributable to the Group from its associates.

These accounting policies have been consistently applied by the Group companies, during all the periods covered by the consolidated financial statements.

Subsidiaries Subsidiaries

Subsidiaries are entities over which the Group exercises control. Control is presumed to exist when the Group owns more than one half of the voting rights. Additionally, control also exists when the Group has the power to, directly or indirectly, govern the financial and operating policies of the entity, so as to obtain benefits from its activities, even if its shareholding is equal or less than 50%. Subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that control ceases.

Accumulated losses of a subsidiary are attributed proportionally to the owners of the parent and to the noncontrolling interest even if this results in non-controlling interest having a deficit balance.

In a business combination achieved in stages (step acquisition) where control is obtained, the Group remeasures its previously held non-controlling interest in the acquiree at its acquisition date fair value and recognises the resulting gain or loss in the income statement when determining the respective goodwill. At the time of a partial sale, from which arises a loss of control of a subsidiary, any remaining non-controlling interest retained is remeasured to fair value at the date the control is lost and the resulting gain or loss is recognised against the income statement.

Associates

Associates are entities over which the Group has significant influence over the company's financial and operating policies but not its control. Generally when the Group owns more than 20% of the voting rights it is presumed that it has significant influence. However, even if the Group owns less than 20% of the voting rights, it can have significant influence through the participation in the policy-making processes of the associated entity or the representation in its executive board of directors.

Investments in associates are accounted for by the equity method of accounting from the date on which significant influence is transferred to the Group until the date that significant influence ceases. The book value of the investments in associates includes the value of the respective goodwill determined on acquisition and is presented net of impairment losses.

In a step acquisition that results in the Group obtaining significant influence over an entity, any previously held stake in that entity is remeasured to fair value through the income statement when the equity method is first applied.

If the Group's share of losses of an associate equals or exceeds its interest in the associate, including any medium and long-term interest, the Group discontinues the application of the equity method, except when it has a legal or constructive obligation of covering those losses or has made payments on behalf of the associate.

Gains or losses on sales of shares in associate companies are recognised in the income statement even if that sale does not result in the loss of significant influence.

Special purpose entities ("SPE") purpose entities ("SPE")

The Group consolidates certain special purpose entities ("SPE"), specifically created to accomplish a narrow and well defined objective, when the substance of the relationship with those entities indicates that they are controlled by the Group, independently of the percentage of the equity held.

The evaluation of the existence of control is made based on the criteria established by SIC 12 – Consolidation – Special Purpose Entities, which can be summarised as follows:

In substance, the activities of the SPE are being conducted in accordance with the specific needs of the Group's business, so that the Group obtains the benefits from these activities;
In substance the Group has the decision-making powers to obtain the majority of the benefits from the activities of the SPE;
In substance, the Group has rights to obtain the majority of the benefits of the SPE, and therefore may be exposed to the inherent risks of its activities;
In substance, the Group retains the majority of residual or ownership risks related to the SPE so as to obtain the benefits from its activities.

Investment funds managed by the Group

As part of the asset management activity, the Group manages investment funds on behalf of the holders of the participation units. The financial statements of these funds are not consolidated by the Group except in the cases where control is exercised over its activity based on the criteria established by SIC – 12. It is assumed that there is control when the Group owns more than 50% of the participation units.

Goodwill

Goodwill resulting from business combinations that occurred until 1 January 2004 was offset against reserves, according to the option granted by IFRS 1, adopted by the Group on the date of transition to the IFRS.

Goodwill resulting from business combinations that occurred from 1 January 2004 until 31 December 2009 was accounted under the purchase method. The cost of acquisition was measured as the fair value, determined at the acquisition date, of the assets and equity instruments given and liabilities incurred or assumed plus any costs directly attributable to the acquisition. Goodwill represents the difference between the cost of acquisition and the fair value of the Group's share of identifiable net assets, liabilities and contingent liabilities acquired.

For acquisitions on or after 1 January 2010, in accordance with IFRS 3 – Business Combinations, the Group measures goodwill as the fair value of the consideration transferred including the fair value of any previously held noncontrolling interests in the acquire, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Transaction costs are expensed as incurred.

At the acquisition date, the non-controlling interests are measured at their proportionate interest in the fair value of the net identifiable assets acquired and of the liabilities assumed, without the respective portion of goodwill. As a result, the goodwill recognised in these consolidated financial statements corresponds only to the portion attributable to the equity holders of the Bank.

In accordance with IFRS 3 – Business Combinations, goodwill is recognised as an asset at its cost and is not amortised. Goodwill relating to the acquisition of associates is included in the book value of the investment in those associates determined using the equity method. Negative goodwill is recognised directly in the income statement in the period the business combination occurs.

The recoverable amount of the goodwill recognised as an asset is reviewed annually, regardless of whether there is any indication of impairment. Impairment losses are recognised directly in the income statement.

The recoverable amount corresponds to the higher of the fair value less costs to sell and the respective value in use. In determining value in use, estimated futures cash flows are discounted using a rate that reflects market conditions, time value of money and business risks.

Transactions with non- Transactions with non-controlling interest controlling interestcontrolling interest

Acquisitions of non-controlling interest, that did not result in a change in control, are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such a transaction. Any difference between the consideration paid and the amount of non-controlling interest acquired is accounted for as a movement in equity.

Similarly, sales of non-controlling interest and dilutions from which does not result a loss of control, are accounted for as transactions with equity holders in their capacity as equity holders and therefore no gain or loss is recognised in the income statement. Any difference between the sale proceeds and the recognised amount of non-controlling interest in the consolidated financial statements is accounted for as a movement in equity.

Gains or losses on a dilution or on a sale of a portion of an interest in a subsidiary, from which results a loss of control, are accounted for by the Group in the income statement.

Foreign currency translation

The financial statements of each of the Group entities are prepared using their functional currency which is defined as the currency of the primary economic environment in which that entity operates. The consolidated financial statements are prepared in euro, which is BES's functional and presentation currency.

The financial statements of each of the Group entities that have a functional currency different from the euro are translated into euro as follows:

Assets and liabilities are translated into the functional currency using the exchange rate prevailing at the balance sheet date;
Income and expenses are translated into the functional currency at rates approximating the rates ruling at the dates of the transactions;
The exchange differences resulting from the translation of the equity at the beginning of the year using the exchange rates at the beginning of the year and at the balance sheet date are accounted for against reserves net of deferred taxes. Similarly, regarding the subsidiaries and associates results, the exchange differences arising from the translation of income and expenses at the rates ruling at the dates of the transactions and at the balance sheet date are accounted for against reserves. When the entity is sold such exchange differences are recognised in the income statement as a part of the gain or loss on sale.

Balances and transactions eliminated in consolidati and transactions consolidation consolidation

Inter-company balances and transactions, including any unrealised gains and losses on transactions between Group companies, are eliminated in preparing the consolidated financial statements, unless unrealised losses provide evidence of an impairment loss that should be recognised in the consolidated financial statements.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment loss.

2.3 Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to euro at the foreign exchange rates ruling at the balance sheet date. Foreign exchange differences arising on translation are recognised in the income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at the foreign exchange rates ruling at the dates the fair value was determined. The resulting exchange differences are accounted for in the income statement, except if related to equity instruments classified as available-for-sale, which are accounted for in equity, within the fair value reserve.

2.4 Derivative financial instruments and hedge accounting

Classification

Derivatives for risk management purposes include (i) hedging derivatives and (ii) derivatives used to manage the risk of certain financial assets and financial liabilities designated at fair value through profit or loss that were not classified as being hedging derivatives.

All other derivatives are classified as trading derivatives.

Recognition and measurement measurement

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into (trade date). Subsequent to initial recognition, the fair value of derivative financial instruments is re-measured on a regular basis and the resulting gains or losses on re-measurement are recognised directly in the income statement, except for derivatives designated as hedging instruments. The recognition of the resulting gains or losses of the derivatives designated as hedging instruments depends on the nature of the risk being hedged and of the hedge model used.

Fair values are obtained from quoted market prices, in active markets, if available or are determined using valuation techniques, including discounted cash flow models and options pricing models, as appropriate.

Derivatives traded in organised markets, namely futures and some options, are recognised as trading derivatives, being marked to market on a daily basis and the resulting gains or losses are recognised directly in the income statement. Once the fair value changes on these derivatives are settled daily through the margin accounts held by the

Group, these derivatives do not present any fair value on the balance sheet. The margin accounts are included under the caption Other assets (see Note 34) and comprise the minimum collateral mandatory for open positions.

Hedge accounting

• Classification criteria

Hedge accounting is used for derivative financial instruments designated as hedging instruments, provided the following criteria are met:

(i) At the inception of the hedge, the hedge relationship is identified and documented, including the identification of the hedged item and of the hedging instrument and the evaluation of the effectiveness of the hedge;
(ii) The hedge is expected to be highly effective, both at the inception of the hedge and on an ongoing basis;
(iii) The effectiveness of the hedge can be reliably measured, both at the inception of the hedge and on an ongoing basis;
(iv) For cash flows hedges, the cash flows are highly probable of occurring.
Fair value hedge

In a fair value hedge, the book value of the hedged asset or liability, determined in accordance with the respective accounting policy, is adjusted to reflect the changes in its fair value that are attributable to the risks being hedged. Changes in the fair value of the derivatives that are designated as hedging instruments are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the risk being hedged.

If the hedge no longer meets the criteria for hedge accounting, the derivative financial instrument is transferred to the trading portfolio and the hedge accounting is discontinued prospectively. The cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income statement over the period to maturity.

• Cash flow hedge

When a derivative financial instrument is designated as a hedge of the variability in highly probable future cash flows, the effective portion of changes in the fair value of the hedging derivatives is recognised in equity. Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged item will affect the income statement. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss recognised in equity at that time is recognised in the income statement when the hedged transaction also affects the income statement. When a hedged transaction is no longer expected to occur, the cumulative gain or loss reported in equity is recognised immediately in the income statement and the hedging instrument is reclassified for the trading portfolio.

Embedded derivatives

Derivatives that are embedded in other financial instruments are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not carried at fair value through profit or loss.

These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement.

2.5. Loans and advances to customers 2.5.

Loans and advances to customers include loans and advances originated by the Group, which are not intended to be sold in the short term. Loans and advances to customers are recognised when cash is advanced to borrowers.

Loans and advances to customers are derecognised from the balance sheet when (i) the contractual rights to receive their cash flows have expired, (ii) the Group has transferred substantially all risks and rewards of ownership or (iii) although retaining some but not substantially all of the risks and rewards of ownership, the Group has transferred the control over the assets.

Loans and advances to customers are initially recorded at fair value plus transaction costs and are subsequently measured at amortised cost, using the effective interest rate method, less impairment losses.

In accordance with the documented strategy for risk management, the Group contracts derivative financial instruments to manage certain risks of a portion of the loan portfolio, without applying, however, the provisions of hedge accounting as mentioned in Note 2.4. These loans are measured at fair value through profit or loss, in order to eliminate a measurement inconsistency resulting from measuring loans and derivatives for risk management purposes on different basis (accounting mismatch). This procedure is in accordance with the accounting policy for classification, recognition and measurement of financial assets at fair value through profit or loss, as described in Note 2.6.

Impairment

The Group assesses, at each balance sheet date, whether there is objective evidence of impairment within its loan portfolio. Impairment losses identified are recognised in the income statement and are subsequently reversed through the income statement if, in a subsequent period, the amount of the impairment losses decreases.

A loan or a loan portfolio, defined as a group of loans with similar credit risk characteristics, is impaired when: (i) there is objective evidence of impairment as a result of one or more events that occurred after its initial recognition and (ii) that event (or events) has an impact on the estimated future cash flows of the loan or of the loan portfolio, that can be reliably estimated.

The Group first assesses whether objective evidence of impairment exists individually for each loan. In this assessment the Group uses the information that feeds the credit risk models implemented and takes into consideration the following factors:

the aggregate exposure to the customer and the existence of non-performing loans;
the viability of the customer's business model and its capability to trade successfully and to generate sufficient cash flow to service their debt obligations;
the extent of other creditors' commitments ranking ahead of the Group;
the existence, nature and estimated realisable value of collaterals;
the exposure of the customer within the financial sector;
the amount and timing of expected recoveries.

When loans have been individually assessed and no evidence of loss has been identified, these loans are grouped together on the basis of similar credit risk characteristics for the purpose of evaluating the impairment on a portfolio basis (collective assessment). Loans that are assessed individually and found to be impaired are not included in a collective assessment for impairment.

If an impairment loss is identified on an individual basis, the amount of the impairment loss to be recognised is calculated as the difference between the book value of the loan and the present value of the expected future cash flows (considering the recovery period), discounted at the original effective interest rate. The carrying amount of impaired loans is reduced through the use of an allowance account. If a loan has a variable interest rate, the discount rate for measuring the impairment loss is the current effective interest rate determined under the contract rules.

The changes in the recognised impairment losses attributable to the unwinding of discount are recognised as interest and similar income.

The calculation of the present value of the estimated future cash flows of a collateralised loan reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral.

For the purposes of a collective evaluation of impairment, loans are grouped on the basis of similar credit risk characteristics, taking in consideration the Group's credit risk management process. Future cash flows in a group of loans that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the loans in the Group and historical loss experience. The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group with the purpose of reducing any differences between loss estimates and actual loss experience.

When a loan is considered by the Group as uncollectible and an impairment loss of 100% was recognised, it is written off against the related allowance for loan impairment.

2.6. Other financial asse assets

Classification Classification

The Group classifies its other financial assets at initial recognition in the following categories:

• Financial assets at fair value through profit or loss

This category includes: (i) financial assets held for trading, which are those acquired principally for the purpose of selling in the short term or that are owned as part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking and (ii) financial assets that are designated at fair value through profit or loss at inception.

The Group classifies, at inception, certain financial assets at fair value through profit or loss when:

Such financial assets are managed, measured and their performance evaluated on a fair value basis;
Such financial assets are being hedged (on an economical basis), in order to eliminate an accounting mismatch; or
Such financial assets contain an embedded derivative.

The structured products acquired by the Group corresponding to financial instruments containing one or more embedded derivatives meet the above mentioned conditions, and, in accordance, are classified under the fair value through profit or loss category.

• Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold until its maturity and that are not classified, at inception, as at fair value through profit or loss or as available-for-sale.

• Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets (i) intended to be held for an indefinite period of time, (ii) designated as available-for-sale at initial recognition or (iii) that are not classified in the other categories referred to above.

Initial recognition, initial measurement and dereco Initial recognition, initial measurement and derecognition l derecognition gnition

Purchases and sales of: (i) financial assets at fair value through profit or loss, (ii) held-to-maturity investments and (iii) available-for-sale financial assets are recognised on trade date – the date on which the Group commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, in which case these transaction costs are directly recognised in the income statement.

Financial assets are derecognised when (i) the contractual rights to receive their cash flows have expired, (ii) the Group has transferred substantially all risks and rewards of ownership or (iii) although retaining some but not substantially all of the risks and rewards of ownership, the Group has transferred the control over the assets.

Subsequent measurement

Financial assets at fair value through profit or loss are subsequently carried at fair value and gains and losses arising from changes in their fair value are included in the income statement in the period in which they arise.

Available-for-sale financial assets are also subsequently carried at fair value. However, gains and losses arising from changes in their fair value are recognised directly in equity, until the financial assets are derecognised or impaired, at which time the cumulative gain or loss previously recognised in equity is recognised in the income statement. Foreign exchange differences arising from equity investments classified as available-for-sale are also recognised in equity, while foreign exchange differences arising from debt investments are recognised in the income statement. Interest, calculated using the effective interest rate method and dividends are recognised in the income statement.

Held-to-maturity investments are carried at amortised cost using the effective interest rate method, net of any impairment losses recognised.

The fair values of quoted investments in active markets are based on current bid prices. For unlisted securities the Group establishes fair value by using (i) valuation techniques, including the use of recent arm's length transactions, discounted cash flow analysis and option pricing models and (ii) valuation assumptions based on market information.

Reclassifications between categories Reclassifications between categories ssifications between categories

The Group only reclassifies non-derivative financial assets with fixed or determinable payments and fixed maturities, from the available-for-sale financial assets category to the held-to-maturity investments category, if it has the intention and ability to hold those financial assets until maturity.

Reclassifications between these categories are made at the fair value of the assets reclassified on the date of the reclassification. The difference between this fair value and the respective nominal value is recognised in the income statement until maturity, based on the effective interest rate method. The fair value reserve at the date of the reclassification is also recognised in the income statement, based on the effective interest rate method.

Impairment Impairment

The Group assesses periodically whether there is objective evidence that a financial asset or group of financial assets is impaired.

A financial asset or a group of financial assets is impaired if there is objective evidence of impairment as a result of one or more events that occurred after their initial recognition, such as: (i) for equity securities, a significant or prolonged decline in the fair value of the security below its cost, and (ii) for debt securities, when that event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For held-to-maturity investments, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (considering the recovery period) discounted at the financial asset's original effective interest rate and are recognised in the income statement. The carrying amount of the impaired assets is reduced through the use of an allowance account. If a held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.For held-to-maturity investments if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through the income statement.

If there is objective evidence that an impairment loss on available-for-sale financial assets has been incurred, the cumulative loss recognised in equity – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement – is taken to the income statement. If, in a subsequent period, the amount of the impairment loss decreases, the previously recognised impairment loss is reversed through the income statement up to the acquisition cost if the increase is objectively related to an event occurring after the impairment loss was recognised, except in relation to equity instruments, in which case the reversal is recognised in equity.

2.7. Sale and repurchase agreements 2.7. Sale agreements agreements

Securities sold subject to repurchase agreements (repos) at a fixed price or at the sales price plus a lender's return are not derecognised. The corresponding liability is included in amounts due to banks or to customers, as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest rate method.

Securities purchased under agreements to resell (reverse repos) at a fixed price or at the purchase price plus a lender's return are not recognised, being the purchase price paid recorded as loans and advances to banks or customers, as appropriate. The difference between purchase and resale price is treated as interest and accrued over the life of the agreements using the effective interest rate method.

Securities lent under lending agreements are not derecognised being classified and measured in accordance with the accounting policy described in Note 2.6. Securities borrowed under borrowing agreements are not recognised in the balance sheet.

2.8. Financial l 2.8. Financial liabilities iabilities iabilities

An instrument is classified as a financial liability when it contains a contractual obligation to transfer cash or another financial asset, independently from its legal form.

Non-derivatives financial liabilities include deposits from banks and due to customers, loans, debt securities, subordinated debt and short sales. Preference shares issued are considered to be financial liabilities when the Group assumes the obligation of reimbursement and/or to pay dividends.

The financial liabilities are recognised (i) initially at fair value less transaction costs and (ii) subsequently at amortised cost, using the effective interest rate method, except for short sales and financial liabilities designated at fair value through profit or loss, which are measured at fair value.

The Group designates, at inception, certain financial liabilities as at fair value through profit or loss when:

Such financial liabilities are being hedged (on an economical basis), in order to eliminate an accounting mismatch; or
Such financial liabilities contain embedded derivatives.

The structured products issued by the Group meet the above mentioned conditions and, in accordance, are classified under the fair value through profit or loss category.

The fair value of quoted financial liabilities is based on the current price. In the absence of a quoted price, the Group establishes the fair value by using valuation techniques based on market information, including the own credit risk of the issuer.

If the Group repurchases debt issued, it is derecognised from the balance sheet and the difference between the carrying amount of the liability and its acquisition cost is recognised in the income statement.

2.9. Financial guarantees 2.9. guarantees

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument, namely the payment of principal and/or interests.

Financial guarantees are initially recognised in the financial statements at fair value on the date that the guarantee is issued. Subsequently financial guarantees are measured at the higher of (i) the fair value recognised on initial recognition or (ii) any financial obligation arising as a result of the guarantees at the balance sheet date. Any increase in the liability relating to guarantees is taken to the income statement.

The financial guarantee contracts issued by the Group normally have a stated maturity date and a periodic fee, usually paid in advance on a quarterly basis. This fee varies depending on the counterparty risk, the amount and the time period of the contract. Therefore, the fair value of the financial guarantee contracts issued by the Group, at the inception date, equal the initial fee received, which is recognised in the income statement over the period to which it relates. The subsequent periodic fees are recognised in the income statement in period to which they relate.

2.10. Equity instr Equity instr instruments

An instrument is classified as an equity instrument when it does not contain a contractual obligation to deliver cash or another financial asset, independently from its legal form, being a contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Transaction costs directly attributable to the issue of equity instruments are recognised under equity as a deduction from the proceeds. Amounts paid or received related to acquisitions or sales of equity instruments are recognised in equity, net of transaction costs.

Distributions to holders of an equity instrument are debited directly to equity as dividends, when declared.

Preference shares issued are considered as equity instruments if the Group has no contractual obligation to redeem and if dividends, non cumulative, are paid only if and when declared by the Group.

2.11. Offsetting financial instruments 2.11. Offsetting financial instruments Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.12. Non 2.12. Non-current assets held for sale current assets held for sale current assets

Non-current assets or disposal groups (groups of assets to be disposed of together and related liabilities that include at least a non-current asset) are classified as held for sale when their carrying amounts will be recovered principally through sale (including those acquired exclusively with a view to its subsequent disposal), the assets or disposal groups are available for immediate sale and is highly probable.

Immediately before classification as held for sale, the measurement of the non-current assets or all assets and liabilities in a disposal group, is brought up to date in accordance with the applicable IFRS. Subsequently, these assets or disposal group are measured at the lower of their carrying amount or fair value less costs to sell.

In the scope of its activity, the Group incurs in the risk from failure of the borrower to repay all the amounts due. In case of loans and advances with mortgage collateral, the Group acquires the asset held as collateral in exchange for loans. In accordance with the requirements of Regime Geral das Instituições de Crédito e Sociedades Financeiras (RGICSF), banks are prevented, unless authorised by the Bank of Portugal, from acquiring property that is not essential to their daily operations (no. 1 of article 112 of RGICSF) being able to acquire, however, property in exchange for loans granted by the Group. This property must be sold within 2 years, period that may be extended by written authorization from the Bank of Portugal and in conditions to be determined by this authority (no. 114 of art of RGICSF).

It is Group's objective to immediately dispose all property acquired in exchange for loans. This property is classified as non-current assets held-for-sale and is initially recognised at the lower of its fair value less costs to sell and the carrying amount of the loans. Subsequently, this property is measured at the lower of its carrying amount and the corresponding fair value less costs to sell and is not depreciated. Any subsequent write-down of the acquired property to fair value is recorded in the income statement.

Property valuations are performed in accordance with one of the following methodologies, which are applied in accordance with the specific situation of the asset:

a) Market Method

The Market Comparison Criteria takes as reference transaction values of similar and comparable property to the property under valuation, obtained through market searching carried out in the zone.

b) Income Method

Under this method, the property is valued based on the capitalization of its net income, discounted for the present moment, through the discounted cash-flows method.

c) Cost Method

This method separates the value of property on its basic components: Urbane Ground Value and Urbanity Value; Construction value; and Indirect Costs Value.

The valuations are performed by independent specialized entities. The valuation reports are analysed internally with the gauging of processes adequacy, by comparing the sales values with the revaluated values.

Assets/liabilities from subsidiaries acquired for resale purposes reflect, essentially, assets and liabilities from subsidiaries acquired by the Group in exchange for loans, for which the Group's objective is its subsequent disposal within one year. Since these acquisitions arise from the exchange for loans, these acquisitions are recognised at its fair value, and any difference between its fair value and the extinguished loan following the acquisition, is recognised as an impairment for loan losses. In the recognition date of an entity which meets the subsidiary criteria and for which the Group's objective is the resale, this is consolidated in accordance with the applicable procedures adopted by the Group and its assets and liabilities are measured at fair value determined at the acquisition date. However, in these particular cases, assets are classified as non-current assets held for sale and liabilities are classified as non-current liabilities held for sale. Therefore, and at the first consolidation date, the net value of assets and liabilities from the subsidiary reflect its fair value determined on the acquisition date (which arises from the exchange for loan).

These subsidiaries are consolidated until its effective sale. At each balance sheet date, the net carrying amount of its assets and liabilities is compared with its fair value, less cost to sell and an impairment loss is recognised when necessary.

For the purpose of the fair value calculation for subsidiaries held for sale, the Bank adopts the following methodologies:

for subsidiaries whose assets correspond mainly to real estate properties, its fair value is determined with reference to the value of these assets, in accordance with the valuations performed by independent specialized entities;
for the remaining entities, the fair value is determined according to the discounted cash flow methodology, using assumptions consistent with the business risk of each subsidiary.

2.13. Property and equipment 2.13. Property and equipment

Property and equipment are measured at cost less accumulated depreciation and impairment losses. The value includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group. All other repairs and maintenance are charged to the income statement during the year in which they are incurred.

Land is not depreciated. Depreciation of other assets is calculated using the straight-line method over their estimated useful lives, as follows:

	Number of years
Buildings	35 to 50
Improvements in leasehold property	10
Computer equipment	4 to 5
Furniture	4 to 10
Fixtures	5 to 10
Security equipment	4 to 10
Office equipment	4 to 10
Motor vehicles	4
Other equipment	5

When there is an indication that an asset may be impaired, IAS 36 requires that its recoverable amount is estimated and an impairment loss recognised when the net book value of the asset exceeds its recoverable amount. Impairment losses are recognised in the income statement.

The recoverable amount is determined as the greater of its net selling price and value in use which is based on the net present value of future cash flows arising from the continuing use and ultimate disposal of the asset.

2.14. Intangible assets Intangible assets

The costs incurred with the acquisition, production and development of software are capitalised, as well as the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight line basis during their expected useful lives, which is usually between three to six years.

Costs that are directly associated with the development of identifiable specific software applications, and that will probably generate economic benefits beyond one year, are recognised as intangible assets. These costs include employee costs from the Group companies specialised in IT directly associated with the development of the referred software.

All remaining costs associated with IT services are recognised as an expense as incurred.

2.15. Leases Leases

The Group classifies its lease agreements as finance leases or operating leases taking into consideration the substance of the transaction rather than its legal form, in accordance with IAS 17 – Leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases.

Operating leases

Payments made under operating leases are charged to the income statement in the period to which they relate.

Finance leases leases nce leases

• As lessee

Finance lease contracts are recorded at inception date, both under assets and liabilities, at the cost of the asset leased, which is equal to the present value of outstanding lease instalments. Instalments comprise (i) an interest charge, which is recognised in the income statement and (ii) the repayment of principal, which is deducted from liabilities. Financial charges are recognised as costs over the lease period, in order to produce a constant periodic rate of interest on the remaining balance of liability for each period.

• As lessor

Assets leased out are recorded in the balance sheet as loans granted, for the amount equal to the net investment made in the leased assets. Interest included in instalments charged to customers is recorded as interest income, while repayments of principal, also included in the instalments, are deducted from the amount of the loans granted. The recognition of the interest reflects a constant periodic rate of return on the lessor's net outstanding investment.

2.16. Employee benefits

Pensions Pensions

Arising from the signing of the "Acordo Colectivo de Trabalho" (ACT) and subsequent amendments resulting from the 3 tripartite agreements as described in Note 13, the Bank and other Group entities set up pension funds and other mechanisms to cover the liabilities with pensions on retirement and disability, widows' pension and health-care benefits.

The pension liabilities and health care benefits are covered by funds that are managed by ESAF – Espírito Santo Fundos de Pensões, S.A., a Group's subsidiary.

The pension plans of the Group are classified as defined benefit plans, since the criteria to determine the pension benefit to be received by employees on retirement are predefined and usually depend on factors such as age, years of service and level of salary.

The pension liability is calculated semi-annually by the Group, as at 31 December and 30 June for each plan individually, using the projected unit credit method, and reviewed annually by qualified independent actuaries. The discount rate used in this calculation was determined with reference to market rates associated with high-quality corporate bonds issues, denominated in the currency in which benefits will be paid and with a maturity similar to the expiry date of the plan obligations.

The Group determines the net interest expense (income) for the period on the net defined benefit liability (asset) by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) at the beginning of the annual period, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Consequently, the net interest expense (income) includes interest cost on the defined benefit obligation net of a theoretical return on the plan assets, both calculated using the discount rate applied in the determination of the defined benefit obligation.

Remeasurements gains and losses resulting from (i) actuarial gains and losses arising from the differences between actuarial assumptions used and real values obtained (experience adjustments) and from changes in the actuarial assumptions and (ii) gains and losses arising from the difference between theoretical return on plan assets and actual investment returns, are recognised in Other comprehensive income.

The Group recognises as a cost in the income statement a net total amount that comprises (i) the service cost, (ii) net interest expense (income), (iii) effect early retirement, (iv) past service costs, and (v)the effect of settlement or curtailment occurred during the period. The net interest expense (income) with the pension plan is recognised in interest and similar income or interest expense and similar charges, depending on its nature. Early retirement costs correspond to an increase on the liabilities due to the fact the employee retires before reaching 65 years of age.

The Group makes payments to the funds in order to maintain its solvency and to comply with the following minimum levels: (i) the liability with pensioners shall be totally funded at the end of each year, and (ii) the liability related to past services cost with employees in service shall be funded at a minimum level of 95%.

Semi-annually, the Group assesses for each plan separately, the recoverability of any recognised asset in relation to the defined benefit pension plans, based on the expectation of reductions in future contributions to the funds.

Health care benefits

The Group provides to its banking employees health care benefits through a specific Social-Medical Assistance Service. This Social-Medical Assistance Service (SAMS) is an autonomous entity which is managed by the respective Union.

SAMS provides to its beneficiaries services and/or contributions on medical assistance expenses, diagnostics, medicines, hospital confinement and surgical operations, in accordance with its financing availability and internal regulations.

The annual contribution of the Group to SAMS amounts to 6.5% of the total annual remuneration of employees, including, among others, the holiday and Christmas subsidy.

The measurement and recognition of the Group's liability with post-retirement healthcare benefits is similar to the measurement and recognition of the pension liability described above. These benefits are covered by the Pension Fund which at present covers all responsibilities with pensions and health care benefits.

Long term service benefits Long term benefits

In accordance with the ACT "Acordo Colectivo de Trabalho" for the banking sector, BES Group has assumed the commitment to pay to current employees that achieve 15, 25 and 30 years of service within the Group, long-term service premiums corresponding, respectively, to 1, 2 and 3 months of their effective monthly remuneration earned at the date the premiums are paid.

At the date of early retirement or disability, employees have the right to a premium proportional to what they would earn if they remained in service until the next payment date.

These long term service benefits are accounted for by the Group in accordance with IAS 19 as other long-term employee benefits.

The liability with long term service benefits is calculated semi-annually, at the balance sheet date, by the Group using the projected unit credit method. The actuarial assumptions used are based on the expectations about future salary increases and mortality tables. The discount rate used in this calculation is determined based on the same methodology described above for pensions.

In each period, the increase in the liability for long term service premiums, including actuarial gains and losses and past service costs is charged to the income statement.

Variable remuneration payment plan on financial instruments (PRVIF) truments (PRVIF)

Following the recommendations of the Supervising and Regulatory authorities, on the shareholders General Meeting, held in 6 April 2010 it was approved a new remuneration policy for the Executive Committee members. This policy consists in giving to the Executive Committee members a fixed remuneration, which should represent approximately 45% of the total remuneration, and a variable component representing around 55% of the total remuneration. The variable remuneration shall have two components: one associated with short-term performance and another with medium-term performance. Half of the short-term component must be paid in cash and the remaining 50% should be paid over a three years period, with half of these payments to be made in cash and the remaining through the attribution of shares. The medium-term component has associated a share options program with the exercise of the options set at 3 years from the date of its attribution.

The execution of the PRVIF in what concerns remunerations in cash, number of shares and options to be attributed to each Executive Committee member is performed through the deliberation of the Remunerations Committee.

In what concerns the model for the attribution of shares under PRVIF, these are delivered to the beneficiaries on an accrual basis, through a period of three years (1st year: 33%; 2nd year: 33%; 3rd year 34%) and is conditioned to the verification of a Return on Equity equal to 5% or higher.

In relation to the model for the attribution of options, these are also granted to the beneficiaries by the Remunerations Committee, being the exercise price equal to the mathematical average of the closing price of BES shares in NYSE Euronext Lisbon during the last 20 working days prior to the grant date, increased by 10%. The options can only be exercised at the maturity date, the beneficiary can choose between cash or physical settlement.

PRVIF establishes the possibility of attributing options over BES shares to its top management, e.g. general directors and Board of Directors advisors. These options are granted by the Board of Directors to the beneficiaries and work in the same way as the ones granted to the Executive Committee members.

Bonus to employee

In accordance with IAS 19 - Employee benefits, the bonus payment to employees and to the Board of Directors is recognised in the income statement in the year to which they relate.

2.17. Income tax 2.17. Income tax

Income tax for the period comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Income tax recognised directly in equity relating to fair value re-measurement of available-for-sale financial assets and cash flow hedges is subsequently recognised in the income statement when gains or losses giving rise to the income tax are also recognised in the income statement.

Current tax is the tax expected to be paid on the taxable profit for the year, calculated using tax rates enacted or substantively enacted at the balance sheet date at each jurisdiction.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax basis, and is calculated using the tax rates enacted or substantively enacted at the balance sheet date in any jurisdiction and that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax liabilities are recognised for all taxable temporary differences except for goodwill, not deductible for tax purposes, differences arising on initial recognition of assets and liabilities that affect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent it is probable that future taxable profits will be available against which deductible temporary differences can be deducted.

The Group offsets deferred taxes assets and liabilities for each subsidiary, whenever (i) the subsidiary has a legally enforceable right to set off current tax assets against current tax liabilities, and (ii) they relate to income taxes levied by the same taxation authority. This offset is therefore performed at each subsidiary level, being the deferred tax asset presented in the consolidated balance sheet the sum of the subsidiaries' amounts which present deferred tax assets and the deferred tax liability presented in the consolidated balance sheet the sum of the subsidiaries' amounts which present deferred tax liabilities.

2.18. Provisions 2.18. Provisions

Provisions are recognised when: (i) the Group has present legal or constructive obligation, (ii) it is probable that settlement will be required in the future and (iii) a reliable estimate of the obligation can be made.

When the effect of the passage of time (discount) is material, the provision corresponds to the net present value of the expected future payments, discounted at an appropriate rate considering the risk associated to the obligation.

Restructuring provisions are recognised when the Group has approved a detailed and formal restructuring plan and such restructuring either has commenced or has been announced publicly.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net costs of continuing with the contract.

2.19. Interest income and expense

Interest income and expense are recognised in the income statement under interest and similar income and interest expense and similar charges for all non-derivative financial instruments measured at amortised cost and for the available-for-sale financial assets, using the effective interest rate method. Interest income arising from nonderivative financial assets and liabilities at fair value through profit or loss is also included under interest and similar income or interest expense and similar charges, respectively.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. The effective interest rate is calculated at inception and it is not subsequently revised, except in what concerns financial assets and liabilities with a variable interest rate. In this case the effective interest rate is periodically revised, having in consideration the impact of the change in the reference interest rate in the estimated future cash-flows.

When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and commissions paid or received that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

In the case of financial assets or groups of similar financial assets for which an impairment loss was recognised, interest income is calculated using the interest rate used to measure the impairment loss.

For derivative financial instruments, except for derivatives for risk management purposes (see Note 2.4), the interest component of the changes in their fair value is not separated out and is classified under net gains/(losses) from financial assets and financial liabilities at fair value through profit or loss. The interest component of the changes in the fair value of derivatives for risk management purposes is recognised under interest and similar income or interest expense and similar charges.

2.20. Fee and commission income

Fees and commissions are recognised as follows:

Fees and commissions that are earned on the execution of a significant act, as loan syndication fees, are recognised as income when the significant act has been completed;
Fees and commissions earned over the period in which the services are provided are recognised as income in the period the services are provided;
Fees and commissions that are an integral part of the effective interest rate of a financial instrument are recognised as income using the effective interest rate method.

2.21. Dividend income 2.21. Dividend income

Dividend income is recognised when the right to receive payment is established.

2.22. Segmental reporting reporting

The Group adopts IFRS 8 – Segmental reporting, for the disclosure of the financial information by operating segments (see Note 4).

An operating segment is a Group component (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and (iii) for which discrete financial information is available.

2.23. Earnings per share 2.23. Earnings per share

Basic earnings per share is calculated by dividing net income available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, excluding the average number of ordinary shares purchased by the Group and held as treasury stock.

For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to assume conversion of all dilutive potential ordinary shares, such as convertible debt and share options granted to employees. Potential or contingent share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.

2.24. Cash and cash equivalents Cash equivalents equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months' maturity from the inception date, including cash, deposits with banks and deposits at Central Banks. Cash and cash equivalents exclude restricted balances with central banks.

2.25. Investment properties Investment propertiesproperties

The Group classifies as investment property the property held to earn rentals or for capital appreciation or both. Investment property is recognised initially at cost, including transaction costs that are directly attributable expenditures, and subsequently at their fair value. Changes in the fair value determined at each balance sheet date are recognised in the income statement. Investment property is not amortised.

Subsequent expenditure is capitalised only when it is probable that it will give rise to future economic benefits in excess of the originally assessed standard of performance of the asset.

2.26. Insurance contracts contracts

The Group issues contracts that contain insurance risk, financial risk or a combination of both insurance and financial risk. A contract, under which the Group accepts significant insurance risk from another party, by agreeing to compensate that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.

A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with discretionary participating features is classified as investment contract recognised and measured in accordance with the accounting policies applicable to insurance contracts (IFRS 4). A contract issued by the Group that transfers only financial risk, without discretionary participating features, is classified as an investment contract and accounted for as a financial instrument (IAS 39).

The financial assets held by the Group to cover the liabilities arising under insurance and investment contracts are classified and accounted for in the same way as other Group financial assets.

Insurance contracts and investment contracts with discretionary participating features are recognised and measured as follows:

Premiums

Gross written premiums are recognised for as income in the period to which they respect, in accordance with the accrual accounting principle. Reinsurance premiums ceded are accounted for as expense in the period to which they respect in the same way as gross written premiums.

Acquisition costs

Acquisition costs that are directly or indirectly related to the selling of insurance and investment contracts with discretionary participating features are capitalized and deferred through the life of the contracts. Deferred acquisition costs are subject to recoverability testing at the time of the insurance policy or investment contract is issued and subject to impairment test (liability adequacy test) at each reporting date.

Claims reserves reserves

Claims outstanding reflects the estimated total outstanding liability for reported claims and for incurred but not reported claims (IBNR). Reserves for both reported and not reported claims are estimated by management based on experience and available data using statistical methods. Claims reserves are not discounted.

Life assurance reserve

The life assurance reserve reflects the present value of the Group's future obligations arising from life policies (insurance contracts and investment contracts with discretionary participating features) written and is calculated in accordance with recognised actuarial methods within the scope of applicable legislation.

Reserve for bonus and rebates rebates

The reserve for bonus and rebates corresponds to the amounts attributed to policyholders or beneficiaries of insurance or investment contracts, in the form of profit participation, which have not yet been specifically allocated and included in the life assurance reserve.

Shadow accounting accounting

In accordance with IFRS 4, the unrealised gains and losses on the assets covering liabilities arising out from insurance and investment contracts with discretionary participating features are attributable to policyholders, to the extent that it is expected that policyholders will participate on those unrealised gains and losses when they became realised in accordance with the terms of the contracts and applicable legislation, by recording those amounts under liabilities.

Liability adequacy test Liability adequacy test

At each reporting date, the Group performs a liability adequacy test to the insurance and investment contracts with discretionary participating features liabilities. The assessment of the liabilities is performed using the best estimate of future cash flows under each contract, discounted at a risk free rate. The liability adequacy test is performed product by product or aggregate basis when contracts are subject to broadly similar risks and managed as a single portfolio. Any deficiency determined, if exists, is recognised directly through income.

Unearned premium reserve

The reserve for unearned gross written premiums and reinsurance ceded premiums reflects the part of the written premiums before the end of the period for which the risk period continues after the end of the period

NOTE 3–CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN AP CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING LYING ACCOUNTING LYING ACCOUNTINGPOLICIES POLICIESPOLICIES

IFRS set forth a range of accounting treatments and require management to apply judgement and make estimates in deciding which treatment is most appropriate. The most significant of these accounting policies, are discussed in this section in order to improve understanding of how their application affects the Group's reported results and related disclosure. A broader description of the accounting policies applied by the Group is shown in Note 2 to the Consolidated Financial Statements.

Because in many cases there are other alternatives to the accounting treatment chosen by management, the Group's reported results would differ if a different treatment were chosen. Management believes that the choices made are

appropriate and that the financial statements present the Group's financial position and results fairly in all material aspects.

3.1. Impairment of available- of available-for-sale financial assets sale assets

The Group determines that available-for-sale financial assets are impaired when there has been a significant or prolonged decline in the fair value below its cost or when it has identified an event with impact on the estimated future cash flows of the assets. This determination requires judgement based on all available relevant information, including the normal volatility of the financial instruments prices. Considering the high volatility of the markets, the Group has considered the following parameters when assessing the existence of impairment losses:

(i) Equity securities: significant decline in market value in relation to the acquisition cost or market value below the acquisition cost for a prolonged period;

(ii) Debt securities: objective evidence of events that have an impact on the estimated future cash flows of these assets.

In addition, valuations are generally obtained through market quotation or valuation models that may require assumptions or judgement in making estimates of fair value.

Alternative methodologies and the use of different assumptions and estimates could result in a higher level of impairment losses recognised with a consequent impact in the income statement of the Group.

3.2. Fair value of derivatives and other assets and Fair of derivatives and other and liabilities at fair value ilities at fair value

Fair values are based on listed market prices if available; otherwise fair value is determined either by dealer price quotations (both for that transaction or for similar instruments traded) or by pricing models, based on net present value of estimated future cash flows which take into account market conditions for the underlying instruments, time value, yield curve and volatility factors. These pricing models may require assumptions or judgements in estimating fair values.

Consequently, the use of a different model or different assumptions or judgements in applying a particular model may have produced different financial results from the ones reported.

3.3. Impairment losses on loans and advances 3.3. Impairment losses on loans and advancesImpairment losses on advances

The Group reviews its loan portfolios to assess impairment on a regular basis, as described in Note 2.5.

The evaluation process in determining whether an impairment loss should be recorded in the income statement is subject to numerous estimates and judgements. The frequency of default, risk ratings, loss recovery rates and the estimation of both the amount and timing of future cash flows, among other factors, are considered in making this evaluation.

Alternative methodologies and the use of different assumptions and estimates could result in a different level of impairment losses with a consequent impact in the consolidated income statement of the Group.

3.4. Goodwill Goodwillimpairment impairmentimpairment

Goodwill recoverable amount recognised as an asset of the Group is revised annually regardless the existence of impairment losses.

For this purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the business unit exceeds the respective recoverable amount.

In the absence of an available market value, the recoverable amount is determined using cash flows/ dividends predictions, applying a discount rate that includes a risk premium appropriated to the business unit being tested.

Changes in the expected cash flows and in the discount rate may lead to different conclusions from those that led to the preparation of these financial statements.

3.5. Securitisations and special purpose entities ( 3.5. Securitisations purpose entities (SPE) (SPE)

The Group sponsors the formation of special purpose entities (SPEs) primarily for asset securitisation transactions.

The Group does not consolidate SPEs that it does not control. As it can sometimes be difficult to determine whether the Group does control an SPE, it makes judgements about its exposure to the risks and rewards, as well as about its ability to make operational decisions for the SPE in question (see Note 2.2).

The determination of the SPEs that needs to be consolidated by the Group requires the use of estimates and assumptions in determining the respective expected residual gains and losses and which party retains the majority of such residual gains and losses. Different estimates and assumptions could lead the Group to a different scope of consolidation with a direct impact in net income.

3.6. Held 3.6. Held-to-maturity investments maturity investmentsmaturity investments

The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement.

In making this judgement, the Group evaluates its intention and ability to hold such investments to maturity.

If the Group fails to keep these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount close to maturity – it will be required to reclassify the entire class as available-for-sale. The investments would therefore be measured at fair value instead of amortised cost.

Held-to-maturity investments are subject to impairment tests made by the Group. The use of different assumptions and estimates could have an impact on the income statement of the Group.

3.7. Income taxes 3.7. Income taxes Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant interpretations and estimates are required in determining the worldwide amount for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.

Different interpretations and estimates would result in a different level of income taxes, current and deferred, recognised in the period.

The Tax Authorities are entitled to review the Bank and its subsidiaries located in Portugal's determination of annual taxable earnings, for a period of four years or six years in case there are tax losses brought forward. Hence, it is possible that some additional taxes may be assessed, mainly as a result of differences in interpretation of the tax law. However, the Board of Directors of the Bank, and those of its subsidiaries, are confident that there will be no material tax assessments within the context of the financial statements.

3.8. Pension and other employees' benefits 3.8. Pension and other employees' benefitsPension other employees' benefits

Determining pension liabilities requires the use of assumptions and estimates, including the use of actuarial projections, estimated returns on investment, and other factors that could impact the cost and liability of the pension plan.

Changes in these assumptions could materially affect these values.

3.9. Insurance and investment contracts liabilities 3.9. Insurance and liabilities

Insurance and investment contracts liabilities represent liabilities for future insurance policy benefits. Insurance reserves for traditional life insurance, annuities and workmen's compensation policies have been calculated based upon mortality, morbidity, persistency and interest rate assumptions applicable to those

coverages. The assumptions used reflect the Groups' and market experience and may be revised if it is determined that future experience will differ substantially from that previously assumed. Insurance and investment contracts liabilities include: (i) life mathematical reserve, (ii) reserve for bonus and rebates, (iii) claims reserves, (iv) unexpired risk reserve and (v) unearned premiums reserve. Claims reserves include estimated provisions for both reported and unreported claims incurred and related expenses.

When claims are made by or against policyholders, any amounts that the Group pays or expects to pay are recorded as losses. The Group establishes reserves for payment of losses for claims that arise from its insurance and investment contracts.

In determining their insurance reserves and investment contracts liabilities, the Group's insurance companies perform a continuing review of their overall positions, their reserving techniques and their reinsurance coverage. The reserves are also reviewed periodically by qualified actuaries.

The Group maintains property and casualty loss reserves to cover the estimated ultimate unpaid liability for losses with respect to both reported and not reported claims incurred as of the end of each accounting year. Claims reserves do not represent an exact calculation of liability, but instead represent estimates, generally using actuarial valuations/techniques. These reserve estimates are expectations of what the ultimate settlement of claims is likely to cost based on an assessment of facts and circumstances then known, a review of historical settlement patterns, estimates of trends in claims severity, frequency, legal theories of liability and other factors. Variables in the reserve estimation process can be affected by both internal and external events, such as changes in claims handling procedures, economic inflation, legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective basis. Additionally, there may be significant reporting lags between the occurrence of the insured event and the time it is actually reported to the insurer. Reserve estimates are continually reviewed in a regular ongoing process as historical loss experience develops and additional claims are reported and settled.

The liability adequacy test is performed considering the expected cash flows of each contract. These cash flows include premiums, mortality, maturities, surrenders, lapses, expenses and commissions. Whenever the contracts include options and guarantees, the present value of liabilities is determined stochastically based in the market consistent principles. This test is conducted product by product or in aggregate when the risk are similar or managed on a portfolio basis.

NOTE4 –SEGMENT REPORTING T REPORTING

BES Group activities are focused on the financial sector and are directed to companies, institutional and private customers. The Group's decision centre is in Portugal, which makes it its privileged market. The historical link with Brazil and Africa, the globalization of the Portuguese companies and the Portuguese emigration to several countries, led to an internationalisation of the Group, which already has an international structure contributing significantly to the Group's activities and results.

The Group's products and services includes deposits, loans to retail and corporate customers, fund management, broker and custodian services, investment banking services and the commercialization of life and non-life insurance products. Additionally, the Group makes short, medium and long term investments in the financial and currency

exchange markets with the objective of taking advantages from the prices changes or to have a return from its available resources.

The Group has BES as its main operating unit - with 612 branches in Portugal and with branches in London, New York, Spain (31 branches), Nassau, Cayman Islands, Cape Verde, Venezuela, Luxembourg and Madeira Free Zone and 10 representation offices – with BES Investimento (investment banking); BES Angola (71

branches); BES Açores (17 branches); Banco BEST (13 branches); Espírito Santo Bank; BES Oriente; Aman Bank; BES Cabo Verde; BES Vénétie; Espírito Santo Activos Financeiros (ESAF); BES Seguros (non life insurance) and BES Vida, among other companies.

When evaluating the performance by business area, the Group considers the following Operating Segments: (1) Domestic Commercial Banking, including Retail, Corporate, Institutional and Private Banking; (2) International Commercial Banking; (3) Investment Banking; (4) Asset Management; (5) Life Insurance; (6) Capital Markets and Strategic Investments; and (7) Corporative Centre. Each segment includes the BES structures that directly or indirectly relate to it, and also the other units of the Group whose activities are most related to one of these segments. In addition to the individual evaluation of each operating unit of the Group (considered as an investment centre), the Executive Committee defines strategies, commercial programs and performance evaluation for each operating segment.

Complementary, the Group uses a second segmentation of its activities and results according to geographic criteria, segregating the activity and the results generated from the units located in Portugal (domestic activities) from the units located abroad (international activities).

4.1. Operating segments description description

Each of the operating segments includes the following activities, products, customers and Group structures:

Domestic Commercial Banking Domestic Banking

This operating segment includes all the banking activity with corporate and institutional customers developed in Portugal, based in the branch offices network, corporate centres and other channels and includes the following:

a) Retail: corresponds to all activity developed by BE Retail: S in Portugal with private customers and small businesses. The financial information of the segment relates to, among other products and services, mortgage loans, consumer credit, financing the clients' activity, deposits repayable on demand and term deposits, retirement plans and other insurance products to private customers, commissions over account management and electronic payments, the investment funds cross-selling and brokerage and custodian services.
b) Corporate and Institutional: includes BES activitie Corporate Institutional: s in Portugal with small, medium and large companies, through its commercial structure dedicated to this segment, which includes 24 corporate centres. Also includes activities with institutional and municipal customers.

c) Private Banking: includes private banking activity Private Banking: of BES, all profit, loss and assets and liabilities associated to customers classified as private by BES. The main products considered on this segment are: deposits; discretionary management, selling of investment funds, custodian services, brokerage services and insurance products.

International Commercial Banking Commercial Banking

This operating segment includes the units located abroad, which banking activities are focused on corporate and retail customers, excluding investment banking and asset management, which are integrated in the corresponding segments.

Among the units comprising this segment are BES Angola and Spain, London, New York, Cape Verde, Luxembourg and Venezuela branches. The main products included in this segment are deposits, credit, leveraged finance, structured trade finance and project finance operations. This segment, in the context of the funding strategy, has been assuming a relevant role, mainly within institutional customers.

Investment Banking

Includes assets, liabilities, profits and losses of the operating units that consolidate in BES Investimento, which comprises all the investment banking activities of the Group originated in Portugal and abroad. In addition to the lending activity, deposits and other forms of funding, it includes Project Finance advisory services, mergers and acquisitions, restructuring and debt consolidation, initial public offerings (shares and bonds), brokerage and other investment banking services.

Asset Management Asset Management

This segment includes the asset management activities developed by ESAF in Portugal and abroad (Spain, Brazil, Angola e Luxembourg). ESAF's products includes all types of funds - investment funds, real estate funds and pension funds, and also includes discretionary management services and portfolio management.

Life Insurance Insurance

This segment includes the activities of BES-Vida, through the sale of traditional and investment insurances and retirement plans to BES customers.

Capital Markets and Strategic Investments Investments

This segment includes the financial management of the Group, namely the investments in capital markets instruments (equity and debt), whether they are integrated in trading, fair value, available for sale or held to maturity financial assets portfolios. Also included in this segment is the Group's investment in non-controlling strategic positions, as well as all the activity inherent to interest rate and exchange rate risk management, long and short positions on financial instruments management, which allow the Group to take advantage of the price changes in those markets where these instruments are exchanged.

Corporative Centre Centre

This area does not correspond to an operating segment. It refers to an aggregation of corporative structures acting throughout the entire Group, such as, áreas related to the Board of Directors, Compliance, Planning, Financial and Accounting, Risk Management, Investor Relations, Internal Audit, Organization and Quality, among others.

4.2. Allocation criteria of the activity and results to the operating segments operating segments

The financial information presented for each segment was prepared in accordance with the criteria followed for the preparation of internal information analysed by the decision makers of the Group, as required by IFRS.

The accounting policies applied in the preparation of the financial information related with the operating segments are consistent with the ones used in the preparation of these consolidated financial statements, which are described in Note 2, being also adopted the following principles:

Measurement of profit or loss from operating segmen Measurement of operating segments rement segments

The Group uses net income before taxes as the measure of profit or loss for evaluating the performance of each operating segment.

Autonomous operating segments

As mentioned above, each operating unit (branches abroad, affiliated and associated entities) is evaluated separately, as these units are considered investment centres. Additionally, considering the characteristics of the business developed by these units, they are fully included in one of the operating segments, assets, liabilities, equity, income and expenses.

BES structures dedicated to segments

BES activity comprises most of its operating segments and therefore its activity is disaggregated.

For the purpose of allocating the financial information, the following principles are used: (i) the origin of the operation, i.e., the operation is allocated to the same segment as the commercial structure that originated it, even though, in a subsequent phase, the group makes a strategic decision in order to securitize some of

these originated assets; (ii) the allocation of a commercial margin to mass-products, established in a high level when the products are launched; (iii) the allocation of a margin directly negotiated by the commercial structures with the clients for non-mass-products; (iv) the allocation of direct costs from commercial and

central structures dedicated to the segment; (v) the allocation of indirect cost (central support and IT services) determined in accordance with specific drivers and with the Cost Based Approach (CBA) model; (vi) the allocation of credit risk determined in accordance with the impairment model; (vii) the allocation of the Bank total equity to the capital markets and strategic investments segment.

The transactions between the independent and autonomous units of the Group are made at market prices; the price of the services between the structures of each unit, namely the price established for funding between units, is determined by the margins process referred above (which vary in accordance with the strategic relevance of the product and the balance between funding and lending); the remaining internal transactions are allocated to the segments in accordance with CBA without any margin from the supplier; the strategic decisions and/ or of exceptional nature are analysed on a case by case basis, being the income and/ or costs generally allocated to the capital markets and strategic investments segment.

The interest rate risk, exchange risk, liquidity risk and others, except for credit risk, are included in the Financial Department, whose mission is to make the Bank's financial management. The related activity and results are included in Capital Markets and Strategic Investments segment.

Interest and similar income / expense Interest and similar expense

Since the Group's activities are exclusively related to the financial sector, the major income results from the difference between interest received on assets and interest paid from liabilities. This situation and the fact that the segments evaluation is based on negotiated margins or determined previously to each product,

leads to the results on the intermediation activity being presented, as permitted by IFRS 8 paragraph 23, as the net value of interest under the designation of Financial Income.

Consolidated Investments under the equity method the equity methoded method

Investments in associated companies consolidated under the equity method are included in Capital Markets and Strategic Investments segment, in case of BES associates. For other companies of the Group, the same entities are included in the segment they relate to.

Non current assets

Non current assets, according to IFRS 8, include Other Tangible Assets and Intangible Assets. BES includes these assets on the Capital Markets and Strategic Investments segment; the non current assets held by the subsidiaries are allocated to the segment in which these subsidiaries develop their business.

Income taxes

Income tax is a part of the Group net income but does not affect the evaluation of most of the Operating Segments. Deferred tax assets and liabilities are included in the Capital Markets and Strategic Investments segment.

Post employment benefits Post employment

Assets under post employment benefits are managed in a similar way to deferred income taxes assets, and are included in the Capital Markets and Strategic Investments segment. The factors that influence the amount of responsibilities and the amount of the funds assets correspond, mainly, to external elements; it

is Group's policy not to include these factors on the performance evaluation of the operating segments, which activities relate to customers.

Domestic and International Areas Domestic

In the disclosure of financial information by geographical areas, the operating units that integrate the International Area are: BES Angola and its branches, BES África, Aman Bank, BES Oriente, Espírito Santo Bank, BES Cape Verde; Espírito Santo Vénétie, Banco Delle Tre Venezie, Moza Bank, Ijar Leasing Argélie, Tranquilidade Angola, and the branches in London, Spain, New York, Cape Verde, Venezuela and Luxembourg and the operating units located abroad from BES Investimento and ESAF.

The financial elements related to the international area are presented in the financial statements of those units with the respective consolidation and elimination adjustments.

The primary segments reporting are presented as follows:

										(in thousands of euro)
					31.12.2013
	Retail	Corporate and Institutional	Private banking	International commercial banking	Investment banking	Asset management	Insurance	Capital markets and strategic investments	Corporative centre	Total
Net interest	451 030	348 1 97	1 1 7 81 0	431 826	82 073	1 868	1 44 1 92	( 542 688)	-	1 034 308
Net fees and comissions	1 65 242	242 607	1 4 1 44	1 20 341	1 01 777	51 557	( 1 1 521 )	( 1 8 51 0)	-	665 637
Other operating income	45 668	21 840	1 3 608	( 42 993)	62 61 7	5 1 99	267 1 21	( 201 645)	-	1 71 41 5
Total operating income	661 940	61 2 644	1 45 562	509 1 74	246 467	58 624	399 792	( 762 843)	-	1 871 360
Operating expenses	443 301	689 747	22 906	504 353	231 461	1 9 683	1 6 049	486 339	1 46 022	2 559 861
Includes:
Provisions/Impairment	61 347	631 01 2	5 887	238 230	59 850	2 463	4 1 09	41 9 991	-	1 422 889
Depreciation and amortisation	46 520	6 1 48	1 955	31 1 99	6 726	297	596	8 928	5 492	1 07 861
Gains on disposal of investments in subsidiaries and associates	-	-	-	-	-	-	-	-	-	-
Share of profit of associates	-	-	-	( 47)	632	-	-	506	-	1 091
Profit before income tax and non-controlling interests	21 8 639 21	( 77 1 03) 1 03) 03)	1 22 656 1 22	4 774	1 5 638 5 638	38 941 941	383 743 743	(1 248 676) 676)	( 1 46 022) 1 46 022)	( 687 41 0) (
Intersegment operating income	3 632	27 277	2	1 51 1 54	( 1 1 606)	( 1 4 050)	( 33)	( 1 30 074)	-	26 302
Total Net Assets	1 5 1 1 7 748 5 1	22 400 036 22 400 22 400 036	1 760 201 1 760 201 1 760	24 533 731 24 533 731 533 731	5 963 21 7 5 963 21 7 5 963 21	203 91 5 203 91 5 91 5	7 964 451 7 964 451 451	2 664 71 7 2 664 71 7 7	-	80 608 01 6 80 608 01 6
Total Liabilities	1 4 81 1 737 4 81	22 477 1 37 22 477 1 37	1 637 586 1 637	22 551 746 551 746	5 31 0 451 5 0 451	22 382 382	7 583 620 620	( 835 939) 939)	-	73 558 720 73
Investments in Associates	-	-	-	8 306	58 473 58 473 58 473 58 473	-	-	469 887 469 887 887	-	536 666 536 666
Capital expenditure tangible assets	51 4 51 4	- -	-	94 292 94 292 94 292 94 292	6 452	83	1 06 1	1 2 820 1 2 820 2 820 2 820	1 09 1	1 1 4 376 1 1 4 376
Capital expenditure intangible assets	61 5	- 5	-	1 0 752 0 752	3 225	1 24	1 077 1 077	42 756 756	-	58 549 58
Capital expenditure non-current assets	5 427	-	-	66 573 66 573	1 6 81 3 6 81	-	-	806 670 670	1 1 059 1	906 542

										(in thousands of euro)
					31.12.2012
	Retail	Corporate and Institutional	Private banking	International commercial banking	Investment banking	Asset management	Insurance	Capital markets and strategic investments	Corporative centre	Total
Net interest	397 594	268 1 00	92 834	300 543	94 844	3 01 5	1 1 5 902	( 92 324)	-	1 1 80 508
Net fees and comissions	1 97 91 1	260 985	1 8 560	21 4 1 77	1 00 673	50 755	( 1 4 81 0)	( 34 333)	-	793 91 8
Other operating income	47 057	1 5 223	8 538	57 802	63 61 6	1 0 972	1 38 365	31 6 1 51	-	657 724
Total operating income	642 562	544 308	1 1 9 932	572 522	259 1 33	64 742	239 457	1 89 494	-	2 632 1 50
Operating expenses	482 861	702 036	20 421	446 406	222 262	20 796	8 81 6	282 072	1 62 837	2 348 507
Includes:
Provisions/Impairment	74 51 3	640 964	2 429	205 524	46 205	3 1 1 9	41 8	226 258	-	1 1 99 430
Depreciation and amortisation	51 1 36	6 626	2 1 44	27 250	5 777	41 9	425	8 502	5 795	1 08 074
Gains on disposal of investments in subsidiaries and associates	-	-	-	-	2 503	-	-	( 2 1 20)	-	383
Gains arising on business combinations achieved in stages	-	-	-	-		- -	-	( 89 586)	-	( 89 586)
Share of profit of associates	-	-	-	272	336	-	-	7 704	-	8 31 2
Profit before income tax and non-controlling interests	1 59 701 1	( 1 57 728) ( 57 728) ( 1 57 728)	99 51 1 99 51 1 99 99	1 26 388 1 26 388 1 26 388	39 71 0 39 71 0 39 71 39 71	43 946 43 946 946 946	230 641 230 641 641	( 1 76 580) ( 1 76 580) 76 580)	( 1 62 837) ( 1 62 837) 1 62 837)	202 752 202 752
Intersegment operating income	4 799	31 248	1 1	87 861	( 1 3 361 )	( 1 3 921 )	( 953)	( 66 720)	-	28 964
Total Net Assets	1 5 633 394 5 633	23 032 898 23 032 23 032 898	1 491 1 00 1 491 1 00 1 491 1	22 096 488 22 096 488 096 488	6 484 489 6 484 489 6 484 489	1 89 948 1 89 948 948	6 657 573 6 657 573 573	8 1 04 938 8 1 04 938 938	-	83 690 828 83 690 828
Total Liabilities	1 5 542 1 45 5 542 45	23 032 23 032 898	1 491 1 49 1 491 1	20 607 324 607 324	5 745 347 5 745 347	23 622 622	6 385 553 553	3 1 30 046 046	-	75 958 084 75
Investments in Associates	-	-	-	8 539	57 456 57 456	-	-	51 4 987 4 987	-	580 982
Capital expenditure tangible assets	699	-	-	1 37 1 81 1 37 1	1 875 1 875	1 80	2	8 841 8 841	22	1 48 800 48
Capital expenditure intangible assets	583	- -	-	1 0 91 4 1 0 91 4 0 91 0 91	6 1 1 6 6 1 1 6 6 1 6 1	1 1 7 1 1 7 1 7 1 7	31	370 746 370 746 746	-	388 507 388 507
Capital expenditure non-current assets	5 41 2 5 41 2	- -	-	232 354 232 354 232 354		- -	-	1 1 98 387 1 1 98 387 387	1 4 258 1 4 258 1 1	1 450 41 1 1 450 41 1

The secondary segment information is prepared in accordance with the geographical distribution of the Group's business units, as follows:

											(in thousands of euro)
						31 .1 2.201 3
	Portugal	Spain	France / Luxembourg	United Kingdom	United States of America	Brazil	Angola	Cape Verde	Macao	Other	Total

Net profit for the year	( 539 482)	( 47 765)	1 0 265	32 648	2 846	6 741	1 5 499	1 428	3 678	( 3 41 6)	( 51 7 558)
Intersegment operating income	( 1 33 740)	7 960	21 391	229 261	366	-	( 1 07 1 75)	1 76	7 845	21 8	26 302
Net assets	54 1 24 1 1 1	6 351 81 3	985 875	5 1 07 326	1 548 221	2 336 01 2	8 300 565	261 01 5	389 685	1 203 393	80 608 01 6
Investments in associates	386 1 95	( 32 864)	73 71 6	-	-	380	52 548	-	-	56 691	536 666
Capital expenditure tangible assets	1 4 887	3 663	-	839	1 75	3 930	89 752	1 0	7	1 1 1 3	1 1 4 376
Capital expenditure intangible assets	46 426	4 000	-	1 006	51	804	41 4	401	1 364	4 083	58 549
Capital expenditure non-current assets	81 2 097	57 069	-	-	-	1 6 81 3	20 563	-	-	-	906 542

											(in thousands of euro)
						31 .1 2.201 2
	Portugal	Spain	France / Luxembourg	United Kingdom	United States of America	Brazil	Angola	Cape Verde	Macao	Other	Total

Net profit for the year	8 41 6	1 5 825	6 293	1 9 232	5 868	1 1 088	31 680	1 756	3 982	( 8 039)	96 1 01
Intersegment operating income	( 66 956)	5 81 6	7 681	250 030	( 379)	-	( 1 74 070)	( 2 295)	8 81 2	325	28 964
Net assets	59 1 75 822	4 652 643	464 238	5 944 423	1 393 230	2 439 976	7 970 699	208 048	446 385	995 364	83 690 828
Investments in associates	481 330	( 32 864)	73 528	-	-	498	25 846	-	-	32 644	580 982
Capital expenditure tangible assets	9 929	2 939	976	388	44	305	1 26 709	1 81	-	7 329	1 48 800
Capital expenditure intangible assets	375 337	4 31 8	51	887	1 49	901	382	444	-	6 038	388 507
Capital expenditure non-current assets	1 203 799	44 625	-	-	-	-	201 987	-	-	-	1 450 41 1

NOTE5 –NET INTEREST INCOME NET INTEREST INCOMEINCOME

This balance is analysed as follows:

						(in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Assets / Liabilities at amortised cost and available-for-sale financial assets	Assets / Liabilities at fair value through profit or loss	Total	Assets / Liabilities at amortised cost and available-for-sale financial assets	Assets / Liabilities at fair value through profit or loss	Total
Interest and similar income
Interest from loans and advances	2 294 653	1 4 1 87	2 308 840	2 51 8 907	8 367	2 527 274
Interest from financial assets at fair value through profit or loss	-	254 730	254 730	-	255 529	255 529
Interest from deposits with banks	52 959	807	53 766	61 876	3 749	65 625
Interest from available-for-sale financial assets	388 448	-	388 448	538 988	-	538 988
Interest from held-to-maturity financial assets	44 837	-	44 837	45 01 4	-	45 01 4
Interest from derivatives for risk management purposes	-	395 474	395 474	-	459 01 2	459 01 2
Other interest and similar income	20 922	-	20 922	22 667	-	22 667
	2 801 81 9 2 9	665 1 98 665 1 98	3 467 01 7 3	3 1 87 452 452	726 657	3 91 4 1 09 4 1 09
Interest expense and similar charges
Interest from debt securities	748 922	67 1 34	81 6 056	824 832	37 481	862 31 3
Interest from amounts due to customers	958 355	49 321	1 007 676	1 004 605	33 1 64	1 037 769
Interest from deposits from central banks and other banks	328 358	1 1 843	340 201	408 1 39	1 1 028	41 9 1 67
Interest from subordinated debt	73 31 4	-	73 31 4	70 820	-	70 820
Interest from derivatives for risk management purposes	-	1 95 462	1 95 462	-	343 532	343 532
	2 1 08 949 2	323 760 323 760	2 432 709 2	2 308 396 396	425 205	2 733 601 601
	692 870	341 438 341 438	1 034 308 1	879 056 056	301 452	1 1 80 508 80 508

Interest from loans and advances includes na amount of euro 103 082 thousand (31 December 2012: euro 78 290 thousand) related to the unwind of discount regarding the impairment losses of loans and advances to customers that are overdue (see Note 25).

Interest from derivatives for risk management purposes includes, in accordance with the accounting policy described in Notes 2.4 and 2.19, interest from hedging derivatives and from derivatives used to manage the risk of certain financial assets and financial liabilities designated at fair value through profit or loss in accordance with the accounting policies described in Notes 2.5, 2.6 and 2.8.

NOTE6 –NET FEE AND COMMISSION INCOME NET FEE COMMISSION INCOME INCOME

This balance is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 .1 3	31 .1 2.201 2 .1 2
Fee and commission income
From banking services	444 943	561 1 03
From guarantees granted	253 1 92	227 836
From transactions with securities	68 1 57	60 560
From commitments assumed to third parties	24 902	35 1 52
Other fee and commission income	74 621	90 41 1
	865 81 5 5	975 062
Fee and commission expenses
From banking services rendered by third parties	86 1 79	80 796
From transactions with securities	21 487	26 568
From guarantees received	69 996	59 735
Other fee and commission expenses	22 51 6	1 4 045
	200 1 78 1	1 81 1 44 1 81 1 44
	665 637	793 91 8 8

Fee and commission expenses from guarantees received includes as at 31 December 2013, the amount of euro 60.6 million (31 December 2012: euro 58.5 million) related with the guarantees received from the Portuguese government in relation with the debt issued by the Group.

NOTE7 –NET (LOSSES) FROM FINANCIAL NET (LOSSES) FROM FINANCIALASSETS AN ASSETS AND FINANCIAL LIABILITIES AT FAIR D FINANCIAL LIABILITIES FAIR VALUE THROUGH VALUE PROFIT OR LOSS OR LOSS

This balance is analysed as follows:

						(in thousands of euro)
		31 .1 2.201 3 3			31 .1 2.201 2 31 .1 2.201 2
	Gains	Losses	Total	Gains	Losses	Total
Assets and liabilities held for trading
Bonds and other fixed income securities
Issued by government and public entities	90 728	1 64 298	( 73 570)	943 283	723 240	220 043
Issued by other entities	1 9 51 3	1 2 1 84	7 329	1 1 495	26 01 6	( 1 4 521 )
Shares	42 680	61 320	( 1 8 640)	43 840	47 740	( 3 900)
Other variable income securities	637	495	1 42	320	270	50
	1 53 558 1 53	238 297 238 238 297	( 84 739) ( 84 739) 84 739)	998 938 998 938 998	797 266 797 266 797	201 672 201 672
Derivative financial instruments
E xchange rate contracts	2 81 3 1 31	2 81 5 001	( 1 870)	1 040 055	1 038 856	1 1 99
Interest rate contracts	5 407 371	5 553 303	( 1 45 932)	4 958 027	4 91 0 937	47 090
E quity/Index contracts	2 1 51 347	2 1 67 61 4	( 1 6 267)	1 342 51 9	1 325 590	1 6 929
Credit default contracts	506 01 9	539 289	( 33 270)	753 554	783 848	( 30 294)
Other	30 780	21 673	9 1 07	1 04 652	( 44 482)	1 49 1 34
	1 0 908 648 908	1 1 096 880 1 096	( 1 88 232) 1 88 232) 232)	8 1 98 807 1 98	8 01 4 749 01 4	1 84 058 1 84
Financial assets at fair value through profit or loss

Securities
Bonds and other fixed income securities
Issued by government and public entities	63 685	37 582	26 1 03	64 235	2 642	61 593
Issued by other entities	2 049 254	2 01 9 477	29 777	1 83 334	1 09 685	73 649
Shares	266 595	263 554	3 041	2 025	5 792	( 3 767)
Other variable income securities	2 473 276	2 420 906	52 370	1 1 9 647	1 89 055	( 69 408)
	4 852 81 0 852 81 0	4 741 51 9 4 741	1 1 1 291 1	369 241 369	307 1 74 307	62 067 62
Other financial assets(1 )
Loans and advances to customers	36 606	1 5 779	20 827	8 768	9 406	( 638)
	36 606 36	1 5 779 5 1 5 779	20 827 20 827 20	8 768	9 406	( 638) ( 638)
Financial liabilities(1 )
Deposit from banks	1 7 887	-	1 7 887	1 091	25 228	( 24 1 37)
Due to customers	92 01 3	50 506	41 507	57 034	1 68 007	( 1 1 0 973)
Debt securities issued	44 449	94 505	( 50 056)	71 1 73	267 531	( 1 96 358)
Life insurance products	63 857	231 764	( 1 67 907)	71 859	247 91 4	( 1 76 055)
Other subordinated debt	-	-	-	2 71 5	1 759	956
	21 8 206 21 8	376 376 775	( 1 58 569) 1 58 569) 569)	203 872 203	71 0 439 71 0	( 506 567)
	5 1 07 622 1 07	5 1 34 073 5 1 34	( 26 451 ) 26 ) )	581 881 581	1 027 01 9 027 01 9	( 445 1 38) 1 38)
	1 6 1 69 828 1 69	1 6 469 250 6 469	( 299 422) 422) 422)	9 779 626 779	9 839 034 839	( 59 408) 59

(1 ) Includes the fair value change of hedged assets and liabilities or at fair value option.

As at 31 December 2013, this balance includes a negative effect of euro 73.3 million related to the change in fair value of financial liabilities designated at fair value through profit or loss, attributable to the Group's credit risk component (31 December 2012: negative effect of euro 35.2 million).

In accordance with the accounting policies followed by the Group, financial instruments are initially recognised at fair value. The best evidence of the fair value of the instrument at inception is deemed to be the transaction price. However, in particular circumstances, the fair value of a financial instrument at inception, determined based on a valuation techniques, may differ from the transaction price, namely due to the existence of a built-in fee, originating a day one profit.

The Group recognises in the income statement the gains arising from the built-in fee (day one profit), generated, namely, on the trading of foreign exchange financial products, considering that the fair value of these instruments at inception and on subsequent measurements is determined only based on observable market data and reflects the Group access to the wholesale market.

In 2013, the gains recognised in the income statement arising from the built-in fee amounted to approximately euro 13 691 thousand (2012: euro 14 587 thousand) being substantially related to foreign exchange transactions.

NOTE8 –NET GAINS FROM AVAILABLE NET AVAILABLE-FOR-SALE FINANCIAL ASSETS SALE ASSETS ASSETS

						(in thousands of euro)
		31 .1 2.201 3 2.201 3		31 .1 2.201 2 .1 2.201
	Gains Gains	Losses Losses	Total	Gains	Losses	Total
Bonds and other fixed income securities Issued by government and public entities	376 835	20 404	356 431	81 3 802	23 738	790 064
Issued by other entities Shares	1 3 665 84 598	1 3 527 1 6 093	1 38 68 505	77 000 46 523	62 31 6	1 4 684 250 272 ( 203 749)
Other variable income securities	28 626	1 2 588	1 6 038	1 3 564	1 4 357	( 793)
	503 724	62 61 2 62 61 2	441 1 1 2 441 1 1 2	950 889 950 889	350 683 350 683 350	600 206 600 206

This balance is analysed as follows:

During the year ended 31 December 2013, the Group sold at market prices through the stock exchange, 77.4 million ordinary shares of EDP, this transaction generated a realised net gain of euro 53.7 million.

During the year ended 31 December 2012, the Group sold at market prices through the stock exchange, 96.4 million ordinary shares of EDP and 260.7 million ordinary shares of Portugal Telecom. These transactions generated a realised net loss of euro 224.9 million.

Related party transactions are described in Note 48.

NOTE9 –NET (LOSSES) FROM FOREIGN EXCHANGE DIFFEREN NET (LOSSES) FROM DIFFERENCES

This balance is analysed as follows:

						(in thousands of euro)
		31 .1 2.201 3 .1 2.201 3			31 .1 2.201 2 2
	Gains Gains	Losses Losses	Total	Gains	Losses	Total
Foreign exchange translation	863 872	868 075	( 4 203)	948 205	971 993	( 23 788)
	863 872 863	868 075 868 868 075	( 4 203) ( 4 203)203)	948 205 948 205	971 993 971 993	( 23 788) ( 23 788)

This balance includes the exchange differences arising on translating monetary assets and liabilities at the exchange rates ruling at the balance sheet date in accordance with the accounting policy described in Note 2.3.

NOTE10–NET (LOSSES) FROM THE SALE OF OTHER ASSETS NET FROM THE SALE OF ASSETS

This balance is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 .1 2.201 3	31 2.201 31 .1 2.201 2
Loans and advances to customers	( 20 738)	( 39 507)
Non current assets held for trade
Pledge for credit recovery	( 637)	( 5 91 7)
Other current assets held for sale	( 53 1 77)	-
Other	5 936	3 265
	( 68 61 6) ( 68 61 6)	( 42 1 59) ( 42 1 59)

As at 31 December 2013, Loans and advances to customers include a gain of euro 0.1 million related to the sale of 63 million of credits realised within the deleverage program of the Group (2012: loss of euro 29.6 million).

As at 31 December 2013, the caption Other non-current assets held for sale regards the losses on disposals of nonfinancial assets registered in the balance sheet of BES Angola.

NOTE11 –INSURANCE EARNED PREMIUMS, NET OF REINSURANCE INSURANCE REINSURANCE

The insurance earned premiums, net of reinsurance, can be analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Gross written premiums	41 8 290	64 491
Reinsurance premiums ceded	( 62 21 6)	( 2 347)
Net premiums written	356 074	62 1 44
Change in the provision for unearned premiums, net of reinsurance	( 745)	1 1 3
E arned premiums, net of reinsurance	355 329	62 257

Gross written premiums by segment are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31
Annuities	59 501	39 632
Saving contracts with profit sharing	358 789	24 859
	41 8 290	64 491

In accordance with IFRS 4, the contracts issued by the Group for which there is only a transfer of financial risk, with no discretionary participating features, are classified as investment contracts and accounted for as financial liabilities. Contracts for which the investment risk is borne by insurance contracts and fixed rate without profit are not accounted for as premiums.

The increase in gross written premiums in 2013 is essentially due the significant increase in the capitalization products and retirement plans. The reinsurance premiums ceded respect to cover the risk of death and longevity of contracts made in the traditional segments.

NOTE12 –CLAIMS INCURRED CLAIMS INCURREDNET, OF REINSURANCE NET, REINSURANCE

Claims incurred, net of reinsurance are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 2
Claims paid
Gross amount	( 250 868)	( 366 81 2)
Reinsurance share	( 1 0 41 3)	2 621
	( 261 281 )	( 364 1 91 )
Change in claims outstanding reserve
Gross amount	1 4 1 20	854
Reinsurance share	1 81 0	364
	1 5 930	1 21 8
	( 245 351 )	( 362 973)

NOTE13 –CHANGE IN THE TECHNICAL RESERVES, NET OF REINSURAN CHANGE NET OF REINSURANCE

The change in the technical reserves, net of reinsurance is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 2
Mathematical reserves	( 1 62 662)	298 451
Reserve for participating features	( 1 537)	( 1 1 08)
Other technical reserves	( 745)	2 964
Reserve for reinsurance	7 348	1 1 1 6
Commissions and participating features from reinsurance	1 90 395	-
	32 799	301 423

The decrease in mathematical reserves in 2013 is essentially due to the significant increase in gross written premiums, as mentioned in Note 11, alongside with a reduction of the claims paid (especially at the level of redemptions).

Commissions and reinsurance profit sharing includes the net upfront fee, resulting from the signing of a reinsurance treaty in which BES Vida reinsures the life insurance risk portfolio at 100%, including all insurance policies in force as at 30 June 2013.

From this date, BES Vida will cede to the reinsurer all premiums and claims associated with the policies included in this treaty. The Company will perform the servicing of these contracts, as well as the distribution of the respective products.

Under this treaty, BES Vida received an upfront fee, having transferred all the risks and benefits associated with these contracts. On that basis, the risk of (i) life, (ii) disability, and (iii) cancellation of contracts were transferred. As such the upfront fee is recognized on the present date, net of the respective in force value of the portfolio recognized as an asset, at the date of acquisition of BES Vida (see Notes 31 and 54).

NOTE14–OTHER OPERATING INCOME AND EXPENSES OTHER INCOME AND EXPENSESEXPENSES

This balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 2
Other operating income / (expenses)
IT related business	1 720	5 689
Gains (losses) on repurchase of Group debt securities (see Notes 38 and 42)	1 4 1 1 8	1 1 3 721
Non recurring gains on credit operations	1 9 71 2	21 900
Non recurring gains on advisory services	3 671	4 299
Direct and indirect taxes	( 1 7 904)	( 1 5 1 44)
Contributions to the deposits guarantee fund	( 1 2 865)	( 1 0 372)
Contribution for the Resolution Fund	( 1 1 81 3)	-
Contributions to the banking sector	( 27 289)	( 27 91 0)
Membership and donations	( 6 324)	( 8 252)
Outros	( 32 1 78)	34 31 5
	( 69 1 52) ( 1 52)	1 1 8 246 1 1 8 246

As at 31 December 2012, the caption Other includes a gain of euro (i) 21.8 million related with the reduction on the defined benefit obligation for death allowance (see Note 16); (ii) 10.3 million from the termination of the exclusive distribution agreement established between ESAF and Banco Pastor.

NOTE15–STAFF COSTS STAFF COSTS

This balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 2.201
Wages and salaries	436 757	462 683
Remuneration	432 1 97	459 681
Long-term service benefits (see Note 1 6)	4 560	3 002
Mandatory social charges	97 438	1 03 579
Pension costs (see Note 1 6)	1 4 371	1 2 01 2
Other costs	26 459	20 609
	575 025 025	598 598 883

As at 31 December 2013, other costs include the amount of euro 925 thousand (31 December 2012: euro 489 thousand) related to the variable remuneration plan on financial instruments (PRVIF) of BES in accordance with the accounting policy described in Note 2.16. The details of this scheme implemented by BES Group are analysed in Note 16.

The salaries and other benefits attributed to the key management personnel of Group are analysed as follows:

				(in thousands of euro)
	B oard of Directors	Audit Committee	Other Key management	Total
31 December 201 3
Salaries and other short term benefits	6 1 81	379	1 3 985	20 545
Variable remuneration	200	-	1 598	1 798
Sub total Sub	6 381 6 381	379	1 5 583 5 583	22 343 22 343
Long term benefits and social charges	6 535	-	3 659	1 0 1 94
Other remuneration and long term service benefits	1 30	-	270	400
Total	1 3 046 1 3 046	379	1 9 51 2 9 51	32 937 32 937
31 December 201 2
Salaries and other short term benefits	5 523	364	1 3 589	1 9 476
Variable remuneration	1 946	-	1 670	3 61 6
Sub total Sub	7 469 7 469	364	1 5 259 5 259	23 092 23 092
Long term benefits and social charges	3 730	-	2 562	6 292
Other remuneration and long term service benefits	27	-	45	72
Total	1 1 226 1 1 226	364	1 7 866 7 866	29 456 29 456

Other key management personnel include board members of BES subsidiaries, the top management and the Advisors to the Board of Directors of the Bank.

As at 31 December 2013 and 2012, the loans granted by the Group to key management personnel amounted to euro 21 193 thousand and euro 28 883 thousand, respectively.

As at 31 December 2013 and 2012, the number of employees of the Group is analysed as follows:

	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
BE S employees Financial sector subsidiaries employees	6 626 3 590	6 675 3 269
Financial sector group entities employees Financial sector	1 0 21 6 21	9 944

By Professional category, the number of employees of the Group is analysed as follows:

	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Senior management Management Specific functions	1 21 7 1 1 71 4 1 60	1 1 89 1 060 4 1 86
Administrative functions and other	3 668	3 509
	1 0 21 6 1 0	9 944 9 944

NOTA16–EMPLOYEE BENEFITS EMPLOYEE BENEFITS

Pension and health- Pension and health-care benefits care benefits

In compliance with the Collective Labor Agreement (ACT) for the banking sector established with the unions, the Bank undertook the commitment to grant its employees, or their families, pension on retirement, disability and incapacity. Pension payments consist of a rising percentage based on years of service, applicable to each year's negotiated salary table for the active work force.

The Group provides to its banking employees health care benefits through a specific Social-Medical Assistance Service (SAMS), managed by the respective Union. The annual contribution of the Group to SAMS amounts to 6.5% of the total annual remuneration of employees, including, among others, the holiday and Christmas subsidy. The measurement and recognition of the Group's liability with post-retirement healthcare benefits is similar to the measurement and recognition of the pension liability described above. These benefits are covered by the Pension Fund which at present covers all responsibilities with pensions and health care benefits.

As at 30 December 1987, in compliance with the ACT, the Bank established a pension fund to cover pension on retirement, disability and incapacity. Moreover, the Bank has changed the pension fund contract in order to allow the coverage of health care benefits and death allowance. The pensions funds in Portugal are managed by ESAF – Espírito Santo Fundo de Pensões, S.A.. However, it should be noted that only employees hired hired before 31 March 2008 are covered by this benefit. Employees hired after that date are covered by the Portuguese Social Security Scheme.

Additionally, with the publication of Decree-Law n.1-A / 2011 of January 3, all banking sector employees beneficiaries of "CAFEB – Caixa de Abono de Família dos Empregados Bancários" were integrated into the General Social Security Scheme from 1 January 2011, which assumed the protection of banking sector employees in the contingencies of maternity, paternity and adoption and even old age, remaining under the responsibility of the banks the protection in sickness, disability, survivor and death.

Retirement pensions of banking employees integrated into the second tripartite General Social Security agreement, continue to be calculated according to the provisions of ACT and other conventions. Banking employees, are entitled to receive a pension under the general regime, which amount takes into account the number of years of discounts for that scheme. Banks are responsible for the difference between the pension determined in accordance with the

provisions of ACT and that the one that the banking employees are entitled to receive from the General Social Security Regime.

The contribution rate to the Social Security Regime is 26.6%, 23.6% paid by the employer and 3% paid by the employees, instead of Caixa de Abono de Família dos Empregados Bancários (CAFEB), abolished by the same law. In consequence of this change, the pension rights of active employers is to be covered under the terms defined by the General Social Security Regime, taking into account the length of service from 1 January 2011 until retirement. The differential required to support the guaranteed pension in terms of the ACT is paid by the Banks.

At the end of 2011 following the third tripartite agreement, it was decided to transfer to the Social Security Regime the banks liabilities with pension in payment as at 31 December 2011.

The tripartite agreement established, provides for the transfer to the Social Security sphere of the liabilities with pensions in payment as of 31 December 2011 at constant values (0% discount rate). The responsibilities relating to updates of pensions value, other pension benefits in addition to those to be borne by the Social Security, health-care benefits, death allowance and deferred survivor pensions, will remain in the sphere of responsibility of the banks with the correspondent funding being provided through the respective pension funds.

The banks pension funds assets, specifically allocated to the cover of the transferred liabilities, were also

transferred to the Social Security. Being thus a definitive and irreversible transfer of the liabilities with pensions in payment (even if only on a portion of the benefit), the conditions set out in IAS 19 'Employee benefits' underlying the concept of settlement were met, as the obligation with pension in payment as at 31 December 2011 extinguished at the date of transfer.

			Assumptions			Actual
	31 -1 2-201 3		31 -1 2-201 2
	1 st through 3rd year	4th and subsequent years	1 st through 4th year	5th and subsequent years	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Actuarial Assumptions
E xpected return of plan assets	4.00%		4.50%		1 .42%	-2.37%
Discount rate	4.00%		4.50%		-	-
Pension increase rate	0.00%	0.75%	0.00%	0.75%	0.1 2%	-0.56%
Salaries increase rate	1 .00%	1 .75%	1 .00%	1 .75%	1 .1 5%	1 .02%
Mortatility table men			TV 73/77 - 1 year
Mortatility table woman			TV 88/90

The key actuarial assumptions used to calculate pension liabilities are as follows:

Disability decreases are not considered on the liabilities calculation. The determination of the discount rate as at 31 December 2013 was based on: (i) the evolution of the main indexes related with high quality corporate bonds and (ii) the duration of liabilities.

The number of persons covered by the plan is as follows:

	31 .1 2.201 3 .1 3	31 .1 31 .1 2.201 2

E mployees	5 908	6 096
Pensioners	5 795	5 734

TOTAL	1 1 703 1	1 1 830

The application of IAS 19 on responsibilities and coverage levels reportable to 31 December 2013 and 2012 is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 .1
Assets / (liabilities) recognised in the balance sheet
Total obligations	(1 307 994) 994)	(1 206 283) (1 206 283)
Pensioners	( 474 546)	( 448 265)
E mployees	( 833 448)	( 758 01 8)
Coverage Fair value of plan assets	1 31 1 935 31 935	1 220 885
Net assets / (liabilities) in balance sheet (See Note 34 and 43)	3 941 941	1 4 602 1 4 602
Acumulated actuarial deviations recognised in other comprehensive income comprehensive income	1 1 78 798 798 1 798 1 1	1 078 732 1 732

In accordance with the accounting policy described in Note 2.16 – Employees Benefits, the Group liability with pensions is calculated semi-annually, and assesses at each balance sheet date and for each plan separately, the recoverability of the recognised assets in relation to the defined benefit pension plans based on the expectation of reductions in future contributions to the funds.

The changes in the defined benefit obligation can be analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3	31 .1 2.201 2
Defined benefit obligation at the beginning of the period period	1 1 206 283 283	1 077 1 077 864
Service cost	1 3 350	1 2 01 2
Interest cost	54 235	58 994
Plan participants' contribution	3 260	3 259
Actuarial (gains) / losses:
- Changes in actuarial assumptions	93 300	65 366
- E xperience adjustments	( 29 1 76)	40 300
Pensions paid by the fund	( 30 393)	( 27 481 )
Transfer to the Social Security regime of the liabilities with pensions in payment	-	( 21 81 3)
E xchange differences and other	( 2 865)	( 2 21 8)
Defined benefit obligation at the end of the period	1 307 994 1 994	1 206 283 1 206

During the year ended 31 December 2012, following the amendment to Decree Law 133/2012 which determines the calculation method for the death allowance, there was a reduction on the defined benefit obligation with this benefit, in the amount of euro 21.8 million. Considering that this benefit is already vested (given that the employee or retiree is entitled to the benefit in full without the need to comply with any service condition), the Group recognized the referred amount on the other operating expenses caption.

Based on the position as at 31 December 2013, for certain changes in actuarial assumptions, the following impacts would occur:

An increase in the discount rate by 25 basis points would reduce the benefit obligation by approximately euro 50 million; a decrease of equal magnitude would increase the benefit obligation by approximately euro 57 million;
An increase of 25 basis points in the growth of salaries and pensions would increase the benefit obligation by approximately euro 62 million; a decrease of equal magnitude would reduce the benefit obligation by approximately euro 51 million;
The use of mortality tables with increase of another year would increase the benefit obligation by approximately euro 44 million; with a reduction of one year the benefit obligation would decrease by approximately euro 37 million.

	(in thousand of euro)
	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 31 .1 2.201 2
Fair value of plan assets at the beginning of the period eriod	1 220 885	1 1 84 878 1 878
Actual return on plan assets	1 6 993	( 24 299)
Group contributions	1 03 806	86 41 0
Plan participants' contributions	3 260	3 259
Pensions paid by the fund	( 30 393)	( 27 481 )
E xchange differences and other	( 2 61 6)	( 1 882)
Fair value of plan assets at the end of the period Fair of assets of the period	1 31 1 935 1 31 1 935 1 31	1 220 885 1 220 885

The change in the fair value of the plan assets in 2013 and 2012 is analysed as follows:

On the presumption that actuarial and financial assumptions used in 2013 for the calculation of the defined benefit obligation are verified, the Group does not anticipate the need to make significant additional contributions for the pension fund in 2014.

Pension fund assets are analysed as follows:

(in thousands of euro)
31 .1 2.201 3 .1 3	31 .1 2.201 2 31 .1 2.201 2
289 697	1 78 654
306 547	335 1 92
423 273	370 769
292 41 8	336 270
1 31 1 935 1 1	1 220 885

The real estate assets rented to the Group and securities issued by Group companies which are part of the pension fund assets are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
Shares	2 925	1 200
Bonds	1 839	6 382
Real E state	227 469	298 022
Total	232 233	305 604

As at 31 December 2013 and 2012, the fund holds participation units of ES Ventures III Fund, which is fully consolidated in the Group.

During the year ended 31 December 2012 the Group acquired 49 779 and 37 115 thousand units of Fungere Fund and Fungepi Fund to the Group pensions funds, by an amount of euro 158.1 million and euro 87.2 million, respectively (see Note 1).

The changes in the accumulated actuarial gains and losses are analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2.201 2
Accumulated actuarial (gains) and losses recognised in other comprehensive income at the beginning of the period	1 078 732	886 964
Actuarial (gains)/ losses
- Changes in actuarial assumptions	93 300	65 366
- E xperience adjustments	6 677	1 27 1 03
Others	89	( 701 )
Accumulated actuarial (gains) and losses recognised in other
comprehensive income at the end of the period the of the period	1 1 78 798 1 1 1 78 798	1 078 732 1 078 732

During 2013, the legal retirement age in Portugal, for active employees under the Social Security Regime, went from 65 years to 66 years of age. However, the Group plan remained unchanged with retirement age at 65 years old. Therefore, the change in the legal retirement age has an impact in the amount of the Group defined benefit obligation due to the reduction of the participation of the Social Security Regime.

The impact implied by the change in the legal retirement age in 2013 from 65 years to 66 years of age, with consequences at the level of the co-funding of Social Security, regarding the responsibilities related with active employees covered by the plan and transferred to the Social Security Regime under the tripartite agreement, resulted in an actuarial loss of approximately euro 8 million.

The net benefit cost can be analysed as follows:

		(in thousand of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Service cost	1 3 350	1 2 01 2
Interest cost	1 389	( 3 468)
Others	1 021	-
Net benefit cost	1 5 760 5	8 8 544

In compliance with the previously mentioned on the Note 2.16, from 1st of January 2013 and following the revision of IAS 19 – Employees Benefits, the income/expenses from interest became to be recognised by their net value under the interest (income/expense) and similar caption.

In the years ended in 31 December 2013 and 2012, the changes in the net assets/ (liabilities) recognised in the balance sheet is analysed as follows:

		(in thousand of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2
At the beginning of the period	1 4 602 1	1 07 01 4 1 07 01 4
Net periodic benefit cost	( 1 5 760)	( 8 544)
Actuarial (gains)/ losses recognised on other comprehensive income	( 1 00 066)	( 1 91 768)
Contributions of the period and pensions paid by the Group	1 03 806	86 41 0
Others (a)	1 359	21 490
At the end of the period	3 941	1 4 602

(a) In 201 2, this amount includes a profit of euro 21 . 8 million related to the liability decrease with death subsidy.

The evolution of the defined benefit obligations, fair value of plan assets and of the experience adjustments gains/ (losses) in the past 5 years, is presented as follows:

					(in thousands of euro)
	31.12.2013	31.12.2012	31.12.2011	31.12.2010	31.12.2009
Defined benefit obligation	(1 307 994)	(1 206 283)	(1 077 864)	(2 205 366)	(2 125 202)
Fair value of plan asssets	1 311 935	1 220 885	1 184 878	2 206 313	2 198 280
(Un)/over funded liabilities	3 941	14 602	107 014	947	73 078
(Gains)/losses from experience adjustments arising on defined benefit obligation( 29 176)		40 300	( 110 266)	25 201	51 583
(Gains)/losses from experience adjustments arising on plan assets	35 853	86 803	268 043	66 895	( 90 994)

Variable remuneration payment plan on financial instruments truments (PRVIF) (PRVIF)

Following the recommendations of the Supervising and Regulatory authorities, on the BES shareholders General Meeting, held in 6 April 2011 it was approved a new remuneration policy for the Executive Committee members. This policy consists in giving to the Executive Committee members a fixed remuneration, which should represent approximately 45% of the total remuneration, and a variable component representing around 55% of the total remuneration. The variable remuneration shall have two components: one associated with short-term performance and another with medium-term performance (10% of the total remuneration). Half of the short-term component must be paid in cash and the remaining 50% should be paid over a three years period, with half of these payments to be made in cash and the remaining through the attribution of shares. The medium-term component has associated a share options program with the exercise of the options set at 3 years from the date of its attribution.

Regarding the first scheme, the attribution of PRVIF shares to the beneficiaries is performed on a deferred basis over a period of three years (1st year: 33%; 2nd year: 33% and 3rd year: 34%) and is subject to the achievement of a Return on Equity (ROE) greater than or equal to 5%.

Regarding the attribution of options, there are attributed to the beneficiaries and the exercise price is equal to the single average of the closing prices of BES shares on NYSE Euronext Lisbon during the 20 days preceding the day of attribution of the options, plus 10%.

The option can only be exercised at maturity and the beneficiary may choose between the physical settlement or the financial settlement of the options.

The plans' initial fair value was calculated using an option valuation model with the following assumptions:

	Option valuation assumption
	1 st attribution	2nd attribution
Initial reference date	1 2.04.201 1	1 2.1 0.201 2
Final reference date	31 .03.201 4	1 5.01 .201 6
Rights granted to employees	2 250 000	6 280 045
Reference price (in euro)	3.47	0.67
Interest rate	2.31 %	0.67%
Volatility	40.0%	65.0%
Initial fair value of the plan (in thousand of euro)	1 1 30	1 940

PRVIF is accounted for in accordance with the applicable IFRS rules (IFRS 2 and IAS 19). During 2013, the Group registered, against liabilities, a cost of euro 925 thousand (31 December 2012: euro 489 thousand) related to the amortization of the initial options premium granted.

Long-term service benefits term service benefits

As referred in Note 2.16, for employees that achieve certain years of service, the Bank pays long term service premiums, calculated based on the effective monthly remuneration earned at the date the premiums are due. At the date of early retirement or disability, employees have the right to a premium proportional to that they would earn if they remained in service until the next payment date.

As at 31 December 2013 and 2012, the Group's liabilities regarding this benefits amount to euro 30 376 thousand and euro 28 691 thousand, respectively (see Note 43). The costs incurred in the year ended 31 December 2013 with longterm service benefits amounted to euro 4 560 thousand (31 December 2012: euro 3 002 thousand).

The actuarial assumptions used in the calculation of the liabilities are those presented for the calculation of pensions (when applicable).

NOTE17–GENERAL AND ADMINISTRATIVE EXPENSES GENERAL EXPENSES

This balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
Rental costs	76 524	71 788
Advertising costs	31 470	34 476
Communication costs	43 924	45 766
Maintenance and related services	23 925	21 752
Travelling and representation costs	32 695	31 676
Transportation	7 403	7 894
Insurance costs	9 780	8 232
IT services	62 734	66 632
Independent work	9 081	7 863
Temporary work	5 040	5 346
E lectronic payment systems	1 0 1 72	1 0 836
Legal costs	21 358	1 9 745
Consultants and external auditors	28 336	28 251
Water, energy and fuel	1 2 876	1 2 275
Consumables	4 987	5 358
Other costs	73 781	64 230
	454 086 454	442 1 20 20

The balance "Other specialised services" includes, among others, costs with security, information services and databases. The balance "Other costs" includes costs with training and external suppliers.

The outstanding lease instalments related to the non-cancellable operational lease contracts are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Up to 1 year	2 803	8 903
1 to 5 years	1 1 263	1 0 451
	1 4 066 1 066	1 9 354 1 9 354

The fees invoiced during the years 2013 and 2012 by the statutory auditors, according to art. 508.º-F of "Código das Sociedades Comerciais" are presented as follows:

	(in thousands of euro)
	31 .1 2.201 3 3	31 31 .1 2.201 2 2
Audit fees	2 568	2 709
Audit related fees	1 609	1 1 48
Tax consultancy services	51 4	650
Other services	637	309
Total	5 328 5	4 81 6 4 81 6

NOTE18–EARNINGS PER SHARE EARNINGS SHARE

Basic earnings per share

Basic earnings per share, is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.

	(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 2.201 2
Profit attributable to the equity holders of the Bank (1 )	( 51 7 558) 51 558)	96 1 01 96 1 01
(-) Dividends on preference shares	6 950	6 1 37
(-) Remuneration from perpetual bonds	2 1 91	1 864
(+) Gains and losses realized in reserves	6 096	4 478
Profit attributable to the equity holders of the Bank with adjustments (1 )	( 520 603) 520 603)	92 578 92 578
Weighted average number of ordinary shares (thousands) Weighted average number of treasury stock (thousands)	4 01 7 928 ( 820)	3 096 971 ( 1 1 91 0)
Weighted average number of ordinary shares outstanding (thousands) ing (thousands)	4 01 7 1 08 01 7 1 08	3 085 061 085 061
B asic earnings per share attributable to equity holders of the B ank (in euro) ders of B (in euro)	(0.1 3) 3)3)	0.03
B asic earnings per share from continuing activities attributable to equity holders of the B ank (in euro)	(0.1 2) 2)	0.04 0.04

Diluted earnings per share Diluted share

The diluted earnings per share is calculated considering the profit attributable to the equity holders of the Company and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.

The diluted earnings per share are not different from the basic earnings per share as the outstanding plans of PRVIF do not have a dilutive effect.

NOTE19–CASH AND DEPOSITS AT CENTRAL BANKS CASH DEPOSITS AT BANKS

	(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2
Cash	288 1 37	303 538
Deposits at central banks Bank of Portugal Other central banks	31 044 1 400 1 82	26 1 36 1 047 867
	1 431 226	1 074 003
	1 71 9 363 1 9	1 377 541 1 377 541

As at 31 December 2013 and 31 December 2012, this balance is analysed as follows:

The deposits at Central Banks include mandatory deposits with the Bank of Portugal intended to satisfy legal minimum cash requirements, for an amount of euro 30 309 thousand (31 December 2012: euro 23 136 thousand). According to the European Central Bank Regulation no. 1348/2011, of 14 December 2011, minimum cash requirements kept as deposits with the Bank of Portugal earn interest and correspond to 1% of deposits and debt certificates maturing in less than 2 years, excluding deposits and debt certificates of institutions subject to the European System of Central Banks' minimum reserves requirements. During 2013, these deposits have earned interest at an average rate of 0.55% (2012: 0.89%).

The fulfilment of the minimum cash requirements for a given period of observation is monitored taking into account the value of bank deposits with the Bank of Portugal during the referred period. The balance of the bank account with the Bank of Portugal as at 31 December 2013, was included in the observation period from 11 December 2013 to 14 January 2014, which corresponded to an average minimum cash requirements of euro 265.1 million.

NOTE 20 20–DEPOSITS WITH BANKS DEPOSITS WITH BANKS

As at 31 December 2013 and 2012, this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 31 .1 2.201 2 2

Deposits with banks in Portugal
Repayable on demand	1 01 1 46	1 38 854
Uncollected cheques	85 1 64	1 07 354
	1 86 31 0 1 31 0	246 208 246 208
Deposits with banks abroad
Repayable on demand	321 781	392 1 83
Uncollected cheques	3 564	8 962
Other	31 290	33 724
	356 635 356 635	434 869 434 869
	542 945 542 945	681 077

Uncollected cheques in Portugal and abroad were sent for collection during the first working days following the reference dates.

NOTE21–FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADIN FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADINFINANCIAL HELD FOR TRADING

As at 31 December 2013 and 2012, this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
Financial assets held for trading
Securities
Bonds and other fixed income securities
Issued by government and public entities	952 852	1 347 806
Issued by other entities	1 28 694	259 203
Shares	30 963	51 91 1
Other variable income securities	1 373	2 01 4
	1 1 1 3 882 1 1 1 882	1 660 934 1 934
Derivatives
Derivative financial instruments with positive fair value	1 394 050	2 264 465
	2 507 932 2 507 932	3 925 399 3 925 399
Financial liabilities held for trading
Derivative financial instruments with negative fair value	1 269 788	2 1 21 229
Short sales	1 4 484	796
	1 284 272 1 284 272	2 1 22 025 2 1 22 025

As at 31 December 2013 and 2012 the analysis of the securities held for trading by the period to maturity, is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31

Up to 3 months	40 708	1 38 71 0
3 to 1 2 months	1 1 2 295	1 30 677
1 to 5 years	627 81 8	757 798
More than 5 years	300 721	576 1 27
Undetermined	32 340	57 622
	1 1 1 3 882 1 1 1 3	1 1 660 934 934

In accordance with the accounting policy described in Note 2.6, securities held for trading are those which are bought to be traded in the short-term, regardless of their maturity.

Regarding quoted and unquoted securities, the balance financial assets held for trading is as follows:

	31 .1 2.201 3 .1 3			31 .1 2.201 2 31 .1 2.201 2
Quoted Quoted	UnquotedUnquoted Unquoted	Total	Quoted	Unquoted UnquotedUnquoted	Total

952 852 76 583	- 52 1 1 1	952 852 1 28 694	1 347 806 94 1 57	- 1 65 046	1 347 806 259 203
30 894	69	30 963	40 1 35	1 1 776	51 91 1
1 373	-	1 373	2 01 4	-	2 01 4
1 061 702 1 061 702	52 1 80 1 80	1 1 1 3 882 1 3	1 484 1 1 2 1 484 1	1 76 822 1 822	1 660 934

As at 31 December 2013 the exposure to public debt from peripheral Eurozone countries is analysed in Note 51.

As at 31 December 2013 and 2012, derivative financial instruments can be analysed as follows:

		31 .1 2.201 3			31 .1 2.201 2	(in thousands of euro)
		Fair Value			Fair Value
	Notional	Assets Assets	LiabilitiesLiabilities Liabilities	Notional	Assets	Liabilities Liabilities
Trading derivatives
E xchange rate contracts
Forward
- buy	1 866 504			1 21 7 845
- sell	1 863 1 06	23 900	8 459	1 226 399	6 968	1 2 443
Currency Swaps
- buy	1 643 820			3 357 723
- sell	1 628 1 41	3 346	2 1 70	3 344 1 04	1 753	2 002
Currency Futures a)	2 771 1 68	-	-	278 31 7	-	-
Currency Interest Rate Swaps
- buy	60 789			1 1 8 945
- sell	62 31 2	1 4 938	1 2 839	1 1 5 406	25 690	1 8 343
Currency Options	2 81 3 981	27 31 6	25 1 44	2 41 4 534	41 41 5	46 846
	1 2 709 821 1	69 69 500	48 61 2 61	1 2 073 273 1 073	75 826	79 634 79
Interest rate contracts
Forward Rate Agreements	31 0 000	79	-	200 000	-	1 6
Interest Rate Swaps	23 903 263	1 202 322	1 069 853	30 649 333	1 953 058	1 81 2 560
Swaption - Interest Rate Options	2 000	-	-	363 000	1 556	1 556
Interest Rate Caps & Floors	3 378 746	28 286	26 877	4 918 557	40 843	38 562
Interest Rate Futures a)	4 436 679	-	-	3 784 771	-	-
Interest Rate Options	870 288	330	328	1 903 388	1 341	1 341
	32 900 976 32	1 231 01 7 231 1 231 01 7	1 097 058 1 097 058 1	41 81 9 049 41 81 9 049 81 9	1 996 798 1 996 798 1	1 854 035 1 854 035
E quity / index contracts
E quity / Index Swaps	581 628	23 273	42 538	664 51 6	86 202	24 936
E quity / Index Options	904 483	35 421	63 1 93	2 71 2 479	60 726	1 31 1 46
E quity / Index Futures a)	53 1 1 3	-	-	96 583	-	-
Future Options a)	395 420	-	-	82 234	-	-

	1 934 644	58 694 58 694 58	1 05 731 1 05 731 1	3 555 81 2 3 555 81 2 3 555	1 46 928 1 46 928 1	1 56 082 1 56 082
Credit default contracts
Credit Default Swaps	1 264 1 96	34 839	1 8 387	2 774 780	44 91 3	31 478
Total	48 809 637 48	1 394 050 394 1 394 050	1 269 788 1 269 788 1	60 222 91 4 60 222 91 4 222	2 264 465 2 264 465 2	2 1 21 229 2 1 21 229

a) Derivatives traded in organised markets, whose fair value is settled daily through the margin accounts.

As at 31 December 2013, the fair value of derivative financial instruments included the amount of euro 4.2 million (asset) (31 December 2012: asset for an amount of euro 21.1 million) related to the positive fair value of the embedded derivatives, as described in Note 2.4.

		31 .1 2.201 3 3		31 .1 2.201 2
	Notional Notional	Fair value (net)value (net) Fair value (net)	Notional Notional Notional	Fair value (net) Fair value (net)
Up to 3 months	9 433 559	( 1 1 685)	1 3 956 784	71 1 33
3 to 1 2 months	7 787 1 95	4 377	9 998 962	( 46 401 )
1 to 5 years	1 6 1 90 81 8	34 765	1 8 71 9 605	21 460
More than 5 years	1 5 398 065	96 805	1 7 547 563	97 044
	48 809 637 48 637	1 24 262 262	60 222 91 4 60 222 4	1 43 236 43

As at 31 December 2013 and 2012, the analysis of trading derivatives by the period to maturity is presented as follows:

NOTE 22 22–OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFI OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS OR OR LOSS

As at 31 December 2013 and 2012, this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2.201 2
Bonds and other fixed income securities
Issued by government and public entities	1 234 070	51 5 994
Issued by other entities	1 238 21 6	1 1 1 8 425
Shares and other variable income securities	1 402 061	1 1 87 1 34
	3 874 347 3 347	2 821 553 2 821 553

In light of IAS 39 and in accordance with the accounting policy described in Note 2.6, the Group designated these financial assets as at fair value through profit or loss, in accordance with the documented risk management and investment strategy, considering that these financial assets (i) are managed and evaluated on a fair value basis and/or (ii) have embedded derivatives.

As at 31 December 2013 and 2012, the analysis of the financial assets at fair value through profit or loss by the period to maturity is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 31 .1 2.201 2 2
Up to 3 months	599 834	486 789
3 to 1 2 months	1 028 886	239 972
1 to 5 years	347 043	224 257
More than 5 years	51 8 935	733 700
Undetermined	1 379 649	1 1 36 835
	3 874 347 3 874	2 821 553 2 821 553

Regarding quoted or unquoted securities, the balance financial assets at fair value through profit or loss, is presented as follows:

						(in thousands of euro)
		31 .1 2.201 3 31 2.201 3			31 .1 2.201 2 .1
	Quoted Quoted	UnquotedUnquoted Unquoted	Total	Quoted	Unquoted Unquoted Unquoted	Total

Bonds and other fixed income securities
Issued by government and public entities	1 234 070	-	1 234 070	51 5 994	-	51 5 994
Issued by other entities	491 650	746 566	1 238 21 6	272 936	845 489	1 1 1 8 425
Shares and other variable income securities	61 9 944	782 1 1 7	1 402 061	599 049	588 085	1 1 87 1 34
	2 345 664	1 528 683	3 874 347 3 347	1 387 979 1 387	1 433 574 433 574	2 821 553 821

NOTE23–AVAILABLE AVAILABLEAVAILABLE-FOR-SALE FINANCIAL ASSETS SALE FINANCIAL ASSETS

As at 31 December 2013 and 2012, this balance is analysed as follows:

					(in thousands of euro)
		Fair value reserve		Impairment	Book
	Cost (1 )	Positive Positive	Negative Negative	losses	value
Bonds and other fixed income securities
Issued by government and public entities	4 005 020	26 436	( 24 821 )	-	4 006 635
Issued by other entities	2 01 9 221	64 470	( 36 01 4)	( 31 256)	2 01 6 421
Shares	1 400 040	83 327	( 66 877)	( 1 98 377)	1 21 8 1 1 3
Other variable income securities	1 304 985	1 7 342	( 9 489)	( 67 402)	1 245 436
B alance as at 31 December 201 3 alance at December 201 3	8 729 266 729 266	1 91 575 575	( 1 37 201 ) ( 201 ) )	( 297 035) 297 035) 035)	8 486 605 486 605
Bonds and other fixed income securities
Issued by government and public entities	4 205 940	201 1 52	( 1 703)	-	4 405 389
Issued by other entities	4 086 487	65 422	( 78 023)	( 1 7 1 71 )	4 056 71 5
Shares	1 557 346	82 1 53	( 45 387)	( 1 85 1 90)	1 408 922
Other variable income securities	908 326	1 6 472	( 4 908)	( 35 606)	884 284
B alance as at 31 December 201 2 alance at December 201 2	1 0 758 099 758 099 1 0 758 099	365 1 99 365 1 99 1	( 1 30 021 ) ( 1 30 021 ) ( 021 )	( 237 967) ( 237 967) 237 967)	1 0 755 31 0 1 0 755 31 0

(1 ) Acquisition cost relating to shares and other variable income securities and amortised cost relating to debt securities.

As at 31 December 2013, the exposure to debt of peripheral countries in the euro area is analysed in Note 51.

In accordance with the accounting policy described in Note 2.6, the Group assesses periodically whether there is objective evidence of impairment on the available-for-sale financial assets, following the judgment criteria's described in Note 3.1.

The changes occurred in impairment losses of available-for-sale financial assets are presented as follows:

	(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Balance at the beginning of the period	237 967	1 68 282
Charge for the period	1 1 5 595	1 03 233
Charge off	( 43 265)	( 28 426)
Write back for the period	( 1 1 035)	( 3 925)
E xchange differences and other	( 2 227)	( 1 1 97)
B alance at the end of the period	297 035	237 967 967

As at 31 December 2013 and 2012, the analysis of available-for-sale assets by the period to maturity is presented as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 .1 2

Up to 3 months	1 252 01 5	2 859 487
3 to 1 2 months	708 1 63	1 263 81 4
1 to 5 years	1 548 499	1 227 774
More than 5 years	2 568 446	3 1 1 4 31 6
Undetermined	2 409 482	2 289 91 9
	8 486 605 486 605	1 0 755 31 0 1 0 755 31 0

The main equity exposures that contribute to the fair value reserve, as at 31 December 2013 and 2012, can be analysed as follows:

					(in thousands of euro)
	31 .1 2.201 3
	Acquisition	Fair value reserve			B ook
Description	cost	Positive Positive	Negative	Impairment	value
Portugal Telecom	346 678	-	( 62 407)	( 37)	284 234
E DP- Energias de Portugal	20 1 21	4 999	-	-	25 1 20
Banque Marocaine du Commerce E xtérieur	81 004	2 424	-	-	83 428
	447 803	7 423 7 423 7	( 62 407) ( 62 407) 62 407)	( 37) ( 37)37)	392 782 392 782

(milhares de euros)

31 .1 2.201 2
	Acquisition	Fair value reserve			B ook
Description	cost	Positive Positive	Negative	Impairment	value

Portugal Telecom	346 637	-	( 1 0 757)	-	335 880
E DP- Energias de Portugal	1 73 826	24 447	-	-	1 98 273
Banque Marocaine du Commerce E xtérieur	81 004	-	( 1 5 81 3)	-	65 1 91
	601 467	24 447 24	( 26 570) 26 570) 570)	-	599 344 599 344

During the year ended 31 December 2013, the Group sold at market prices 77.4 million ordinary shares of EDP, which generated a realised net gain of euro 53.7 million.

During the year ended 31 December 2012, the Group sold at market prices 96.4 million ordinary shares of EDP and 260.7 million ordinary shares of Portugal Telecom. These transactions generated a realised net loss of euro 224.9 million.

The analysis of the available-for-sale financial assets by quoted and unquoted securities, is presented as follows:

						(in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Quoted Quoted	Unquoted Unquoted Unquoted	Total	Quoted	Unquoted UnquotedUnquoted	Total
Securities Bonds and other fixed income securities Issued by government and public entities Issued by other entities	2 867 307 705 898	1 1 39 328 1 31 0 523	4 006 635 2 01 6 421	3 1 1 1 938 785 750	1 293 451 3 270 965	4 405 389 4 056 71 5
Shares	541 766	676 347	1 21 8 1 1 3	787 1 78	621 744	1 408 922
Other variable income securities	550 61 1	694 825	1 245 436	323 81 0	560 474	884 284
	4 665 582	3 821 023 821 023	8 486 605 8 605	5 008 676 5 008 676	5 746 634	1 0 755 31 0 1 755

NOTE24–LOANS AND ADVANCES TO BANKS LOANS ADVANCES TO BANKS

As at 31 December 2013 and 2012 this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 2.201
Loans and advances to banks in Portugal
Deposits at central banks	3 900 000	3 350 000
Deposits at other banks	81 461	39 372
Loans	1 69 508	1 27 581
Other loans and advances	1 1 65	84 474
	4 1 72 1 71 72	3 635 51 2 635
Loans and advances to banks abroad
Deposits	605 1 1 0	833 223
Very short term deposits	90 976	1 48 696
Loans	457 978	703 798
Other loans and advances	1 05 499	1 05 653
	1 259 563	1 791 370 791
Impairment losses	( 270)	( 364)
	5 431 464	5 426 51 8 426

The main loans and advances to banks in Portugal, as at 31 December 2013 bear interest at an average annual interest rate of 1.46% (31 December 2012: 1.73%). Loans and advances to banks abroad bear interest at an average annual interest rate of 0.24%.

As at 31 December 2013 and 2012, the analysis of loans and advances to banks by the period to maturity is presented as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 2
Up to 3 months	5 1 1 6 994	5 063 1 07
3 to 1 2 months	225 380	96 652
1 to 5 years	22 491	79 623
More than 5 years	66 867	1 87 427
Undetermined	2	73
	5 431 734 734	5 426 882 5 426 882

The changes occurred during the year in impairment losses of loans and advances to banks are presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31 .1 2.201 2
Balance at the beginning of the year	364	21 9
Charge for the year	306	1 366
Write back for the year	( 386)	( 1 207)
E xchange differences and year	( 1 4)	( 1 4)
B alance at the end of the year	270	364 364

NOTE25–LOANS AND ADVANCES TO CUSTOMERS LOANS TO CUSTOMERS CUSTOMERS

As at 31 December 2013 and 2012, this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 .1 2.201 2
Domestic loans
Corporate
Loans	1 2 951 686	1 2 605 085
Commercial lines of credits	4 635 722	5 247 361
Finance leases	2 21 5 471	2 560 544
Discounted bills	306 776	454 624
Factoring	1 048 537	1 41 2 476
Overdrafts	52 640	76 303
Other loans	1 54 1 57	31 0 1 68
Retail
Mortgage loans	9 693 399	1 0 067 1 67
Consumer and other loans	1 480 827	1 726 91 0
	32 539 21 5 32	34 460 638 460 638
Foreign loans
Corporate
Loans	9 301 803	8 593 536
Commercial lines of credits	2 061 420	2 1 81 087
Finance leases	62 424	69 732
Discounted bills	87 1 07	1 45 877
Factoring	53 035	52 494
Overdrafts	737 402	581 680
Other loans	1 88 997	458 646
Retail
Mortgage loans	1 01 2 41 2	964 525
Consumer and other loans	688 449	705 091
	1 4 1 93 049 1 4	1 3 752 668 752 668
Overdue loans and interest
Up to 3 months	1 64 250	21 9 41 6
From 3 months to 1 year	71 3 61 2	608 075
From 1 to 3 years	1 355 793	791 568
More than 3 years	756 389	566 369
	2 990 044 2	2 1 85 428 1 85 428
	49 722 308 49	50 398 734 50 398 734
Impairment losses	(3 387 41 2)	(2 692 342)
	46 334 896 46	47 706 392 47 706 392

As at 31 December 2013, the balance loans and advances to customers (net of impairment) includes an amount of euro 3 253.5 million (31 December 2012: euro 3 803.3 million) related to securitised loans following the consolidation of

the securitisation entities (see Notes 1 and 49), according to the accounting policy described in Note 2.2. The liabilities related to these securitisations are booked under Debt securities issued (see Notes 38 and 49).

As at 31 December 2013, loans and advances include euro 5 552.6 million of mortgage loans that collateralise the issue of covered bonds (31 December 2012: euro 5 605.1 million) (see Note 38).

As at 31 December 2013, loans and advances to customers included a portfolio of loans granted, which are under a sovereign guarantee of Republic of Angola to the Group through its subsidiary Banco Espírito Santo Angola, S.A..

The analysis of debt securities issued by the period to maturity is as follows:

	(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 2.201 2
Up to 3 months	6 409 71 5	7 932 875
3 to 1 2 months	5 885 1 57	6 1 43 51 8
1 to 5 years	1 0 1 28 053	1 0 058 945
More than 5 years	24 309 339	24 077 968
Undetermined	2 990 044	2 1 85 428
	49 722 308 49	50 398 734 398

The changes occurred during the year in impairment losses of loans and advances to customers are presented as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2.201 2
B alance as at 1 J anuary	2 692 342	2 1 67 444
Charge for the year	1 439 1 60	1 01 6 1 53
Charge off	( 207 263)	( 208 494)
Write back of the year	( 434 068)	( 201 321 )
Unwind of discount	( 1 03 082)	( 78 290)
E xchange differences and other	323	( 3 1 50)
B alance as at 31 December	3 387 41 2 387 41	2 692 342

The unwind of discount represents the interest on overdue loans, recognised as interest and similar income, as impairment losses are calculated using the discounted cash flows method.

As at 31 December 2013 and 31 December 2012, the detail of loans and advances to customers and impairment losses can be analysed as follows:

							(in thousands of euro)
				31 .1 2.201 3
	Loans with impairment losses calculated on an individual basis			Loans with impairment losses calculated on a portfolio basis		Total
	Gross amount	Impairment	Gross amount	Impairment	Gross amount		Impairment Net Loans Impairment

Corporate loans	1 3 426 351	2 828 295	23 098 258	1 80 891	36 524 609	3 009 1 86	33 51 5 423
Mortgage loans	2 348 771	1 75 325	8 465 955	1 0 538	1 0 81 4 726	1 85 863	1 0 628 863
Consumers loans - other	584 464	1 84 01 5	1 798 509	8 348	2 382 973	1 92 363	2 1 90 61 0
Total	1 6 359 586	3 1 87 635	33 362 722	1 99 777	49 722 308	3 387 41 2	46 334 896

				31 .1 2.201 2			(in thousands of euro)
		Loans with impairment losses calculated on an individual basis		Loans with impairment losses calculated on a portfolio basis		Total
	Gross amount	Impairment	Gross amount	Impairment	Gross amount		Impairment Net Loans Impairment
Corporate loans	1 2 51 0 484	2 1 95 708	24 1 26 648	1 49 576	36 637 1 32	2 345 284	34 291 848
Mortgage loans	2 362 525	1 60 1 35	8 771 297	6 884	1 1 1 33 822	1 67 01 9	1 0 966 803
Consumers loans - other	585 945	1 68 948	2 041 835	1 1 091	2 627 780	1 80 039	2 447 741
Total	1 5 458 954	2 524 791	34 939 780	1 67 551	50 398 734	2 692 342	47 706 392

The impairment calculated on an individual basis corresponds to the impairment related to loans with objective evidence of impairment and to loans classified as "Higher Credit Risk". The objective evidence of impairment occurs when there is a default event, i.e., from the moment that a significant change occurs in the lender-borrower relationship and the lender is subject to a loss. The "Higher Credit Risk" corresponds to loans without objective evidence of impairment but that present higher risk signs (e.g. customers with overdue loans for more than 30 days and less than 90 days; litigations; higher risk rating / scoring; allocated to the Companies Monitoring Department; and restructured loans due to financial difficulties of the borrower and which are not classified as default).

The interest recognised as interest and similar income during the year ended 31 December 2013 in relation to these loans amounted to euro 717.9 million (31 December 2012: euro 825.4 million), which includes the effect of the unwind of discount in connection with overdue loans.

The Group carries out a renegotiation of a loan in order to maximize its recovery. A loan is renegotiated in accordance with selective criteria, based on the (i) analysis of the overdue circumstances or when there is a high risk that the loan will became overdue, and the (ii) client has made a reasonable effort to fulfil the contractual conditions previously

agreed and (iii) is expected to have the capacity to meet the new terms agreed. The renegotiation normally includes the maturity extension, changes in the payment dates defined and / or amendment of the contracts' covenants. Whenever possible, the renegotiation includes obtaining new collaterals. The renegotiated loans are still subject to an impairment analysis resulting from the revaluation of the new expected cash flows, based in the new contract terms, updated at the original effective interest rate and taking into account the new collaterals.

As at 31 December 2013, loans and advances, excluding overdue loans and interest, includes euro 282 696 thousand of renegotiated loans (31 December 2012: euro 221 416 thousand). At the same date, the impairment regarding these renegotiated loans amounted to euro 6 190 thousand (31 December 2012: euro 16 363 thousand). The related interest recognized in the income statement amounted to euro 10 950 thousand (31 December 2012: euro 9 940 thousand).

The Group requires that some credit operations be collateralised, in order to mitigate credit risk. The more common types of collateral held are mortgages and securities. The fair value of these collaterals is determined at the date the loan is advanced to customers, being periodically updated when the credit is classified as having an impairment trigger.

The collateral received regarding credit operations can be analysed as follows:

				(in thousands of euro)
	31 .1 2.201 3 31	3	31 .1 2.201 2 31 .1 2.201
	Credit Value	Fair Value collateral	Credit Value	Fair Value collateral
Mortgage loans
Mortgages	1 0 600 588	1 0 578 354	1 0 951 831	1 0 930 789
Pawns	3 691	3 51 2	4 739	4 570
Not collateralised	21 0 447	-	1 77 252	-
	1 0 81 4 726	1 0 581 866	1 1 1 33 822	1 0 935 359
Individuals loans
Mortgages	305 840	287 1 64	31 0 561	291 897
Pawns	376 892	254 305	585 020	388 748
Not collateralised	1 700 241	-	1 732 1 99	-
	2 382 973	541 469	2 627 780	680 645
Companies loans
Mortgages	9 664 926	8 553 238	1 0 034 387	9 1 22 921
Pawns	4 973 1 57	2 537 769	6 884 077	3 562 838
Not collateralised	21 886 526	-	1 9 71 8 668	-
	36 524 609	1 1 091 007	36 637 1 32	1 2 685 759
Total	49 722 308 49	22 21 4 342 22 22 21 4 342	50 398 734 50 50 398 734	24 301 763 24 301 763

The amounts relating to loans restructured due to financial difficulties of the borrower, as defined by Bank of Portugal Rule no. 32/2013, are analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3
Corporate	4 1 1 3 958
Mortage loans	201 541
Consumer and other loans	1 1 5 445
Non-residents	1 41 5 421
Total	5 846 365

Loans and advances to customers by interest rate type are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 .1 2.201
Fixed interest rate Variable interest rate	9 421 41 6 40 300 892	8 1 26 91 3 42 271 821
	49 722 308 49	50 398 734 734

An analysis of finance leases by the period to maturity is presented as follows:

	(in thousands of euro)
31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2

364 545	432 202
1 022 599	1 1 30 447
1 1 86 455	1 373 1 1 6
2 573 599	2 935 765

61 705	68 859
1 36 1 82	1 57 21 7
97 81 7	79 41 3
295 704	305 489

302 840	363 343
886 41 7	973 230
1 088 638	1 293 703
2 277 895	2 630 276
( 1 75 1 04)	( 1 44 097)
2 1 02 791 2 1 02	2 486 1 79 2 486 1 79

As at 31 December 2013 and 2012 there are no finance leases which represent individually more than 5% of the total minimum lease payments. There are no finance leases with contingent rents.

NOTE26–HELD-TO-MATURITY INVESTMENTS MATURITY INVESTMENTS

The held-to-maturity investments, can be analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 .1 2
Bonds and other fixed income securities
Issued by government and public entities	322 405	295 271
Issued by other entities	1 1 90 655	685 389
	1 51 3 060 51 060	980 660 980 660
Impairment losses	( 1 3 421 )	( 39 1 1 1 )
	1 499 639 499 639	941 549 941 549

As at 31 December 2013 and 2012, the analysis of held-to-maturity investments by the period to maturity is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 .1

Up to 3 months	584 440	1 4 71 5
3 to 1 2 months	39 31 3	1 75 566
1 to 5 years	384 639	230 854
More than 5 years	504 668	559 525
	1 51 3 060 060	980 660 980 660

The analysis of the held-to-maturity investments by quoted and unquoted securities is presented as follows:

						(in thousands of euro)
	31 .1 2.201 3			31 .1 2.201 2
	Quoted Quoted	Unquoted Unquoted	Total	Quoted	Unquoted Unquoted	Total
Bonds and other fixed income securities
Issued by government and public entities	31 9 904	2 501	322 405	292 678	2 593	295 271
Issued by other entities	1 65 731	1 024 924	1 1 90 655	1 58 769	526 620	685 389
	485 635 635	1 027 425 425 1 027 425	1 51 3 060 1 51 3 060 1 51 3	451 447 451 447 451	529 21 3 529 21 3	980 660 980 660

The changes occurred in impairment losses of held to maturity investments are presented as follows:

(in thousands of euro)
31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2
39 1 1 1	32 31 6
( 372)	7 260
( 25 31 7)	( 467)
( 1 )	2
1 3 421 1	39 1 1 1 39 1 1 1
	-

The securities pledged as collateral by the Group are analysed in Note 46.

During the year ended 31 December 2008, the Group has reclassified non-derivative financial assets to the held-to maturity investments category for an amount of euro 767.2 million, as follows:

							(in thousands of euro)
				Reclassification date			Market value
	Acquisiton cost			Fair value reserve		E ffective	as at 31 December
		B ook value	Positive Positive	Negative Negative	flows a)	interest rateb)	2008
Available-for-sale financial assets	551 897	522 71 5	424	( 29 607)	701 070	5,75%	485 831
Financial assets held for trading	243 1 1 4	244 530	-	-	408 976	1 1 ,50%	237 295
B onds and other fixed income securities	795 01 1	767 245 767 245	424	( 29 607) ( 29 607)607)	1 1 1 0 046 1 1 1 0 046 1 0		723 1 26 723 1 26

a) Undiscounted capital and interest cash flow; future interest is calculated based on the foward interest rates at the date of reclassification.

b) E ffective interest rate was calculated based on the foward interest rates at the date of reclassification; the maturity considered was the minimum between the call date, if applicable and the maturity date of the financial asset.

If the reclassification of financial assets had not occurred, the impact in the financial statements of the Group would be as follows:

(in thousands of euro)
31 .1 2.201 2 2

947
( 73)
874

( 3 780)
1 1 91
( 2 589)

The reclassification of financial assets held-for-trading as held-to-maturity investments was performed following the amendment to IAS 39 Financial instruments: recognition and measurement and IFRS 7 Financial instruments: disclosures, adopted by the Regulation (EU) nº 1004/2008 issued in 15 October 2008. This reclassification was made due to the market conditions following the international financial crises that characterised the year 2008, which was considered to be one of the rare circumstances justifying the application of the amendment to IAS 39.

Following the publication by the Bank of Portugal, in May 2011 of Notice no. 3/2011, which has established new minimum levels for the Core Tier 1 ratio (9% at 31 December 2011 and 10% in 31 December 2012) and bearing in mind the need to achieve, from 2014 onwards, a stable funding ratio of 100%, according to the Memorandum of Economic and Financial Policies established between the Portuguese Government, the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF), the Group has decided during the second half of 2011 to sell a significant portion of the held-to-maturity investments portfolio. Under this decision, the securities to be sold were transferred to the available-for-sale financial assets portfolio and valued at market value.

Taking into account that the reclassification and subsequent sale of those securities is attributable to the significant increase in the industry regulatory capital requirements, it qualifies as an exception to the tainting rules as established under paragraph AG 22 of IAS 39 'Financial Instruments: Recognition and Measurement'. On these basis and once the Group has the intention and ability to hold the remaining securities until their maturity, they remained classified on the held-to-maturity investments portfolio.

The effects of the securities reclassification in the Group consolidated financial statements, at the transfer date, can be analysed as follows:

	(in thousands of euro)
From held-to-maturity investments					To available-for-sale financial assets
Acquisiton cost	Fair value reserve a)	Impairment	Balance	Acquisiton cost	Fair value reserve a)	Impairment	Balance
584 923	( 6 1 38)	( 50)	578 735	584 923	( 1 3 590)	( 50)	571 283

a) Remaining value of the fair value reserves at the transfer date for the held-to-maturity investments portofolio occured with reference to 1 J une 2008

NOTE 27 27–DERIVATIVES FOR RISK MANAGEMENT PURPOSES DERIVATIVES PURPOSES

As at 31 December 2013 and 2012, the fair value of the derivatives for risk management purposes can be analysed as follows:

		31 .1 2.201 3			31 .1 2.201 2
	Hedging	Risk management	Total Total	Hedging Hedging	Risk management	Total
Derivatives for risk management purposes
Derivatives for risk management purposes - assets Derivatives for risk management purposes - liabilities	1 31 641 ( 68 305)	231 750 ( 62 405)	363 391 ( 1 30 71 0)	1 53 897 ( 43 581 )	362 623 ( 81 61 8)	51 6 520 ( 1 25 1 99)
	63 336 336	1 69 345 1 1 69 345	232 681 232 681	1 1 0 31 6 1 1 0 31 6 1 1 31	281 005 281 005	391 321 391 321
Fair value component of assets and liabilities being hedged
Financial assets
Loans and advances to customers	43 1 02	-	43 1 02	22 391	-	22 391
	43 1 02 1	-	43 1 02 1	22 391	-	22 391
Financial liabilities
Deposits from banks	( 50 1 09)	1 331	( 48 778)	( 67 996)	-	( 67 996)
Due to customers	( 501 )	( 48 1 1 0)	( 48 61 1 )	( 787)	( 90 099)	( 90 886)
Debt securities issued	( 1 9 636)	( 9 71 1 )	( 29 347)	( 38 472)	47 631	9 1 59
	( 70 246) ( 246)	( 56 490) 56 490) ( 56 490)	( 1 26 736) ( 1 26 736)26 736)	( 1 07 255) ( 1 07 255)1 255)	( 42 468) ( 42 468) 42 468)	( 1 49 723) ( 1 49 723)
	( 27 1 44) ( 44)	( 56 490) 56 490) 490)	( 83 634) ( 83 634)	( 84 864) 864)	( 42 468) 42 468) 468)	( 1 27 332) 27

2 365 091 1 1 0 31 6 091 1 1 0 31 6 1 8 479 1 8 479 1 ( 84 864) ( 84 864) ( 864) ( 1 6 01 6) ( 1 6 01 6)

As mentioned in the accounting policy described in Note 2.4, derivatives for risk management purposes includes hedging derivatives and derivatives contracted to manage the risk of certain financial assets and financial liabilities designated at fair value through profit or loss.

Hedging derivatives

As at 31 December 2013 and 2012, the fair value hedge relationships present the following features:

							(in thousands of euro)
		31 .1 2.201 3
Derivative	Hedged item	Hedged Risk	Notional	Fair value of (2) derivative	Changes in the fair value of the derivative in the year	Accumulated changes in fair value of the hedged item (1 )	Changes in the fair value of the hedged item in the year(1 )
Interest Rate Swap/ Currency Interest Rate Swap	Loans and advances to customers	Interest rate and exchange	608 738	( 41 21 3)	( 21 366)	43 1 02	20 827
Interest Rate Swap	Deposit from banks	Interest rate	1 74 000	54 1 37	( 1 9 1 61 )	( 50 1 09)	1 7 887
Interest Rate Swap	Due to customers	Interest rate	4 41 7	2 1 76	( 286)	( 501 )	286
E quity / Interest Rate Swap	Debt securities issued	Interest rate/Quotation	1 824 724	48 236	( 26 763)	( 1 9 636)	20 345
			2 61 1 879 2 61 1	63 336 63 336	( 67 576) ( 67 576)576)	( 27 1 44) ( 27 1 44)44)	59 345 59 345
(2) Includes accrued interest							(in thousands of euro)
		31 .1 2.201 2
Derivative	Hedged item	Hedged Risk	Notional	Fair value of (2) derivative	Changes in the fair value of the derivative in the year	Accumulated changes in fair value of the hedged item (1 )	Changes in the fair value of the hedged item in the year(1 )
Interest Rate Swap/ Currency Interest Rate Swap	Loans and advances to customers	Interest rate and exchange	529 897	( 23 884)	( 1 79)	22 391	( 638)
Interest Rate Swap	Deposit from banks	Interest rate	1 74 000	64 725	1 3 779	( 67 996)	( 1 1 744)
Interest Rate Swap	Due to customers	Interest rate	4 41 7	2 1 74	( 50)	( 787)	51
E quity / Interest Rate Swap	Debt securities issued	Interest rate/Quotation	1 656 777	67 301	4 929	( 38 472)	( 3 685)

(1 ) Attributable to the hedged risk (2) Includes accrued interest

Changes in the fair value of the hedged items mentioned above and of the respective hedging derivatives are recognised in the income statement under net gains / (losses) from financial assets and financial liabilities at fair value through profit or loss (See Note 7).

As at 31 December 2013, the ineffectiveness of the fair value hedge operations amounted to a loss of euro 8.2 million (31 December 2012: euro 2.5 million gain) and was recognised in the income statement. The Group evaluates on an ongoing basis the effectiveness of the hedges.

Other derivatives for risk management purposes risk management purposes nagement purposes

Other derivatives for risk management purposes includes derivatives held to hedge financial assets and financial liabilities at fair value through profit and loss in accordance with the accounting policies described in Notes 2.5, 2.6 and 2.8 and that the Group did not classify as hedging derivatives.

The book value of financial assets and financial liabilities at fair value through profit and loss can be analysed as follows:

								(in thousands of euro)
		31 .1 2.201 3
			Derivative Derivative				Assets/Liabilites associated Assets/Liabilites associated
Derivative	Financial assets/liabilites economically hedged	Notional Notional	Fair value Fair value	Changes in the fair value during the year	Fair value	Changes in the fair value during the year	Carrying amount	Redemption amount at maturity (1 )
Credit Default Swap	Assets Loans to customers	268 000	8 059	( 1 7 759)	-	-	-	268 000
	Liabilities
Interest Rate Swap	Due to customers	9 080 000	77 1 52	( 59 891 )	( 48 1 1 0)	41 221	9 346 477	9 298 367
Interest Rate Swap/ FX Forward	Debt security issued	1 095 563	63 273	( 49 908)	26 276	( 50 1 02)	376 026	386 407
Credit Default Swap	Debt security issued	441 233	1 2 805	1 1 547	( 23 472)	( 8 1 69)	467 953	459 006
Equity Swap	Debt security issued	434 476	6 263	1 2 073	( 7 697)	( 1 3 459)	353 257	358 891
Equity Option	Debt security issued	49 030	1 793	682	( 3 487)	( 3 765)	1 1 1 379	1 1 3 01 9
		1 1 368 302 368	1 69 345 1 69	( 1 03 256) ( 1 256)	( 56 490) ( 56 490) 490)	( 34 274) ( 34 274)	1 0 655 092 1 655 092	1 0 883 690 1 0 690

(1) Corresponds to the minimum guaranted amount to be reimbursed at maturity.

								(in thousands of euro)
		31 .1 2.201 2
			Derivative Derivative			Assets/Liabilites associated Assets/Liabilites associated
Derivative	Financial assets/liabilites economically hedged	Notional Notional	Fair value	Changes in the fair value during the year	Fair value	Changes in the fair value during the year	Carrying amount	Redemption amount at maturity (1 )
	Assets
Credit Default Swap	Loans to customers	84 000	-	( 1 600)	-	-	-	84 000
	Liabilities
Interest Rate Swap	Due to customers	7 540 000	1 79 038	67 206	( 90 099)	( 1 1 1 024)	8 791 778	8 71 2 699
Interest Rate Swap/ FX Forward	Debt security issued	1 485 628	97 092	30 345	69 21 7	( 53 029)	303 386	370 71 4
Credit Default Swap	Debt security issued	346 845	5 81 0	44 774	( 22 202)	( 53 860)	376 308	358 728
Equity Swap	Debt security issued	405 1 55	( 3 662)	1 5 81 3	2 985	( 24 257)	339 252	357 237
Equity Option	Debt security issued	82 525	2 727	1 3	( 2 369)	( 5 339)	1 25 874	1 31 828
		9 944 1 53 944	281 005 281 281 005	1 56 551 1 56 551 56 551	( 42 468) ( 42 468)( 42 468)	( 247 509) ( 247 509)509)	9 936 598 9 936 598 9 936	1 0 01 5 206 1 0 01 5 206

(1) Corresponds to the minimum guaranted amount to be reimbursed at maturity.

The credit default swaps associated to loans to customers are part of synthetic securitisation operations, as mentioned in Note 49.

As at 31 December 2013, the fair value of the financial liabilities at fair value through profit or loss, includes a positive cumulative effect of euro 93.8 million (31 December 2012: positive cumulative effect of euro 167.1 million) attributable to the Group's own credit risk. The change in fair value attributable to the Group's own credit risk resulted in the recognition, in 2013, of a loss amounting to euro 73.3 million (31 December 2012: loss of euro 35.2 million), see Note 7.

As at 31 December 2013 and 2012, the analysis of derivatives for risk management purposes by the period to maturity is as follows:

	31 .1 2.201 3		31 .1 2.201 2	(in thousands of euro)
	Notional Notional	Fair ValueValue Fair Value	Notional Notional	Fair Value Value
Up to 3 months	1 329 792	1 7 71 4	1 674 024	1 3 571
3 to 1 2 months	6 725 633	1 6 069	2 361 702	25 889
1 to 5 years	4 51 6 609	89 1 80	7 205 288	205 686
More than 5 years	1 408 1 47	1 09 71 8	1 068 230	1 46 1 75
	1 3 980 1 81 980	232 681 232 681 232	1 1 2 309 244 1 2 309 244 244	391 321 391 321

NOTE28–NON-CURRENT ASSETS AND LIABILITIES HELD FOR SALE CURRENT HELD FOR SALESALE

This balance as at 31 December 2013 and 2012 is analysed as follows:

				( in thousands of euro)
	31 .1 2.201 3 31 .1 2.201 3		31 31 .1 2.201 2
	Assets Assets Liabilities Liabilities Liabilities		Assets	Liabilities Liabilities
Assets and liabilities of subsidiaries acquired exclusively for resale purposes	671 862	1 53 580 1 53 580	731 767	1 75 945 1 75
Property held for sale E quipment Other tangible assets	3 387 737 1 6 1 1 4 4 1 64 3 408 01 5	- - - - -	2 843 378 2 524 3 501 2 849 403 2 849 403 2	- - - -
Impairment losses	( 51 2 866) 2 866)		( 303 630) ( 303 630)
	3 567 01 1	1 53 580 1 53 580	3 277 540 3	1 75 945 1 75

The amounts presented refer to (i) investments in entities controlled by the Group, which have been acquired exclusively with the purpose of being sold in the short term, and (ii) assets acquired in exchange for loans and discontinued branches available for immediate sale.

As at 31 December 2013, the assets of subsidiaries acquired for resale purposes are presented as follows:

	E conomic	Values incorported by B E S Group
	Interest %	Assets Assets	LiabilitiesLiabilities Liabilities	Net Result Net Result
Greenwoods E coresorts empreendimentos imobiliários, SA (1 )	97.66%	226 760	51 6	( 4 571 )
Sealion Holdings Limited	57.00%	1 88 036	1 35 1 58	( 1 9 562)
Portucale - Sociedade De Desenvolvimento Agro - Turistico, S.A.	97.24%	53 989	8 699	( 1 320)
Autodril - Sociedade Imobiliária, SA	60.31 %	48 983	1	1 25
Ribagolfe - E mpreendimentos de Golfe, SA	97.1 6%	22 522	5 776	-
Febagri-Actividades Agropecuárias e Imobiliárias SA	60.31 %	1 1 891	1 284	( 30)
Quinta da Areia - Sociedade Imobiliária, SA	1 00.00%	1 1 950	5	34
Odebrecht E ngenharia Ambiental	0.55%	1 0 760	-	-
Herdade da Boina - Sociedade Imobiliária (1 )	1 00.00%	1 0 1 1 4	1 50	64
J CN - IP - Investimentos Imobiliários e Participações, S.A.	97.24%	9 659	64	( 1 624)
Herdade Vale da Mata	1 00.00%	8 1 21	1 31	-
Sociedade Imobiliária Quinta D. Manuel I, SA	1 00.00%	2 899	4	( 5)
Sociedade Agrícola Turística e Imobiliária da Várzea da Lagoa, SA	1 00.00%	5 886	-	( 2 91 4)
E MSA – E mpreendimentos e E xploração de E stacionamentos SA (1 )	1 00.00%	5 456	353	-
Other	-	1 7 720	1 439	-
(2) Total		634 746	1 53 580 1 53 580	( 29 803) ( 29 803)

( in thousands of euro)

(1 ) E ntities acquired during 201 3; in Greenwoods there was an increase in participation

(2) The assets incorporated are presented net of a provision of euro 37 1 1 6 thousand

The changes occurred in impairment losses are presented as follows:

		( in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31 .1 2.201 2
B alance as at 1 J anuary	303 630	1 81 449
Changes in the scope of consolidation	-	1 1 6 654
Charge/ Write back of the period	294 452	40 1 78
Charge off	( 1 01 757)	( 29 664)
E xchange differences and others	1 6 541	( 4 987)
B alance as at 31 December	51 2 866 51 2	303 630 303 630

In addition to the losses related to impairment, the Group recognized in profit and loss the following amounts, related to these assets:

Losses in real estate, equipments and other assets in the amount of euro 11.5 million (31 December 2012: euro 9.1 million) and gains in the amount of euro 10.8 million (31 December 2012: euro 3.2 million); and
Losses in the amount of euro 29.6 million from the appropriation of results of the subsidiaries held for sale (31 December 2012: euro 8.7 million loss).

						( in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Property and other assets	Assets of subsidiaries acquired for resale	Total	Property and other assets	Assets of subsidiaries acquired for resale	Total
B alance as at 1 J anuary	2 849 403	731 767	3 581 1 70	1 536 884	291 248	1 828 1 32
Change in the scope of consolidation Additions Sales Other	1 1 6 067 832 91 4 ( 452 652) 62 283	- 73 628 ( 91 392) ( 42 1 41 )	1 1 6 067 906 542 ( 544 044) 20 1 42	530 343 996 260 ( 21 8 735) 4 651	- 454 1 51 - ( 1 3 632)	530 343 1 450 41 1 ( 21 8 735) ( 8 981 )
B alance as at 31 December B alance as at December	3 408 3 408 01 5	671 862	4 079 877 4 079	2 849 403 2 403	731 767 767	3 581 1 70 3 1

The changes occurred in non-current assets held for sale during 2013 and 2012, are presented as follows:

The Group has a plan with the objective of the immediate sale of all non-current assets held for sale. However, given the current market conditions it was not possible to sell them within the expected time frame, but the sales effort and, in some cases, negotiations with potential buyers are still ongoing. The sales effort that is being made by the Group includes (i) a web site specifically designed for the sale of real estate assets; (ii) the setup and participation in real estate events in Portugal and abroad; (iii) the setup of contracts with several real estate agents; (iv) the regular sponsorship of auctions; and (v) campaigns in the major emigration centres. The Group, despite its intention to sale these assets, regularly request to the Bank of Portugal the authorisation, under article 114 of RGICSF, the extension of the period of time the Banks have to hold these assets.

The analysis of the real estate assets held for resale by aging is as follows:

				( in thousands of euro)
	31	31 .1 2.201 3 3		31 .1 2.201 2 31 .1 2.201 2
	Gross amount Gross amount	Impairment Impairment	Gross amount amount	Impairment
Held for
less than a year	834 701	64 1 91	1 296 994	1 58 987
for one to two years	1 1 42 1 33	231 523	327 267	26 1 86
more than two years	1 41 0 903	1 77 449	1 21 9 1 1 7	1 1 5 820
	3 387 737	473 1 63 1 63	2 843 378 2	300 993

Real estate assets are included in this caption, at the acquisition date in exchange for loans, by its market value considering an immediate sale scenario. These assets are revaluated periodically, being recognised an impairment loss when necessary.

As at 31 December 2013, the amount of property held for sale includes euro 21 260 thousand (31 December 2012: euro 21 598 thousand) related to discontinued branches, in relation to which the Group recognised an impairment loss amounting to euro 10 925 thousand (31 December 2012: euro 11 193 thousand).

NOTE29 –PROPERTY AND EQUIPMENT ERTY EQUIPMENT EQUIPMENT

	(in thousands of euro)
31 .1 2.201 3	31 .1 2.201 2
Balance at the beginning of the period 441 988	-
Change in the scope of consolidation a) -	446 1 35
Improvements 323	748
Other movements ( 46 456)	( 4 895)
395 855	441 988

As at 31 December 2013 and 2012 the movement on this balance is analysed as follows:

a) Related with the inclusion of BE S Vida, Fungere and Fungepi into the Group consolidation perimeter.

The carrying amount of investment property is the fair value of the properties as determined by a registered and independent appraiser having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. Fair values were determined having regard to recent market transactions for similar properties in the same locations as the Group's investment property when available.

Investment property comprise a group of assets detained by BES Vida and include a number of commercial properties that are leased to third parties. Most lease contracts do not have a specified term, being possible for the lessee to cancel at any time. However, for a small portion of commercial properties leased to third parties on average the leases contain an initial non-cancellable period of 10 years. Subsequent renewals are negotiated with the lessee.

The increase in fair value of investment property of euro 0.1 million and the rental income from investment property of euro 3.4 million, are recognised in Other operating income and expenses (31 December 2012: euro 2.9 million and euro 3.2 million, respectively).

The direct operating expenses including repairs and maintenance arising from investment property that generated rental income during the year 2013 reached 0.2 million euro (31 December 2012: euro 0.7 million). The direct operating expenses including repairs and maintenance arising from investment property that did not generate rental income during the year 2012, reached euro 0.2 million (as at 31 December 2013 all investment properties were rented).

NOTE30–OTHER TANGIBLE ASSETS OTHER ASSETS ASSETS

As at 31 December 2013 and 2012 this balance is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Property
For own use	495 464	472 650
Improvements in leasehold property	231 221	228 098
Other	374	1 1 39
	727 059 727 059	701 887 701 887
E quipment
Computer equipment	300 494	308 497
Fixtures	1 39 623	1 42 759
Furniture	1 34 750	1 31 075
Security equipment	44 893	42 469
Office equipment	35 683	34 961
Motor vehicles	1 5 373	1 2 627
Other	3 1 01	6 1 35
	673 91 7 673 91 7	678 523 678 523
Other	61 9	624
	1 401 595 1 401 595	1 381 034 1 381 034
Work in progress
Improvements in leasehold property	41 6	344
Land and buildings	386 202	396 237
E quipment	2 779	2 092
Other	63	54
	389 460 389 460	398 727
	1 791 055 1 791 055	1 779 761
Accumulated depreciation	( 865 61 7)	( 848 1 39)
	925 438 925 438	931 622

The movement in this balance was as follows:

					(in thousands of euro)
	Property Property	E quipment quipment quipment	Other	Work in progress	Total
Acquisition cost
B alance as at 31 December 201 1 alance as at 31 December 201	686 681	651 863	643	326 485 485	1 665 672 1 665 672
Acquisitions	5 41 0	27 61 5	-	1 1 5 775	1 48 800
Disposals	( 20 291 )	( 1 2 565)	( 1 6)	( 850)	( 33 722)
Transfers (a)	22 859	5 009	-	( 34 592)	( 6 724)
Exchange differences and other (b)	7 228	6 601	( 3)	( 8 091 )	5 735
B alance as at 31 December 201 2 alance as at 31 December 201	701 887	678 523	624	398 727 727	1 779 761 1 779 761
Acquisitions	3 987	26 799	-	83 590	1 1 4 376
Disposals	( 6 379)	( 27 050)	-	( 3)	( 33 432)
Transfers (a)	31 366	1 431	-	( 36 980)	( 4 1 83)
Exchange differences and other	( 3 802)	( 5 786)	( 5)	( 55 874)	( 65 467)
B alance as at 31 December 201 3 alance as at 31 December 201 3	727 059 727 059	673 91 7 673 91 7 91	61 9 61 9 61 9	389 460 389 460 460	1 791 055 1 791 055
Depreciation
B alance as at 31 December 201 1 alance as at 31 December 201	288 649	525 076	269	-	81 3 994 81 994
Depreciation	22 006	39 906	1 0	-	61 922
Disposals	( 1 8 667)	( 7 765)	-	-	( 26 432)
Transfers (a)	( 1 1 1 0)	( 41 3)	-	-	( 1 523)
Exchange differences and other (b)	( 525)	685	1 8	-	1 78
B alance as at 31 December 201 2 alance as at 31 December 201	290 353	557 489	297	-	848 1 39 848 39
Depreciation	21 647	38 649	1 0	-	60 306
Disposals	( 6 379)	( 26 408)	-	-	( 32 787)
Transfers (a)	( 575)	( 1 440)	-	-	( 2 01 5)
Exchange differences and other	( 931 )	( 7 1 00)	5	-	( 8 026)
B alance as at 31 December 201 3 alance as at 31 December 201	304 1 1 5 1 5	561 1 90 1	31 2 31 2	-	865 61 7 865 7
Net amount as at 31 December 201 3 amount at December 201	422 944	1 1 2 727	307	389 460 460	925 438 925 438
Net amount as at 31 December 201 2 amount at December 201	41 1 534	1 21 034	327	398 727 727	931 622 931 622

(a) Property and equipment transferred to the balance other assets, referring to discontinued branches transferred to the balance non-current assets held for sale.

(b) Includes euro 8 743 thousand from property, euro 7 91 9 thousand from equipment and euro 6 647 thousand of accumulated depreciation related to the inclusion of BE S Vida in the consolidation scope.

As at 31 December 2012, the balance equipment – motor vehicles includes equipment acquired under finance lease agreements, whose payment Schedule is as follows (as at 31 December 2013, there were no equipment under finance lease agreements):

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Gross investment in finance leases, payable
Up to one year	-	1 6
From one to five years	-	-
	-	1 6
Interest
Up to one year	-	1
From one to five years	-	-
	-	1
Principal
Up to one year	-	1 5
From one to five years	-	-
	-	1 5

NOTE31–INTANGIBLE ASSETS INTANGIBLE ASSETSINTANGIBLE ASSETS

As at 31 December 2013 and 2012 this balance is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 .1
Goodwill	325 805 325	31 3 665 3 665
(a) Value In Force	-	1 09 937
Internally developed Software - Automatic data processing system	75 601	58 1 86
Acquired to third parties Software - Automatic data processing system Other	674 632 970	645 01 0 951
	675 602 675	645 961 961
Work in progress	30 993 30	33 701 33 701
	1 1 08 001 08	1 1 1 1 61 450 450
Accumulated amortisation Impairment losses	(642 585) (1 0 064)	(596 345) (9 779)
	455 352 455	555 326 326

(a) related to BE S Vida; under the reinsurance operation of the life insurance portfolio, the remaining amount was booked under Other liabilities (see note 43)

		(in thousands of euro)
	31 .1 2.201 3 31 .1 3	31 2.201 31 .1 2.201 2
Subsidiaries
BE S Vida	234 574	234 574
E S Investment Holding (a)	47 540	48 567
E S Gestion	2 459	2 459
Aman Bank	1 6 046	1 6 046
Concordia	1 722	1 756
Imbassaí	1 3 526	-
Others	2 045	2 370
Other cash-generating units
Leasing e Factoring	7 893	7 893
	325 805	31 3 665 31 3 665
Impairment losses	(1 0 064)	(9 779)
	31 5 741	303 886

Goodwill, recognised in accordance with the accounting policy described in Note 2.2, is analysed as follows:

(a) Company that holds E xecution Noble

In 2012, the Group acquired the share capital of BES Vida, and the assets and liabilities fair value was calculated at the date of the acquisition. The fair value of recognized identifiable assets acquired and liabilities assumed include, under intangible assets, the amount of euro 107 768 thousand related to the present value of the business in force acquired related to life insurance contracts (Value in force) (euro 76 515 thousand net of taxes) (see Note 54). This asset will be amortised over the remaining lifetime of the contracts.

Considering the reinsurance contract signed during 2013 and described in Note 13, which reinsures 100% of the life insurance portfolio, inclusing all the policies in force in BES Vida as at 30 June 2013, transferring to the reinsurer all risks and rewards associated to these contracts, the respective value in force in the amount of euro 137 476 thousand was derecognised. The value in force of the remaining contracts, in the net amount of euro 25 380 thousand at the date of the reinsurance contract, have a liability nature and, as such, were accounted in Other liabilities (see Note 43).

BES Vida

The value of BES Vida was determined considering the Embedded Value and the Goodwill. The Embedded Value consists in adding (i) the company's equity (adjusted of unrealised gains and losses, net of tax) and (ii) and the expected present value of flow of distributable future profits from the policies in force at valuation date (adjusted by the cost of the solvency margin, the time value of options and guarantees and by the cost of residual risks that are not coverable). Goodwill consists in the value of new business to be developed by the company in the future.

For valuation purposes, it was used the business projections for the next 30 years and was applied a discount rate of 9.5%, which included an appropriate risk premium for the estimated cash-flows. Based in these assumptions the recoverable amount of the investment exceeds the book value, including Goodwill.

ES Investment Holding Limited

The recoverable amount of ES Investment Holding Limited has been determined using cash flow/dividends predictions based on (i) the financial budget approved by management covering a nine-year period, (ii) a terminal growth rate of 3%, in line with the estimated nominal growth for the country where the company is located and (iii) a discount rate of 9.0% including a risk premium appropriated to the estimated future cash-flows. The nine-year period for estimating the future cash-flows reflect the fact that the company was acquired in late 2010 and its business strategy is being redefined. It is expected that the company achieves a maturity stage only at the end of that time period. Based on the above assumptions the recoverable amount exceeded the carrying amount, including Goodwill.

Aman Bank

On 31 December 2011, the Group recognised an impairment of euro 8 023 thousand in goodwill related with the acquisition of Aman Bank. The impairment reflects the changes of the estimated future cash flows expected by the Group in this entity as a result of the political situation lived in Libya during 2011. In 2012 and 2013, this entity showed a positive trend, thus there was no need to reinforce the impairment loss recognised.

The balance of internally developed software includes the costs incurred by the Group in the development and implementation of software applications that will generate economic benefits in the future (see Note 2.14).

The movement in this balance was as follows:

	Goodwill and			Work in	(in thousands of euro)
	Value In Force	Software Software	Other	progress	Total
Acquisition cost
B alance as at 31 December 201 1 B as December 1	97 739 97 739	658 1 1 3 658 1 1 3 658 1 1	91 7	26 41 3 26 41 3 26 41 3	783 1 82 783 1 82
Acquisitions:
Internally developed	-	54	-	8 257	8 31 1
Acquired from third parties (a)	344 51 1	1 1 533	-	24 1 52	380 1 96
Disposals	-	(1 41 4)	-	( 1 03)	(1 51 7)
Transfers	-	26 255	-	(26 255)	-
Exchange differences and other (b) (c)	(1 8 648)	8 655	34	1 237	(8 722)
B alance as at 31 December 201 2 B as December 2	423 602 602	703 1 96 703 1 96	951	33 701 33 701	1 1 61 450 1
Acquisitions:
Internally developed	-	-	-	9 1 47	9 1 47
Acquired from third parties	1 3 526	1 2 622	20	23 234	49 402
Disposals (d)	(1 37 476)	( 457)	-	-	(1 37 933)
Transfers (d)	21 989	34 221	-	(34 221 )	21 989
Exchange differences and other	4 1 64	651	( 1 )	( 868)	3 946
B alance as at 31 December 201 3 B as December 3	325 805 805	750 233 750 233	970	30 993	1 1 08 001 1
Amortisations
B alance as at 31 December 201 1	-	542 344 542 344 542 344	878	-	543 222 543 222
Amortisations of the period	-	46 1 1 6	36	-	46 1 52
Disposals	-	(1 31 8)	-	-	(1 31 8)
Exchange differences and other (e)	-	8 288	1	-	8 289
B alance as at 31 December 201 2	-	595 430 595 430	91 5	-	596 345
Amortisations of the period	-	47 551	4	-	47 555
Disposals	-	( 458)	-	-	( 458)
Exchange differences and other	-	( 857)	-	-	( 857)
B alance as at 31 December 201 3	-	641 666 666	91 9	-	642 585
Impairment
B alance as at 31 December 201 1 B as December 1	9 628 9 628	-	-	-	9 628
Exchange differences and other	1 51	-	-	-	1 51
B alance as at 31 December 201 2 B as December 2	9 779 779	-	-	-	9 779
Impairment losses	362	-	-	-	362
Exchange differences and other	( 77)	-	-	-	( 77)
B alance as at 31 December 201 3 B as December 3	1 0 064 064	-	-	-	1 0 064
Net amount as at 31 December 201 3 201 3	31 5 741 741 31 5 741	1 08 567 1 08 567 567	51	30 993	455 352 455 352
Net amount as at 31 December 201 2 201 2	41 3 823 823	1 07 766 766	36	33 701 33 701	555 326

(a) Goodwill and VIF relates to BE S Vida control acquisition.

(b) Includes euro 1 9 682 thousands regarding Gespastor goodwill derecognition.

(d) Parcial sale of the VIF in relation to the control acquisition over BE S Vida, under the reinsurance operation of the life insurance portfolio, the remaining amount was booked under Other liabilities (see Note 43)

(e) Includes euro 8 791 thousands from BES Vida control acquisition (see Note 54).

NOTE32–INVESTMENTS IN ASSOCIATES INVESTMENTS IN ASSOCIATES ASSOCIATES

The financial information concerning associates is presented in the following table:

										(in thousands of euro)
	Assets Assets		Liabilities Liabilities		E quity E quity quity		Income		Profit/(Loss) for the period
	31 .1 2.201 3 .1 3	31 .1 2.201 2 2	31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2.201 2	31 .1 2.201 3 2.201 3	31 .1 2.201 2 .1 2.201 22	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 2.201 2 2	31 .1 2.201 3 2.201 33	31 .1 2.201 2 31 .1

ES VÉ NÉ TIE	1 429 691	1 61 6 961	1 257 005	1 444 71 5	1 72 686	172 246	68 489	75 01 2	4 070	10 31 5
LOCARE NT	244 535	285 740	231 41 8	277 404	1 3 1 1 7	8 336	84 420	94 21 3	2 401	2 595
BE S SEGUROS	1 1 6 330	1 20 243	84 941	89 039	31 389	31 204	73 935	66 537	7 1 42	6 971
ESE GUR	36 790	39 121	24 495	28 526	1 2 295	1 0 595	51 252	50 980	998	595
FUNDO ES IBE RIA	1 5 286	1 3 894	104	1 69	1 5 1 82	1 3 725	422	466	( 1 45)	( 1 06)
SCI GE ORGE S MANDE L	1 1 289	1 1 271	9	9	1 1 280	1 1 262	979	957	609	591
BRB INTE RNACIONAL	-	1 2 883	-	1 2 407	-	476	-	1 243	-	( 589)
AUTOPISTA PEROTE -XALAPA	-	650 179	-	521 1 67	-	129 01 2	-	-	-	( 6 634)
ASCENDI GROUP	4 31 4 000	4 056 000	3 750 000	3 656 000	564 000	400 000	158 000	1 40 000	21 000	28 000
EMPARK	768 532	782 872	645 093	651 074	1 23 439	131 798	163 833	1 66 594	( 3 008)	( 7 1 71 )
AUVISA - AUTOVIA DE LOS VIÑE DOS	208 484	21 6 000	21 3 895	222 000	( 5 41 1 )	( 6 000)	1 4 841	1 4 000	( 2 940)	( 4 000)
UNICRE	31 5 889	305 005	1 85 723	1 79 941	1 30 1 66	125 064	197 1 89	231 070	9 785	11 256
MOZA BANCO	361 1 46	1 86 71 9	327 396	1 54 683	33 750	32 036	46 091	21 760	924	( 3 289)
RODI SINKS & IDE AS	43 084	43 446	1 9 138	20 537	23 946	22 909	1 7 268	1 9 528	1 324	1 609

Note: Information adjusted for consolidation purposes

								(in thousands of euro)
	Participation Cost		E conomic Interest E conomic Interest		Book ValueValue Book Value		Share of profit of associates Share of profit of associates
	31 .1 2.201 3 3	31 2.201 2 31 .1 2.201 2	31 .1 2.201 3 33	31 .1 2.201 2 22	31 .1 2.201 3 31 .1 3 3	31 .1 2.201 2 31 .1 2 2	31 .1 2.201 3 31 .1 3 3	31 .1 2.201 2 .1 2.201
BE S VIDA a)	-	-	-	-	-	-	-	2 761
E S VÉ NÉ TIE	42 293	42 293	42.69%	42.69%	73 860	73 672	1 737	4 403
LOCARE NT	2 967	2 967	50.00%	50.00%	6 869	4 478	1 201	1 298
BE S SE GUROS	3 749	3 749	25.00%	25.00%	7 844	7 798	1 785	1 743
E SE GUR	9 634	9 634	44.00%	44.00%	1 2 254	1 1 506	439	262
FUNDO ES IBE RIA	8 081	7 087	45.93%	38.67%	7 31 2	5 649	658	261
SCI GEORGE S MANDE L	2 401	2 401	22.50%	22.50%	2 538	2 534	1 37	1 33
BRB INTE RNACIONAL	-	1 0 659	-	25.00%	-	1 1 9	1 01	( 21 6)
AUTOPISTA PE ROTE -XALAPA b)	-	36 678	-	1 4.33%	-	30 802	-	3 647
ASCE NDI GROUP	1 79 772	1 79 772	28.66%	28.66%	1 50 388	1 86 955	( 431 )	6 566
E MPARK b)	52 429	52 429	1 5.92%	1 5.92%	47 331	50 090	( 2 01 4)	( 2 1 93)
AUVISA - AUTOVIA DE LOS VIÑE DOS	41 056	41 056	35.83%	35.83%	34 792	34 792	-	( 2 531 )
UNICRE b)	1 1 497	1 1 497	1 7.50%	1 7.50%	22 779	21 886	1 71 2	1 970
MOZA BANCO	37 707	1 2 791	49.00%	25.1 0%	37 603	1 2 234	669	( 826)
RODI SINKS & IDE AS	1 240	1 240	24.81 %	24.81 %	8 387	8 1 29	257	1 94
Others	1 47 799	1 40 507			1 24 709	1 30 338	( 5 1 60)	( 9 1 60)
	540 625	554 760 554			536 666 666	580 580 982	1 091 1	8 31 2

a) In May 201 2, BE S acquired the remaining 50% of BE S Vida share capital, becoming fully consolidated in BES.

b) Although the Group's economic interest is less than 20%, this entities were consolidated under the equity method, as the Group exercises a significant influence over their activities.

The movement occurred in this balance is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Balance at the beginning of the period	580 982	806 999
Disposals	( 75 1 37)	( 58 905)
Acquisitions and aditional investments (see Note 1 )	37 338	32 41 8
Share of profit of associates	1 091	8 31 2
Fair value reserve from investments in associates	1 502	43 084
Dividends received	( 4 260)	( 3 423)
Changes in the consolidation scope	-	( 243 790)
E xchange differences and other	( 4 850)	( 3 71 3)
Balance at the end of the period	536 666	580 982 580 982

As at 31 December 2012, the changes in consolidation scope, arises mainly on the full consolidation of BES Vida, as referred in Note 54.

NOTE33–TECHNICAL RESERVES TECHNICAL RESERVESTECHNICAL RESERVES

The direct insurance and reinsurance ceded technical reserves are analysed as follows:

						(in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Direct insurance and accepted reinsurance	Reinsurance ceded	Total	Direct insurance and accepted reinsurance	Reinsurance ceded	Total
Unearned premiums reserve	3 363	-	3 363	2 61 8	-	2 61 8
Life mathematical reserve	1 707 741	( 7 003)	1 700 738	1 545 079	( 1 29)	1 544 950
Claims outstanding reserve	37 538	( 3 432)	34 1 06	27 447	( 1 621 )	25 826
Reserve for participating features	6 01 3	-	6 01 3	2 264	( 2 054)	21 0
	1 754 655	( 1 0 435)	1 744 220	1 577 408	( 3 804)	1 573 604

In accordance with IFRS 4, the contracts issued by the Group for which there is only a transfer of financial risk, with no discretionary profit sharing, are classified as investment contracts (See Note 39).

The life mathematical reserve is analysed as follows:

		31 .1 2.201 3			31 .1 2.201 2	(in thousands of euro)
	Direct insurance and accepted reinsurance	Reinsurance ceded	Total	Direct insurance and accepted reinsurance	Reinsurance ceded	Total
Traditional	27 835	( 7 003)	20 832	31 979	( 1 29)	31 850
Saving contracts with profit sharing	1 679 906	-	1 679 906	1 51 3 1 00	-	1 51 3 1 00
	1 707 741	( 7 003)	1 700 738	1 545 079	( 1 29)	1 544 950

The claims outstanding reserve is analysed as follows:

						(in thousands of euro)
		31 .1 2.201 3		31 .1 2.201 2
	Direct insurance and accepted reinsurance	Reinsurance ceded	Total	Direct insurance and accepted reinsurance	Reinsurance ceded	Total
Traditional	1 3 399	( 3 432)	9 967	1 4 31 6	( 1 621 )	1 2 695
Saving contracts with profit sharing	24 1 39	-	24 1 39	1 3 1 31	-	1 3 1 31
	37 538	( 3 432)	34 1 06	27 447	( 1 621 )	25 826

The claims outstanding reserve represents unsettled claims occurred before the balance sheet date and includes an estimated provision in the amount of euro 447 thousand (31 December 2012: euro 429 thousand), for claims incurred before 31 December 2013, but not reported (IBNR).

The movements on the claims outstanding reserve of direct insurance business are analyzed as follows:

						(in thousands of euro)
		31 .1 2.201 3		31 .1 2.201 2
	Direct insurance and accepted reinsurance	Reinsurance ceded	Total	Direct insurance and accepted	Reinsurance ceded	Total
Balance at the beginning of the period	27 447 447	( 1 621 ) 621 ) )	25 826 25	-	-	-
Change in the scope of consolidation	-	-	-	30 1 94	( 1 257)	28 937
Plus incurred claims
Current year	257 504	( 1 5 748)	241 756	362 235	( 1 1 01 )	361 1 34
Prior years	3 455	( 1 83)	3 272	1 830	( 1 1 7)	1 71 3
Less paid claims related to
Current year	( 246 449)	1 3 1 94	( 233 255)	( 361 834)	640	( 361 1 94)
Prior years	( 4 41 9)	926	( 3 493)	( 4 978)	21 4	( 4 764)
Balance at the end of the period at the of the period	37 538 37 538	( 3 432) ( 3 432)3 432)	34 1 06 34 1 06 34 06	27 447 27 447 27	( 1 621 ) ( 1 621 )( )	25 826 25 826

The reserve for bonus and rebates corresponds to the amounts attributed to policyholders or beneficiaries of insurance and investment contracts with profit sharing, in the form of profit participation, which have not yet been specifically allocated and included in the life mathematical reserve.

The movement in the reserve for bonus and rebates for the years ended 31 December 2013 and 2012 is as follows:

						(in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Direct insurance and accepted reinsurance	Reinsurance ceded	Total	Direct insurance and accepted reinsurance	R einsurance ceded	Total
Balance at the begginning of the period	2 264	( 2 054)	21 0	-	-	-
Changes in the scope of consolidation	-	-	-	1 326	( 804)	522
Amounts paid	( 651 )	2 528	1 877	( 1 70)	1 87	1 7
Estimated attributable amounts	4 400	( 474)	3 926	1 1 08	( 1 437)	( 329)
Balance at the end of the period	6 01 3	-	6 01 3	2 264	( 2 054)	21 0

As at 31 December 2013, life mathematical reserve, as a result of the liability adequacy test, is nil. This test was performed based on the best estimate assumptions, in accordance with the accounting policies described in Note 3.

NOTE34–OTHER ASSETS OTHER ASSETS

As at 31 December 2013 and 2012, the balance other assets is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 2

Collateral deposits placed	1 483 337	1 664 467
Derivative products	1 01 8 206	1 438 955
Collateral CLEARNET, VISA and EBA	30 701	33 597
Collateral related to Letter of Credit	44 797	26 694
Collateral Deposits for litigations	54 956	53 000
Collateral Deposits in relation with reinsurance operations	334 677	-
Other	-	1 1 2 221
Recoverable government subsidies on mortgage loans	30 426	38 658
Public sector	1 84 376	1 44 697
Debtors from the insurance business	1 377	567
Other debtors	677 851	635 668
Receivable income	61 266	48 41 5
Diferred costs	1 1 6 71 0	1 1 4 766
Pension and health benefits	3 941	1 4 602
Gold, other precious metals, numismatics, and other liquid assets	9 962	1 0 834
Stock exchange transactions pending settlement	256 333	1 54 257
Other transactions pending settlement	56 875	21 6 21 6
Other assets	1 55 223	1 85 994
	3 037 677	3 229 1 41 3 229 1 41
Impairment losses	( 1 51 71 7) ( 1 51 71 7)	( 234 987) ( 234 987)
	2 885 960	2 994 1 54 2 994

The caption collateral deposits placed includes deposits made by the Group as collateral in order to be able to perform certain derivative contracts in organized markets (margin accounts) and in over the counter markets (Credit Support Annex – CSA).

The sundry debtors' amount includes:

euro 100 million related with loans to Locarent – Companhia Portuguesa de Aluguer de Viaturas, S.A. (31 December 2012: euro 100 million);
euro 78.7 million of loans to entities within the Group's venture capital business, of which euro 49.5 million are provided for (31 December 2012: euro 77.2 million, of which euro 30.7 million were provided for); and
euro 87.2 million of loans and junior securities following the transfer of loans/assets to companies and specialized funds, of which euro 83.4 million are provided for (31 December 2012: euro 94.3 million, of which euro 87.7 million were provided for).

As at 31 December 2013, the balance prepayments and deferred costs includes the amount of euro 76 745 thousand (31 December 2012: euro 64 901 thousand) related to the difference between the nominal amount of loans granted to Group's employees under the collective labour agreement for the banking sector (ACT) and their respective fair value at grant date, calculated in accordance with IAS 39. This amount is charged to the income statement over the lower period between the remaining maturity of the loan granted, and the estimated remaining service life of the employee.

The stock exchange transactions pending settlement refer to transactions with securities on behalf of third parties, recorded on trade date and pending settlement, in accordance with the accounting policy described in Note 2.6.

The balance of impairment losses is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	30.09.201 2 30.09.201 2
Balance at the beginning of the year	234 987	47 861
Charge off	32 469	1 94 1 42
Write back for the year	( 95 289)	( 355)
Transfers	( 3 330)	( 1 3 427)
Other	( 1 7 1 20)	6 766
Balance at end of the year	1 51 71 7 51 7	234 987 234 987

NOTE35–DEPOSITS FROM CENTRAL BANKS DEPOSITS FROM CENTRAL BANKS

The balance deposits from central banks is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 .1 3	31 .1 2.201 2
From the European System of Central B anks
Deposits	1 95 469	1 29 382
Other funds	9 1 57 000	1 0 1 50 000
	9 352 469 9 469	1 0 279 382 1 0 279 382
From other Central B anks
Deposits	1 77 662	61 3 938
	1 77 662 1 662	61 3 938 61 3 938
	9 530 1 31 9 1	1 0 893 320 893 320

As at 31 December 2013 and 2012, Other funds from the European System of Central Banks includes euro 9 157 million and euro 10 156 million, respectively, covered by securities pledged as collaterals (see Note 46).

As at 31 December 2013, the balance Deposits from other Central Banks – Deposits includes the amount of euro 3 million related to deposits with Angola Central Bank (31 December 2012: euro 431 million).

As at 31 December 2013 and 2012, the analysis of deposits from Central Banks by the period to maturity is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31 .1 2.201 2
Up to 3 months	400 491	1 50 206
1 to 5 years	9 1 29 640	1 0 743 1 1 4
	9 530 1 31	1 0 893 320 1 0 893 320

NOTE36–DEPOSITS FROM BANKS DEPOSITS FROM BANKS

The balance deposits from banks is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Domestic
Deposits	335 420	383 720
Very short term funds	82 1 1 1	40 1 72
Repurchase agreements	-	66 579
Other funds	5 233	4 487
	422 764 422 764	494 958 494 958
International
Deposits	697 656	504 679
Loans	2 749 61 7	2 31 5 433
Very short term funds	91 049	1 94 475
Repurchase agreements	81 7 71 7	1 31 1 1 62
Other funds	220 690	267 951
	4 576 729 4 576 729	4 593 700 4 593
	4 999 493 4 999 493	5 088 658 5 088

As at 31 December 2013 and 2012 the analysis of deposits from banks by the period to maturity is presented as follows:

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 .1
Up to 3 months	2 687 881	2 363 81 3
3 to 1 2 months	886 607	1 327 967
1 to 5 years	869 486	669 591
More than 5 years	555 51 9	727 287
	4 999 493 4	5 088 658 5 088 658

NOTE37–DUE TO CUSTOMERS DUE TO CUSTOMERS

The balance due to customers is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31 .1 2.201 2
Repayable on demand
Demand deposits	1 0 547 944	1 0 458 336
Time deposits
Time deposits	23 352 827	21 71 9 358
Other	5 368	56 391
	23 358 1 95	21 775 749
Savings accounts
Pensioners	295 1 46	28 022
Other	2 093 436	1 645 970
	2 388 582	1 673 992
Other funds
Repurchase agreements	275 003	242 1 50
Other	261 1 69	390 096
	536 1 72	632 246
	36 830 893	34 540 323

The analysis of the amounts due to customers by the period to maturity is as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
Repayable on demand	1 0 547 944	1 0 458 336
With agreed maturity
Up to 3 months	1 3 423 093	1 1 024 506
From 3 months to 1 year	9 306 392	6 51 7 1 98
From1 to 5 years	3 347 981	6 1 69 1 47
More than 5 years	205 483	371 1 36
	26 282 949	24 081 987
	36 830 893	34 540 323

NOTE 38 38–DEBT SECURITIES ISSUED DEBT

The balance of debt securities issued is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31 .1 2
E uro Medium Term Notes (E MTN)	8 568 674	1 0 033 382
Certificates of deposit	31 0 548	61 2 033
Bonds	1 061 524	2 366 1 1 9
Covered bonds	901 1 22	864 1 00
Other	1 077 582	1 548 427
	1 1 91 9 450	1 424 1 5 424 061

As at 31 December 2013, the debt securities issued includes the amount of euro 4 750 millions of debt securities issued with a guarantee from the Portuguese Republic (31 December 2012: euro 4 750 millions).

As at 31 December 2013, this balance includes euro 2 952 millions (31 December 2012: euro 2 660 millions) of debt securities issued at fair value through profit or loss.

Under the covered bonds programme, which has a maximum amount of euro 10 000 million, BES Group issued covered bonds for a total amount of euro 4 040 million. The main characteristics of these issues are as follows:

	Nominal value	B ook value					Rating
Description	(in thousands of euro)	(in thousands of euro)	Issue date date	Maturity date Maturity date	Interest payment Interest payment	Interest rate	Moody's Moody's	DB RS DB RS
BE S Covered Bonds 3.375%	1 000 000	859 681	1 7-1 1 -2009	1 7-02-201 5	Annually	3,375%	Baa3	AL
BE S Covered Bonds DUE J UL 1 7	1 000 000	-	07-07-201 0	09-07-201 7	Annually	6 month Euribor + 0.60%	Baa3	AL
BE S Covered Bonds 21 /07/201 7	1 000 000	-	21 -07-201 0	21 -07-201 7	Annually	6 month Euribor + 0.60%	Baa3	AL
BE S Covered Bonds DUE 4.6%	40 000	41 441	1 5-1 2-201 0	26-01 -201 7	Annually	Fixed rate 4,6%	Baa3	AL
BE S Covered Bonds HIPOT. 201 8	1 000 000	-	25-01 -201 1	25-01 -201 8	Annually	6 month Euribor + 0.60%	Baa3	AL
	4 040 000 040	901 1 22 901

These covered bonds are guaranteed by a cover assets pool, comprised of mortgage credit assets and limited classes of other assets, that the issuer of mortgage covered bonds shall maintain segregated and over which the holders of the relevant covered bonds have a statutory special creditor privilege. These conditions are set up in Decree-Law no. 59/2006, Regulations 5/2006, 6/2006, 7/2006 and 8/2006 of the Bank of Portugal and Instruction 13/2006 of the Bank of Portugal.

As at 31 December 2013, the mortgage loans that collateralise these covered bonds amount to euro 5 552.6 million (31 December 2012: euro 5 605.1 million) (see Note 25).

The changes occurred in debt securities issued during 2013 are analysed as follows:

						(in thousands of euro)
	B alance as at 31 .1 2.201 2	Issues Issues	Repayments	Net repurchase	Other movements a)	B alance as at 31 .1 2.201 3

E uro Medium Term Notes (E MTN)	1 0 033 382	1 207 731	( 2 306 1 07)	( 351 91 7)	( 1 4 41 5)	8 568 674
Certificates of deposit	61 2 033	-	( 299 096)	- b)	( 2 389)	31 0 548
Bonds	2 366 1 1 9	-	( 1 266 678)	( 1 4 861 )	( 23 056)	1 061 524
Covered bonds	864 1 00	-	-	49 927	( 1 2 905)	901 1 22
Other	1 548 427	4 046 731	(4 532 099)	-	1 4 523	1 077 582
	1 5 424 061 5	5 254 462 462 5 254 462	(8 403 980) (8 403 980) 403 980)	( 31 6 851 ) ( 31 6 851 )851 )	( 38 242) ( 38 242)( 242)	1 1 91 9 450 1 1 91 9 450

a) Other movements include accrued interest, corrections by hedging operations, fair value adjustments and foreign exchanges differences.

b) Certificates of deposit are presented at the net value, considering their short term maturity.

In accordance with the accounting policy described in Note 2.8, debt issued repurchased by the Group is derecognised from the balance sheet and the difference between the carrying amount of the liability and its acquisition cost is recognised in the income statement. Following the repurchases performed in 31 December 2013 and in 31 December 2012, the Group has recognised a gain of euro 9.6 million and of euro 74.1 million, respectively (see Notes 14 and 42).

The analysis of debt securities issued by the period to maturity is as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 2.201 2
Up to 3 months	1 268 964	2 466 1 03
3 to 1 2 months	2 61 2 000	1 345 865
1 to 5 years	4 779 353	7 367 491
More than 5 years	3 259 1 33	4 244 602
	1 1 91 9 450 450	1 5 424 061 1 5 424 061

The main characteristics of debt securities issued are presented as follows:

					31 .1 2.201 3		(in thousands of euro)
E ntity ntity	Description Description		CurrencyCurrency Currency	Issue Data	Book Value	Maturity Value MaturityMaturity	Interest Rate
BE S	BES DUE J UN 1 4		EUR	2007	309 353	201 4	E uribor 3 months + 0.1 5%
BE S	BES 5,625% 201 4		EUR	2009	1 364 389	201 4	Fixed Rate - 5.63%
BE S BE S	BES 3,375% BES DUE 3,875%		EUR EUR	2009 201 0	859 681 403 1 30	201 5 201 5	Fixed Rate 3.375% Fixed Rate 3.875%
BE S	BES DUE 4,6%		EUR	201 0	41 441	201 7	Fixed Rate 4.6%
BE S	BES DUE J ULY 1 6		EUR	201 1	59 51 3	201 6	Fixed Rate 6.875%
BE S	BES PORTUGAL NO	a)	EUR	201 1	1 8 935	201 4	E uribor 6 months + 3.5%
BE S	BES PORTUGAL	a)	EUR	201 1	21 081	201 4	E uribor 6 months + 3.5%
BE S BE S	BES DUE FE V.1 4 BES 4 ANOS 7%		EUR EUR	201 2 201 2	1 22 570 1 33 721	201 4 201 6	Fixed Rate 6.5% Fixed Rate 7%
BE S	BES 6,9% 2024		EUR	201 2	69 387	2024	Fixed Rate 6.9%
BE S	BES 26/1 0/201 5		EUR	201 2	50 386	201 5	E uribor 6 months + 3.85%
BE S	BES 5,875% 201 5		EUR	201 2	747 822	201 5	Fixed Rate: 5.875%
BE S BE S (Cayman Branch)	BES 4,75% 201 8 Bic 6.02% 07/1 8/1 4		EUR EUR	201 3 2001	493 591 77 664	201 8 201 4	Fixed Rate: 4.75% Fixed Rate - 6.02%
BE S (Cayman Branch)	Bic 6.09% 27/07/1 5		EUR	2001	46 593	201 5	Fixed Rate - 6.09%
BE S (Spain Branch)	Mortgage Bonds	a)	EUR	2008	1 53 763	201 4	Fixed Rate 4.5%
BE S (Spain Branch)	Mortgage Bonds	a)	EUR	2008	80 369	201 4	Fixed Rate 4%
BE S (Spain Branch) BE S (Spain Branch)	Mortgage Bonds IM BES E MPRE SAS 1 FTA BONO A	a)	EUR EUR	2008 201 1	83 257 1 8 998	201 6 2043	Fixed Rate 4.25% Eur 1 m + 0.3%
BE S (London Branch)	Certificates of deposits		EUR	201 2	1 996	201 4	Fixed Rate 1 .49%
BE S (London Branch)	Certificates of deposits		USD	201 2	230 448	201 4	Fixed Rate 3%
BE S (London Branch)	Certificates of deposits		USD	201 2	78 1 04	201 4	Fixed Rate 3%
BE S (London Branch)	E MTN Series 1		EUR	201 2	1 51 459	201 4	Nominal rate 6.5%
BE S (London Branch) BE S (London Branch)	E MTN Series 2 E MTN Series 3		EUR EUR	201 2 201 2	1 1 7 976 1 02 598	201 6 2022	Nominal rate 7% Nominal rate 5%
BE S (London Branch)	E MTN Series 4		EUR	201 2	50 063	201 4	Nominal rate 6.5%
BE S (London Branch)	E MTN Series 5		EUR	201 2	42 973	201 6	Nominal rate 7%
BE S (London Branch)	E MTN Series 6		EUR	201 2	1 48 545	2022	Nominal rate 5%
BE S (London Branch)	E MTN Series 7		EUR	201 2	1 56 046	201 9	Nominal rate 5%
BE S (London Branch) BE S (London Branch)	E MTN Series 8 E MTN Series 9		EUR EUR	201 2 201 2	46 71 3 231 566	201 5 201 5	Nominal rate 6.75% Nominal rate 6.75%
BE S (London Branch)	E MTN Series 1 0		EUR	201 2	51 1 1 01	201 9	Nominal rate 5%
BE S (London Branch)	E MTN Series 1 1		EUR	201 2	70 228	201 5	Nominal rate 6.75%
BE S (London Branch)	E MTN Series 1 2		EUR	201 2	320 948	201 9	Nominal rate 5%
BE S (London Branch)	E MTN Series 1 3		EUR	201 2	223 221	201 9	Nominal rate 5%
BE S (London Branch) BE S (London Branch)	E MTN Series 1 4 E MTN Series 1 5		EUR EUR	201 2 201 2	207 51 6 24 766	201 9 201 4	Nominal rate 5% Nominal rate 5.5%
BE S (Luxembourg Branch)	BES Luxembourg 5.75% 28/06/1 7		EUR	201 2	20 652	201 7	Nominal rate - 5.75%
BE S (Luxembourg Branch)	BES Luxembourg 3% 21 /06/22		USD	201 2	66 857	2022	Nominal rate - 3%
BE S (Luxembourg Branch)	BES Luxembourg 3.5% 02/01 /43		EUR	201 3	49 765	2043	Fixed Rate - 3.5%
BE S (Luxembourg Branch)	BES Luxembourg 3.5% 23/01 /43		EUR	201 3	43 087	2043	Fixed Rate - 3.5%
BE S (Luxembourg Branch) BE S (Luxembourg Branch)	BES Luxembourg 3.5% 1 9/02/2043 BES Luxembourg 3.5% 1 8/03/2043		EUR EUR	201 3 201 3	82 647 56 985	2043 2043	Fixed Rate - 3.5% Fixed Rate - 3.5%
BE S (Luxembourg Branch)	BES Luxembourg ZC		EUR	201 3	28 573	2048	Fixed Rate - 7%
BE S Finance	E MTN 37		EUR	2004	32 1 99	2029	E fective rate 5.30%
BE S Finance	E MTN 39		EUR	2005	1 00 091	201 5	E uribor 3 months + 0.23%
BE S Finance BE S Finance	E MTN 40 E MTN 56	a)	EUR EUR	2005 2009	21 6 51 4 23 037	2035 2043	6.00% indexed to Swap rate Fixed Rate 7.1 3%
BE S Finance	E MTN 57		EUR	2009	1 8 542	2044	Fixed Rate 7.09%
BE S Finance	E MTN 58		EUR	2009	23 729	2045	Fixed Rate 7.06%
BE S Finance	E MTN 59		EUR	2009	25 878	2042	Fixed Rate 6.84%
BE S Finance	E MTN 60		EUR	2009	27 329	2040	Fixed Rate 6.91 %
BE S Finance BE S Finance	E MTN 61 E MTN 63		EUR EUR	2009 2009	25 538 5 1 06	2041 2039	Fixed Rate 6.87% Fixed Rate 3%
BE S Finance	E xchangeable Bonds (EDP)	a)	EUR	201 0	1 0 231	201 5	Fixed Rate 3%
BE S Finance	E MTN 81	a)	EUR	201 0	6 1 52	201 5	Fixed Rate 3.1 9%
BE S Finance	E MTN 82	a)	EUR	201 0	6 202	201 5	Fixed Rate 3.1 9%
BE S Finance BE S Finance	E MTN 83 E MTN 84	a) a)	EUR EUR	201 0 201 0	6 61 5 6 770	201 5 201 5	Fixed Rate 3.1 9% Fixed Rate 3.1 9%
BE S Finance	E MTN 85	a)	EUR	201 0	6 564	201 5	Fixed Rate 3.1 9%
BE S Finance	E MTN 96	a)	EUR	201 1	8 1 88	201 5	Fixed Rate 5.75%
BE S Finance	E MTN 97	a)	EUR	201 1	7 81 3	201 5	Fixed Rate 5.75%
BE S Finance	E MTN 98	a)	EUR	201 1	9 1 50	201 5	Fixed Rate 5.75%
BE S Finance BE S Finance	E MTN 99 E MTN 1 00	a) a)	EUR EUR	201 1 201 1	9 1 50 9 1 50	201 5 201 5	Fixed Rate 5.75% Fixed Rate 5.75%
BE S Finance	E MTN 1 06	a)	EUR	201 1	8 086	201 5	Fixed Rate 5.51 %
BE S Finance	E MTN 1 07	a)	EUR	201 1	9 364	201 5	Fixed Rate 5.51 %
BE S Finance	E MTN 1 08	a)	EUR	201 1	1 0 641	201 5	Fixed Rate 5.51 %
BE S Finance	E MTN 1 09	a)	EUR	201 1	1 0 641	201 5	Fixed Rate 5.51 %
BE S Finance BE S Finance	E MTN 1 1 0 E MTN 1 1 2	a) a)	EUR EUR	201 1 201 1	1 0 641 50 490	201 5 201 4	Fixed Rate 5.51 % Fixed Rate 6%
BE S Finance	E MTN 1 1 3	a)	EUR	201 1	69 678	2021	Fixed Rate 5%
BE S Finance	E MTN 1 1 4	a)	EUR	201 1	28 262	2021	Fixed Rate 5%
BE S Finance	E xchangeable Bonds		USD	201 2	31 0 986	201 5	Fixed Rate 3.5%
BE SI Group	E SIP OUT24 ESFP LINKE D CMS NOTE	a)	EUR	2004	5 1 49	2024	Fixed Rate + Indexed to CMS
BE SI Group BE SI Group	E SIP CALL RANGE ACCRUAL MAY201 5 E SIP RANGE ACCRUAL J UN1 5	a) a)	EUR EUR	2005 2005	1 227 244	201 5 201 5	Range accrual Range accrual
BE SI Group	E SIP E UR LE VE RAGE SNOWBALL J UL1 5	a)	EUR	2005	1 266	201 5	Fixed Rate + Snowball b)
BE SI Group	E SIP AGO05 SEP35 CALLABLE INV FL	a)	EUR	2005	9 862	2035	E uribor 1 2 months + c)
BE SI Group	E SIP LE VE RAGE SNOWBALL SEP201 5	a)	EUR	2005	2 31 9	201 5	Fixed Rate + Snowball + b)
BE SI Group	E SIP CALL RANGE ACCRUAL NOV201 7	a)	EUR	2005	1 256	201 7	Range accrual
BE SI Group	E SIP 30CMS-2CMS LKD NOTE NOV2036	a)	EUR	2005	1 6 1 69	2036	Fixed Rate 7.44% + Indexed toCMS
BE SI Group BE SI Group	BESI OBCX R.ACCRUAL TARN MAR201 6 E SIP E UR1 2M+1 6 BP APR201 6	a)	EUR EUR	2006 2006	849 4 01 7	201 6 201 6	Fixed Rate 6% + Range Accrual E uribor 1 2M
BE SI Group	E SIP J AN201 7 INDE X BASKET LKD	a)	EUR	2007	1 1 200	201 7	d)
BE SI Group	E SIP MAY1 4 E QUIT BASKT LINKED	a)	USD	2007	1 866	201 4	e)
BE SI Group	E SIP DE C201 5 BASKET LINKE D	a)	EUR	2007	253	201 5	Indexed to BBVA. Credit Agricole and Fortis
BE SI Group	E SIP BARCLAYS LKD ZC MAR201 6	a)	EUR	2008	649	201 6	ZC + f)

					31.12.2013		(in thousands of euro)
Entity	Description		Currency	Issue Data	Book Value	Maturity	Interest Rate
BESI Group	ESIP BARCLAYS LKD 6.30% MAR2016	a)	EUR	2008	405	2016	Fixed Rate $6.30\% + f$ )
BESI Group BESI Group	ESIP LACAIXA EUR3M+2% MAR2016 ESIP JUL2014 INFLATION LINKED	a) a)	EUR EUR	2009 2009	2805 1 3 9 7	2016 2014	E uribor $3M+2\% + f$ ) Indexed to inflation
BESI Group	ESIP FEB2020 EQL LINKED	a)	EUR	2009	81	2020	g)
BESI Group BESI Group	ESIP CLN 5.45% OCT2014 ESIP OCT2014 EOL	a) a)	EUR EUR	2009 2009	203 1 3 2 5	2014 2014	f Indexed to Gazprom. Nokia and DU PONT
BESI Group	ESIP CIMPOR CLN EUR3M DEC2014	a)	EUR	2009	3520	2014
BESI Group BESI Group	ESIP FTD IBERIA 5.95% DEC2014 ESIP FTD IBERIA II 5.5% DEC2014	a) a)	EUR EUR	2009 2009	733 5021	2014 2014	Ð f
BESI Group	ESIP USD FTD IBERIA 5.5% DEC2014	a)	USD	2009	3639	2014	-f)
BESI Group BESI Group	ESIP DEC2014 SX5E LINKED ESIP BRAZIL EQL LINKED	a) a)	EUR EUR	2009 2009	4580 3162	2014 2014	Indexed toDI Eurostoxx 50 h)
BESI Group	ESIP BSKT MERC EMERG EQL FEB2014	a)	EUR	2010	2428	2014
BESI Group	ESIP DJ US REAL EST LKD MAR2015	a)	EUR	2010	800	2015	Indexed to Ishares DI US Real State Index fund
BESI Group BESI Group	ESIP USDEUR FX LKD MAY2015 BESINVESTBRAS 5.625% MAR2015REGS	a) a)	EUR USD	2010 2010	288 274756	2015 2015	indexado a EUR/USD 5.625% a.a.
BESI Group	ESIP CRDAGRI CL EUR6M+1.15 JUN15	a)	EUR	2010	2119	2015	Euribor 6M ACT/360
BESI Group BESI Group	ESIP FTD CRD LINKED J UN2015 ESIP BRAZIL EQL MAY2016	a) a)	EUR EUR	2010 2010	4122 3 2 7 9	2015 2016	i) k)
BESI Group	ESIP SX5E MAY14 EQL	a)	EUR	2010	2066	2014	Indexed toE urostoxx
BESI Group BESI Group	ESIP BASKET LKD JUL2014 BESI SEP2014 EQL LINKED	a) a)	EUR EUR	2010 2010	1100 4323	2014 2014	$\mathbb{D}$ m)
BESI Group	BESI SEP2014 ORIENTE IV EQL	a)	EUR	2010	13 4 4 4	2014	n)
BESI Group BESI Group	ESIP SEP15 DIGITAL ESIP ASIA INDEX LKD SEP2014	a) a)	USD EUR	2010 2010	1 0 6 7 1484	2015 2014	Digital US Libor 3M $\circ$
BESI Group	ESIP DEC2015 CREDLINKED BSCH	a)	EUR	2011	1 600	2015	Indexed to BBVA. Credit Agricole and Fortis
BESI Group BESI Group	ESIP CABAZ BRASIL LKD FEB14 ESIP FEB16 5A EXPOSIC AFRICA LKD	a) a)	EUR EUR	2011 2011	1616 972	2014 2016	D) q)
BESI Group	ESIP EXPOSICAO EURUSD LKD FEB14	a)	EUR	2011	778	2014	FX EUR/USD Linked
BESI Group	ESIP DUAL5%+AFRICA LKD FEB15	a)	EUR	2011	1 2 2 1	2015	r)
BESI Group BESI Group	ESIP SX5E LKD FEB14 ESIP CLN EDP MAR2014	a) a)	EUR EUR	2011 2011	300 10487	2014 2014	Eurostoxx Linked 7% + CLN EDP
BESI Group	ESIP MAR14 BES USDBRL LINKED	a)	EUR	2011	1 4 3 7	2014	USD/BRL Linked
BESI Group BESI Group	ESIP APR 2015 BES ENERGIA LINKED ESIP MAR14 EURCHF LINKED	a) a)	EUR FUR	2011 2011	9859 1166	2015 2014	Espirito Santo Rockefeller Global Linked FX EUR/CHF Linked
BESI Group	ESIP CLN SANTANDER MAR2014	a)	EUR	2011	6166	2014	6.35% + CLN BSCH SUB
BESI Group BESI Group	ESIP EDP MAR2014 CLN ESIP SX5E SPX LKD MAR2016	a) a)	EUR EUR	2011 2011	15 24 2 1856	2014 2016	$6.5% + CLNEDP$ Eurostoxx Linked
BESI Group	ESIP APR 2015 BES ENERGIA LKD	a)	USD	2011	2528	2015	Espirito Santo Rockefeller Global Linked
BESI Group BESI Group	ESIP MAR2014 TEF FTE LINKED ESIP APRIL2014 HEALTH CARE LKD	a) a)	EUR EUR	2011 2011	928 8796	2014 2014	Telefonica e France Telecom Linked Health Care Select Sector SPDR Fund Linked
BESI Group	ESIP HEALTH CARE LKD APR 2014	a)	EUR	2011	1925	2014	S)
BESI Group	ESIP TEF PT LKD 26APR2014 ESIP EDP CLN I UN2014	a)	EUR FUR	2011 2011	390 13534	2014 2014	Telefonica e Portugal Telecom Linked 7% + CLN EDP
BESI Group BESI Group	ESIP TEF PT LKD APR2014	a) a)	EUR	2011	391	2014	Telefonica e Portugal Telecom Linked
BESI Group	ESIP EUR PT CLN JUN2014	a)	EUR	2011	10038	2014	6.75% + CLN PT
BESI Group BESI Group	ESIP BES MOMENTUM JUN2015 ESIP BSCH CLN JUN2014	a) a)	EUR EUR	2011 2011	6956 5848	2015 2014	Espirito Santo Momentum Fund Linked 6.1% + CLN BSCH
BESI Group	ESIP BES PROTECCAO JUN2014	a)	EUR	2011	50974	2014
BESI Group BESI Group	ESIP BRAZIL NOTES LKD MAY2016 ESIP BES 5ANOS EFIC ENERG JUNE16	a) a)	EUR EUR	2011 2011	1824 2803	2016 2016	EUR/BRL Linked -u)
BESI Group	ESIP PETROBRAS CLN JUN2014	a)	USD	2011	2 2 0 5	2014	3-Month USD libor + 3.70% + CLN PETROBRAS
BESI Group BESI Group	ESIP PT II CLN JUN2014 ESIP TEF PT JUN2014	a) a)	EUR EUR	2011 2011	7624 1496	2014 2014	7% + CLN PT Telefonica e Portugal Telecom Linked
BESI Group	ESIP SANTANDER CLN JUN2014	a)	EUR	2011	2754	2014	$6.4% + CLN BSCH$
BESI Group BESI Group	ESIP BES PROTECCAO II JUN2014 ESIP EUR PRICING POWER 5Y JUL14	a) a)	EUR EUR	2011 2011	23 915 1 6 9 1	2014 2016	Inflation and Euribor 12M Liked v)
BESI Group	ESIP SX5E JUL15 EQL	a)	EUR	2011	1594	2015	Eurostoxx Linked
BESI Group BESI Group	ESIP AUG14 ES ROCKEFELLERGLO LKD ESIP BARCLAYS CLN SEP2014	a)	EUR EUR	2011 2011	901 2638	2014 2014	Espírito Santo Rockfeller Linked 6% + Barclays CLN
BESI Group	ESIP AUG14 INFLATION LKD	a) a)	EUR	2011	38 404	2014	Inflation Linked
BESI Group	ESIP AUG2014 ALEMANHA EQL LINKED	a)	EUR	2011	1786	2014	w)
BESI Group BESI Group	ESIP BRL FXL LINKED SEP2016 ESIP SEP14 TRY LKD	a) a)	EUR EUR	2011 2011	731 977	2016 2014	Fx linked Fx linked
BESI Group	ESIP BANCO POPULAR CLN SEP2014	a)	EUR	2011	3189	2014	8.75% + POPULAR CLN
BESI Group BESI Group	ESIP BCO POPULAR CLN SEP2014 ESIP SEP2014 INFLATION+EURIBOR	a) a)	EUR EUR	2011 2011	1 5 1 5 28 096	2014 2014	8.75% + POPULAR CLN Inflation and Euribor 12M Liked
BESI Group	ESIP SEP2014 PSI20 EQL 4	a)	EUR	2011	5190	2014	PSI20 Linked
BESI Group BESI Group	ESIP NOV2015 BES4% GLOBAL LINKED ESIP BCO POPULAR CRDLK SEP2014	a) a)	EUR EUR	2011 2011	29 244 7705	2015 2014	X) 9.40% + Banco Popular CLN
BESI Group	ESIP OCT2014 WORLD INVESTM FOL 3	a)	EUR	2011	1 3 4 9	2014	d)
BESI Group BESI Group	ESIP PT CLN DEC2014 BESI 1.8% GOLD APR2015	a) a)	EUR EUR	2011 2011	20136 1866	2014 2015	11% + PT CLN Fixed Rate 1.8% + indexada ao ouro
BESI Group	ESIP AUTOCALLABLE 2014	a)	EUR	2011	2465	2014	y)
BESIGroup	ESIP TELECOM ITALIA CLN DEC2014	a)	EUR EUR	2011 2011	5 2 6 2 16	2014 2016	7.25% + Telecom Italia CLN
BESI Group BESI Group	ESIP SPANISH NOTES NOV 2016 ESIP EDP USD CLN DEC2014	a) a)	USD	2011	1580	2014	z) 8.5% + EDP CLN
BESI Group	ESIP WORLD INVESTMENT ILDEC2014	a)	EUR	2011	858	2014	d)
BESI Group BESI Group	ESIP TELEFONICA CLN DEC2014 ESIP PORTUGUESE REP CLN DEC2021	a) a)	EUR EUR	2011 2011	4623 26 5 66	2014 2021	7.15% + Telefonica CLN 6% + Republica Portuguesa CLN
BESI Group	ESIP UTILITIES SHS DEC2018	a)	EUR	2011	740	2018	aa)
BESI Group BESI Group	ESIP UTILIT FINANCIALS SHS DEC18 ESIP EWZ EQL J AN2015	a) a)	EUR EUR	2011 2012	4605 862	2018 2015	ab) EWZ Linked
BESI Group	ESIP FEB16 EMP NORDICAS EOL	a)	EUR	2012	1838	2016	ac)
BESI Group BESI Group	ESIP AUG2014 CABAZ MOEDAS 12-14 ESIP CABAZMOEDA VS EUR FEB15 FXL	a) a)	EUR EUR	2012 2012	7446 753	2014 2018	ad) ad)
BESI Group	ESIP EMPRES CHINESAS FEB2017 EOL	a)	EUR	2012	1 2 2 6	2016	ae)
BESI Group	ESIP EDP MAR2014 CLN 2	a)	EUR	2012	13 3 9 9	2014	$6.9% + EDP CLN$
BESI Group BESI Group	ESIP TWIN WIN EURUSD MAR2015 ESIP LUXURY GOODS LKD MAR2015	a) a)	EUR EUR	2012 2012	928 1 2 6 2	2015 2015	EUR/USD Linked af)
BESI Group	ESIP PSI20 LKD MAR2015	a)	EUR	2012	3590	2015	PSI20 Linked
BESI Group BESI Group	ESIP DUAL UPGRADE MAR2014 FSIP DIG CPN FURIBOR 3M MAR2015	a) a)	EUR EUR	2012 2012	893 1 601	2014 2015	ag) Digital EURIBOR 3M
BESI Group	ESIP APR 2019 RECOV BASKET LINKED	a)	EUR	2012	329	2015	ah)
BESI Group BESI Group	BESI CLN REP PORTUGUESA OCT2014 ESIP APR 2015 PSI20 LINKED	a) a)	EUR EUR	2012 2012	3382 1 3 0 8	2014 2015	Republica portuguesa CLN PSI20 Linked
BESI Group	ESIP APR 2020 BES PROTECCAO LKD	a)	EUR	2012	346	2015	Inflation Linked
BESI Group BESI Group	ESIP PT 3YR CREDIT LKD JUN15 ESIP PT 3YR CREDIT LINKED I UN15	a) a)	EUR EUR	2012 2012	10523 14218	2015 2015	7.75% + PT CLN 7.75% + PT CLN
BESI Group	ESIP BES TECNOLOGIA J UN2015 EQL	a)	EUR	2012	4720	2015	ai)

(in thousands of euro)

			31.12.2013
Entity	Description		Currency	Issue Data	Book Value	Maturity	Interest Rate
BESI Group	ESIP EXPOSICAO PETROLEO JUN2015	a)	EUR	2012	165	2015	Brent Linked
BESI Group	ESIP BES EXPOS PETROLE JUN15 EQL	a)	EUR	2012	2 3 7 2	2015	Brent Linked
BESI Group	ESIP RECOV BSKT LINKED JUN2019	a)	EUR	2012	1 1 4 8	2019	aj)
BESI Group BESI Group	ESIP EDP 3YR CREDIT LINKED JUN15 ESIP EDP 3YR II CREDIT LKD J UN15	a) a)	EUR EUR	2012 2012	15 427 12780	2015 2015	8% + EDP CLN 8% + EDP CLN
BESI Group	ESIP TELECOM ITALIA CLN SEP2015	a)	EUR	2012	4319	2015	7% + TELECOM ITALIA CLN
BESI Group BESI Group	ESIP PT TELECO CLN SEP2015 ESIP SEP2015 EDP LKD	a) a)	EUR USD	2012 2012	6 5 4 4 1 5 3 0	2015 2015	7% + PT CLN 7.45% + EDP CLN
BESI Group	ESIP EDP CLN SEP2015	a)	EUR	2012	8165	2015	$6.25% + EDP CLN$
BESI Group	ESIP EUR BRL SEP2017	a)	EUR	2012	1 4 4 2	2017	EUR/BRL Linked
BESI Group BESI Group	ESIP BES EXP COMMOD AGRICOL EQL4 ESIP COMMOD AGRICOL EQL5 OCT2015	a) a)	EUR EUR	2012 2012	8629 4757	2014 2015	ak) al)
BESI Group	ESIP BASKET LINKED OCT2019	a)	EUR	2012	1 0 7 6	2019	am)
BESI Group	ESIP BRAZILIAN NOTES IV OCT2017	a)	EUR	2012	716	2017	EUR/BRL Linked
BESI Group BESI Group	ESIP IBERIA NOV2015 ESIP TURKISH LIRA EQL6 OCT2015	a) a)	EUR EUR	2012 2012	2 2 5 0 1 5 3 0	2015 2015	IBEX+PSI20 Linked EUR/TRY Linked
BESI Group	ESIP BASKET OCT2019 EOL2	a)	EUR	2012	1 7 7 6	2019	REP e BSCH Linked
BESI Group	ESIP COMMODITIES NOV2015	a)	EUR	2012	3 6 6 6	2015	an)
BESI Group BESI Group	ESIP DEC2015 CRDLKD EUR FTD TELE ESIP DEC2012 BASKET FTD	a) a)	EUR FUR	2012 2012	14764 1 551	2015 2015	ao) ap)
BESI Group	ESIP DEC2016 AUTOCALL BRASIL	a)	EUR	2012	6 3 7 4	2016	ag)
BESI Group	ESIP DEC2017 EDP PT TEL.ITAL LK ESIP DEC2015 CRDLKD EDP	a)	EUR EUR	2012 2012	1785 1 0 1 1	2017 2015	ar) 5.25% + EDP CLN
BESI Group BESI Group	ESIP DEC2015 CRDLKD EDP PT	a) a)	EUR	2012	4 0 2 5	2015	6.50% + EDP PT CLN
BESI Group	ESIP DEC2015 CRDLKD EDP PT TLCM	a)	EUR	2012	2 0 1 9	2017
BESI Group	ESIP DEC2017 RENAULT PT LINKED	a)	EUR EUR	2012 2013	4630 4 8 4 0	2017 2015	8.65% + RENAULT PT CLN
BESI Group BESI Group	ESIP DEC2015 FTD CRD LKD ESIP AUTOCALL JAN20 EQL	a) a)	FUR	2013	558	2020	as) at)
BESI Group	ESIP SX5E BOOSTER J AN2016	a)	EUR	2013	2 3 5 8	2016	SX5E Linked
BESI Group BESI Group	ESIP SX5E BULLISH J AN2016 BESI MAR2018 FTD CRD LKD	a) a)	EUR EUR	2013 2013	2 6 0 2 2914	2016 2018	SX5E Linked au)
BESI Group	BESI MAR2016 FTD CRD LKD USD	a)	USD	2013	2 0 0 4	2016	au)
BESI Group	ESIP 4Y AUTOCALL FEB2017 EQL	a)	EUR	2013	9648	2017	av)
BESI Group BESI Group	ESIP 2Y AUTOCALL BES EOL FEB2015 ESIP BULLISH IBERIA MAR2016	a) a)	FUR EUR	2013 2013	840 4720	2015 2016	BES Linked aw)
BESI Group	ESIP TURKISH LIRA EQL MAR2018	a)	EUR	2013	2 2 3 1	2018	EUR/TRY Linked
BESI Group	FSIP 3Y WIN MAR2016	a)	EUR	2013	1 7 1 4	2016	ax)
BESI Group BESI Group	ESIP BARCLAYS 2Y EQL MAR2015 ESIP CLN GALP MAR2018	a) a)	EUR EUR	2013 2013	1 0 5 1 5888	2015 2018	BARCLAYS Linkked EUR GALP CLN Linked
BESI Group	ESIP 3Y AUTOCAL IBERIA EQL MAR16	a)	EUR	2013	1803	2016	aw)
BESI Group	ESIP BASKET+NOTES APR2016	a)	EUR	2013	1 472	2016	Indexed to a basket composed by Coca-Cola. France Telecom. Vivendi and YUM Brands Inc
BESI Group BESIGroup	ESIP BULLISH PAISES PERIF APR16 ESIP AC INDICES GLOBAIS APR16	a) a)	EUR EUR	2013 2013	836 1719	2016 2016	Indexed to a basket composed by PSI20. MIB and IBEX30 Indexed to a basket composed by Eurostoxx. SP500 and Nikkei
BESI Group	ESIP USD CLN GALP MAR2018	a)	USD	2013	7 4 4 5	2018	USD GALP CLN Linked
BESI Group	ESIP 3Y AC SAN TELE REP APR2016	a)	EUR	2013	1 0 3 0	2016	ay)
BESIGroup BESI Group	ESIP BULLISH EUROSTOXX APR2016 ESIP BULLISH EWZ APR2016	a) a)	EUR EUR	2013 2013	1 2 5 1 868	2016 2016	Eurostoxx Linked EWZ Linked
BESI Group	ESIP BULLISH HSCEI APR2016	a)	EUR	2013	955	2016	HSCEI Linked
BESI Group	BES INVESTIMENTO DO 2.90000 29/05/2014		USD	2013	7 5 7 0	2014	3.00%
BESI Group BESI Group	ESIP 3Y WIN MAY16 ESIP CLN PT INT FIN 3.5Y DEC16	a) a)	EUR FUR	2013 2013	1694 11 903	2016 2016	Indexed to a basket composed by Eurostoxx. SP500 and Nikkei Credit Linked Note Portugal Telecom
BESI Group	ESIP FEB16 BULLISH ES AFRICA LKD	a)	EUR	2013	1 3 1 9	2018	Espirito Santo Africa Linked
BESI Group	ESIP WRC BBVA SAN MAY2014 ESIP CLN TELECOM ITALIA JUNE16	a)	EUR EUR	2013 2013	1 0 3 0 6 0 7 2	2014 2016	BBVA & Santander Linked Credit Linked Note Telecom Italia
BESI Group BESI Group	ESIP 3Y AC GALP&REPSOL JUN16	a) a)	EUR	2013	1 660	2016	GALP e REPSOL Linked
BESI Group	ESIP USD CLN ESFPORTUGA 3Y MAY16	a)	USD	2013	5156	2016	ESFP CLN
BESI Group BESI Group	ESIP CLN ESFPORTUGAL 3Y MAY16 ESIP 3Y BULLISH REINO UNID JUN16	a) a)	EUR EUR	2013 2013	6 3 9 2 867	2016 2016	ESFP CLN UKX Linked
BESI Group	ESIP CLN ESFPORTUGAL 3Y N MAY16	a)	EUR	2013	7 3 1 1	2016	ESFP CLN
BESI Group	ESIP 3Y BULLISH BRAZ REAL JUN16	a)	EUR	2013	1 643	2016	EUR/BRL Linked
BESI Group BESI Group	ESIP PT INT. FINANCE DEC16 ESIP 3Y AC ENERGIA IBERICA JUN16	a) a)	EUR EUR	2013 2013	2876 2 5 2 7	2016 2016	PT CLN GALP e REPSOL Linked
BESI Group	ESIP FTD TI, ENEL, PT CLN SEP16	a)	EUR	2013	1 4 9 9	2016	TELECOM ITALIA. ENEL. PT CLN
BESI Group	ESIP FTD BRISA, EDP, PT CL SEP16	a)	EUR	2013	2 2 4 1	2016	BRISA. EDP. PT CLN
BESI Group BESI Group	ESIP 3Y AC BBVA EQL JUL16 ESIP 3Y RENDIMENTO UK EQL JUL16	a) a)	EUR EUR	2013 2013	1 4 4 3 1 3 1 1	2016 2016	az) ba)
BESI Group	ESIP CLN PTI FIN SEP2018	a)	EUR	2013	16 365	2018	7.45% + CLN PT
BESI Group	ESIP USD CLN ASCENDI I UL2015 ESIP USD CLN ESFIL AUG14	a)	USD USD	2013 2013	4 2 3 3 8828	2015 2014	6% + Ascendi CLN
BESI Group BESI Group	ESIP USD CLN PT JUN2018	a) a)	USD	2013	1 501	2018	4.25% + ESFIL CLN 7.35% + CLN PT
BESI Group	ESIP USD TARN USDTRY JUL2018	a)	USD	2013	592	2018	bb)
BESI Group	ESIP 3Y AC SX7P AUG2016 ESIP 3Y AC MULTICH ECOMM AUG2016	a)	EUR	2013	1 4 2 1	2016	bc)
BESI Group BESI Group	ESIP 4Y LEVERAGE EURIBOR AUG2017	a) a)	EUR EUR	2013 2013	663 3182	2016 2017	bd) be)
BESI Group	ESIP CLN TELECOM ITALIA SEP2018	a)	EUR	2013	19 299	2018	5.90% + Telecom Italia CLN
BESI Group BESI Group	ESIP 2Y AC REPSOL SEP15 ESIP 3Y CLN BRISA SEP16	a) a)	EUR EUR	2013 2013	746 2 2 4 1	2015 2016	bf) 6% + Brisa CLN.
BESI Group	ESIP CLN THYSSENKRUPP SEP2018	a)	EUR	2013	13197	2018	5.50% + THYSSENKRUPP CLN
BESI Group	ESIP 2Y AC SANTANDER OCT15	a)	EUR	2013	1 2 6 4	2015	bg)
BESI Group BESI Group	ESIP CLN COMPORTA OCT2020 ESIP SAN TEF EQL OCT2017	a) a)	EUR EUR	2013 2013	5 0 8 6 2 2 1 4	2020 2017	bh) bi)
BESI Group	ESIP 2Y RENDIMENTO CMDT OCT15	a)	EUR	2013	2 9 0 2	2015	bi)
BESI Group	ESIP 3Y CLN PT SEP16	a)	EUR	2013	10 287	2016	$5% + PT CLN$
BESI Group BESI Group	ESIP 3Y VALORIZAÇÃO EUROPA OCT16 ESIP REVERSE CONVR SX5E APR15	a) a)	EUR EUR	2013 2013	204 557	2016 2015	SX5E Linked SX5E Linked
BESI Group	ESIP EUR 5Y EDP, PT, THYSS DEC18	a)	EUR	2013	940	2018	$7.15% + bk)$
BESI Group	ESIP EUR 5Y EDP, PT, TI DEC18	a)	EUR FUR	2013 2013	2 2 0 9	2018	$7.15% + bk$ $6.25% + EDP CLN$
BESI Group BESI Group	ESIP EUR 6Y CLN EDP DEC19 ESIP REV. CONV. SANTANDER APR14	a) a)	EUR	2013	1 0 0 2 619	2019 2014	bi)
BESI Group	ESIP 2Y AC TELECOMS EQL OCT15	a)	EUR	2013	1 5 4 8	2015	bl)
BESI Group	ESIP CLN BRITISH AIRWAYS DEC18 ESIP CLN THYSSENKRUPP DEC18	a)	EUR EUR	2013 2013	9 6 1 2 6 0 6 4	2018 2018	6% + British Airways CLN 5.5% + Thyssenkrupp CLN
BESI Group BESI Group	ESIP 2Y AC SANTANDER NOV2015	a) a)	EUR	2013	4895	2015	bg)
BESI Group	ESIP 2Y BONUS EU STOXX50 NOV2015	a)	EUR	2013	3 0 14	2015	SX5E Linked
BESI Group	ESIP 3Y AC WO G&D NOV16 ESIP 3Y AC WO SANT & TELE NOV16	a)	EUR EUR	2013 2013	1722 994	2016 2016	bm) bi)
BESI Group BESI Group	ESIP 3Y VALORIZACAO BC EUR NOV16	a) a)	EUR	2013	485	2016	bn)
BESI Group	ESIP 4Y AC WO BBVA APPLE NOV2017	a)	EUR	2013	986	2017	bo)
BESI Group BESI Group	ESIP 4Y BULLISH EUROSTOX NOV2017 ESIP BULLISH IBERIA NOV2015	a)	EUR EUR	2013 2013	1 3 1 2 953	2017 2015	SX5E Linked aw)

							(in thousands of euros)
					31.12.2013
Entity	Description		Currency	Issue Data	Book Value	Maturity	Interest Rate
BESI Group	ESIP CLN BRITISH AIR DEC18	a)	EUR	2013	1 2 1 4	2018	5.35% + British Airways CLN
BESI Group	ESIP EUR 5Y EDP. PT. TITA DEC18	a)	EUR	2013	3877	2018	$6.85% + w$
BESI Group	ESIP EUR 6Y CLN BKT 0 REC DEC19	a)	EUR	2013	921	2019	$7.15% + b$ ^D
BESI Group	ESIP USD 5Y EDP. PT. TIT DEC18	a)	USD	2013	4708	2018	7% + Telecom Italia, PT, EDP CLN
BESI Group	ESIP 3Y AC ACOES PORTUG DEC16	a)	EUR	2013	4164	2016	av)
BESI Group	ESIP 3Y AC EWW DEC16	a)	EUR	2013	580	2016	bq)
BESI Group	ESIP 3Y AC WO GLAXO DAIMLE DEC16	a)	EUR	2013	973	2016	bm)
BESI Group	ESIP 3Y AC WO JMT GALP DEC16	a)	EUR	2013	914	2016	br)
BESI Group	ESIP 5Y FTD EDP. PT. BRISA DEC18	a)	EUR	2013	1986	2018	$6.5% + bs$
BESI Group	ESIP CLN PEUGEOT SA DEC16	a)	EUR	2013	1954	2016	4.35% + PEUGEOT CLN
BESI Group	ESIP CLN PT INT FIN DEC18	a)	EUR	2013	2 2 9 0	2018	5% + PT CLN
BESI Group	ESIP CLN TELECOM ITALIA SP DEC16	a)	EUR	2013	1956	2016	4% + Telecom Italia CLN
BESI Group	ESIP DUAL HEATHCARE JUN2014	a)	EUR	2013	1 0 0 1	2016	bt
BESI Group	LCA - Letra de Crédito do agro		BRL	$2012 - 2013$	4926	2014	CDI 92% a 99%
BESI Group	LCA APOS		BRL	2013	23 9 32	2014	CDI 90% a 99%
BESI Group	LCA NOVA		BRL	2013	36 998	2014	CDI 90% a 100%
BESI Group	LCA PRE		BRL	2013	502	2014	PRÉ 100% + 10.05% a 10.73%
BESI Group	Letra de Crédito Imobiliario LCI		BRL	2013	1 7 2 4	2014	CDI 94% a 98%
BESI Group	LF LETRA FINANCEIRA BES INVESTIMENTO		BRL	$2012 - 2013$	32 895	2014 - 2017	CDI 100% a 118%
BESI Group	LF LETRA FINANCEIRA IPCA		BRL	2013	1 6 2 8	2018	IPCA 100%+5.8928%
ESPLC	BES1213_25E BESESPLC13/02/2014		EUR	2013	123110	2014	Fixed Rate 0.73%
ESPLC	BES1213_26E BESESPLC14/02/2014		EUR	2013	127112	2014	Fixed Rate 0.74%
ESPLC	BES0314 28E BESESPLC07/03/2014		EUR	2013	120 056	2014	Fixed Rate 0.73%
ESPLC	BES0314_29E BESESPLC14/03/2014		EUR	2013	150 049	2014	Fixed Rate 0.74%
ESPLC	BES0314 27E BESESPLC05/03/2014		EUR	2013	130 024	2014	Fixed Rate 0.73%
ESPLC	BES0314_30E BESESPLC20/03/2014		USD	2013	7 2 3 7	2014	Fixed Rate 1.12%
Lusitano Mortgage nº 6	Lusitano Mortgage nr 6- Classe A		EUR	2007	489 900	2060	E uribor + $0.20%$
Lusitano Mortgage nº 6	Lusitano Mortgage nr 6- Classe B		EUR	2007	6 5 0 2	2060	$E$ uribor + 0.30%
Lusitano Mortgage nº 6	Lusitano Mortgage nr 6- Classe C		EUR	2007	10 003	2060	E uribor + $0.45%$
Lusitano SME nº 1	Lusitano SME nr 1 - Classe A		EUR	2006	30177	2028	E uribor + $0.15%$
Lusitano SME nº 1	Lusitano SME nr 1 - Classe B		EUR	2006	32 51 6	2028	$E$ uribor + $0.05\%$
Lusitano SME nº 1	Lusitano SME nr 1 - Classe C		EUR	2006	27 105	2028	Euribor + 2.20%

1 1 91 9 450

a) Liabilities at fair value through profit and loss or with embedded derivatives.

b) Indexed to previous cupon + spread - E uribor

c) Indexed to reverse floater

d) Indexed to a basket composed by Dow J ones E urostoxx 50, S&P 500 and Nikkei 225.

e) Indexed to a basket composed by BBVA and BSCH

f) Indexed to credit risk,

g) Indexed to a basket composed by France Telecom and Deutsche Telekom h) Indexed to a basket composed by Petrobras, Companhia Siderurgia Nacional, Itau Unibanco and Banco Bradesco

i) Indexed to a basket composed by Ericsson, Komatsu, Santander, Sanofi-Aventis and ABB LTD.

j) Indexed to credit (First to default) of Santander, PT INT FIN, EDP and Brisa

k) Indexed to a basket composed by Petrobras, Gerdau, Vale, Itau Unibanco and Banco Bradesco l) Indexed to a basket composed by Louis Vuitton, Nokia, Bayer and EON

m) Indexed to a basket composed by E urostoxx50, SP500, Nasdaq1 00 and EWZ

n) Indexed to a basket composed by TOPIX, HANG SENG, HSCEI, NIFTY, KOSPI2 and MSCI Singapore

o) Indexed to a basket composed by HSCE I, MSCI India, MSCI Taiwan and SP ASX200

p) Indexed to a basket composed by Petrobras, Companhia Siderurgia Nacional, Vale SA, Itau Unibanco and Banco Bradesco q) Indexed to a basket composed by MSCI Daily TR Net Emerging Markets Egypt USD e FTSE/J SE Africa TOP40

r) 5% + Indexed to a basket composed by MSCI Daily TR Net Emerging Markets E gypt USD and FTSE /J SE Africa TOP40

s) Indexed to a basket composed by Gilead sciences, Celgene corp, Mylan Inc,Teva Pharmaceutical Ind Ltd and Amgen Inc

t) 4% + Indexed to Eurostat Consumer Price Index (CPI) (excl. Tobaco) for the Eurozone

u) Indexed to a basket composed by Philips, Siemens, Iberdrola and Veolia

v) Indexed to a basket composed by Oracle, SAP, Caterpillar, Komatsu, BHP Billiton, Mitsubishi w) Indexed to a basket composed by Daimler, DB, E.ON

x) 4% + Barclays Capital Armour E UR 7% Index

y) Indexed to a basket composed by Ambev, TAM, Brasil Foods, Itau Unibanco, Gerdau and Cia Energética de Minas Gerais.

z) Indexed to a basket composed byTelefonica, Banco Santander, BBVA and Banco Popular.

aa) Indexed to a basket composed by Telefonica, Iberdrola, ENI spa and Deutsche Telecom. ab) Indexed to a basket composed by Telefonica, Santander, Deutsche Bank and Deutsche Telecom

ac) Indexed to a basket composed by Telenor, Aker Solutions, Tele2 and Volvo.

ad) Indexed to a basket composed by EUR/USD; EUR/NOK and E UR/SE K currency

ae) Indexed to a basket composed by China Life Insurance Co, Petrochina Co and China Mobile LTD

af) Indexed to a basket composed by Anglo American, Cie Financiere Richemont, Porsche, Pernod Ricard, LVMH Moet Hennessy. ag) Indexed to a basket composed by FedE X, Macy's, Harley Davidson, Red Hat and Swiss RE

ah) Indexed to a basket composed by Telefonica, BNP Paribas, Vodafone Group PLC and E .ON

ai) Indexed to a basket composed by HTC, Panasonic and Samsung aj) Indexed to a basket composed byTelefonica, Repsol, Santander and France Telecom

ak)Indexed to a basket of Commodities Corn, Wheat and Sugar

al) Indexed to a basket of Commodities Corn, Wheat and Soybean

am) Indexed to a basket composed by Nestle, Roche, Deutsche Telecom and Societe Generale. an) Indexed to a basket of Commodities Copper, Gold and Palladium

ao) Indexed to credit of Portugal Telecom, Telefonica and Telecom Italia

ap) Indexed to credit of Gas Natural, Renault and Telecom Italia

aq) Indexed to a basket composed by Petroleo Brasileiro, Companhia Vale Rio Doce, Itau Unibanco and BRF Brasil Foods SA ar) Indexed to a credit of Portugal Telecom, EDP and Telecom Italia

as) Indexed to a basket of credit FTD: Telecom Italia, E DP, Portugal Telecom.

at) Indexed to a basket composed by Repsol, BSCH, Nestle. au) Indexed to a basket of credit FTD: Arcelor Mittal, Telefonica and Intesa SPA.

av) Indexed to a basket composed by E DP, Portugal Telecom and GALP.

aw) Indexed to a basket of linked PSI20 and IBEX. ax) Indexed to a basket composed by Ishares MSCI Brazil Index Fund, Russian Depositary Index USD, S&P ASX 200.

ay) Indexed to a basket composed by BBVA, BSCH and Repsol.

az) Indexed to a share of BBVA. ba) Indexed to UKX linked.

bb) 8.5% + USD/TRY FX Linked

bc) Indexed to SX7P linked.

bd) Indexed to a basket composed by Amazon, Ebay and Fedex. be) Indexed to euribor 3 months.

bf) Indexed to shares of Repsol .

bg) Indexed to shares of Santander. bh) 7% + Indexed to bonds of Comporta

bi) Indexed to a basket composed by Santander and Telefonica. bj) Indexed to Commodities NYME X - WTI Crude Oil.

bk) Indexed to credit of E DP, PT and Thyssen.

bl) Indexed to a basket composed by Deutsche Telekom AG, Telefonica SA and Vodafone Group PLC. bm) Indexed to a basket composed by GlaxoSmithKline PLC and Daimler.

bn) Indexed to a basket composed by HSBC Holdings PLC, Santander, BNP, BBVA and UBS.

bo) Indexed to a basket composed by BBVA and APPLE . bp) Indexed to credit ofTelecom Italia, PT, Peugeot, EDP and ThyssenKrupp.

bq) Indexed to EWW linked.

br) Indexed to a basket composed by J eronimo Martins and Galp.

bs) Indexed to credit (First to default) of PT, EDP and Brisa. bt) Indexed to a basket composed by J onhson & J ohnson, Bayer and Roche Holding.

NOTE39–INVESTMENT CONTRA INVESTMENT CONTRACTS

	(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 2.201 2
Fixed rate investment contracts Investment contracts in which the financial risk is borne by the policyholder	2 608 643 1 669 423	1 298 933 2 1 1 4 630
	4 278 066	3 41 3 563

As at 31 December 2013 and 2012, the liabilities arising from investment contracts are analysed as follows:

In accordance with IFRS 4, the insurance contracts issued by the Group for which there is only a transfer of financial risk, with no discretionary participating features, are classified as investment contracts.

The movement in the liabilities arising out from the investment contracts with fixed rate is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 .1 2.201
B alance at the begginning of the period	1 298 933	-
Change in the consolidation scope	-	376 975
Net deposits received	1 420 1 42	1 057 880
Benefits paid	( 1 95 1 04)	( 1 43 288)
Change on the deferred acquisition costs	( 1 841 )	( 1 0 601 )
Technical interest charged	86 51 3	1 7 967
B alance at the end of the period	2 608 643 2	1 298 933 298

The movement in the liabilities arising out from the investment contracts in which the financial risk is borne by the policyholder is analysed as follows:

	(in thousands of euro)
	31 .1 2.201 3 .1 3	31 .1 2.201 2 2.201
Balance at the begginning of the period	2 1 1 4 630	-
Change in the consolidation scope	-	1 91 6 883
Net deposits received	255 1 28	260 993
Benefits paid	( 842 558)	( 220 506)
Changes in financial liabilities at fair value through profit or loss	-	-
Technical result	1 42 223	1 57 260
Balance at the end of the period	1 669 423	2 1 1 4 630

NOTE40–PROVISIONS PROVISIONS PROVISIONS

As at 31 December 2013 and 2012, the balance of provisions presents the following movements:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 31
Balance at the begginning of the period	236 950	1 90 450 1 90 450
Change in the consolidation scope	-	1 6 945
Charge/ Write back of the year	( 1 0 264)	56 978
Charge off	( 1 6 071 )	( 1 7 954)
E xchange differences and others	( 1 8 1 63)	( 9 469)
Balance at the end of the period	1 92 452	236 950 236 950

Provisions, for an amount of euro 192 452 thousand (31 December 2012: euro 236 950 thousand), are intended to cover litigations and other contingencies related to the Group's activities, the more relevant being as follows:

Contingencies in connection with the exchange, during 2000, of Banco Boavista Interatlântico shares for Bradesco shares. The Group has provisions for an amount of approximately euro 55.3 million (31 December 2012: euro 60.3 million) to cover these contingencies;
Contingencies in connection with legal processes established following the bankruptcy of clients which might imply losses for the Group. Provisions for an amount of euro 45.8 million as at 31 December 2013 (31 December 2012: euro 67.7 million) were established to cover these losses;
Contingencies for ongoing tax processes. To cover these contingencies, the Group maintains provisions of approximately euro 22.1 million (31 December 2012: euro 36.1 million). The contingencies for ongoing tax processes includes euro 17.9 million related with the insurance business, of which euro 16.5 million relate to exercises already inspected by the Portuguese tax authorities and for which a judicial claim has been presented, being the total amount claimed of euro 19.4 million;
The remaining balance of euro 69.3 million (31 December 2012: euro 72.9 million), is maintained to cover potential losses in connection with the normal activities of the Group, such as frauds, robbery and on-going judicial cases.

NOTE 41 41–INCOME TAXES INCOME TAXES

The Bank and its subsidiaries domiciled in Portugal are subject to taxation in accordance with the corporate income tax code (IRC) and to local taxes.

Income taxes (current or deferred) are recognised in the income statement except in cases where the underlying transactions have been reflected in equity items.

In these situations, the corresponding tax is also charged to equity, not affecting the net profit for the year.

The Group determined its current income tax for the years ended 31 December 2013 and 2012, on the basis of a nominal tax rate of 25% plus a Municipal Surcharge ("Derrama Municipal") of 1.5%, according to Law no. 107-B/2003, of 31 December and Law no. 2/2007, of 15 January (which approved the Local Finance Law, "Lei das Finanças Locais"). For year 2012, there was an additional fee up to 5% on the State surcharge ("Derrama Estadual") over taxable income above 10 million, according to Law No. 64-B/2011, of 30 December (2012 State Budget Law, "Lei do Orçamento do Estado para 2012").

Additionally, in the 2012 and 2013 income tax calculation was considered the Decree-Law no. 127/2011, of 31 December, which regulates the transfer of pension benefits responsibilities to the National Social Security and that, in conjunction with Article 183 of Law no. 64-B/2011, of 30 December (2012 State Budget Law), established a special tax deductibility for expenses and other changes in equity arising from such transfer:

The negative equity variation from the accounting policy change on recognizing actuarial gains and losses which were previously deferred, will be fully deductible in equal parts during 10 years from 1 January 2012. This impact is recorded in equity;
The settlement effect (determined by the difference between the liability measured in accordance with the IAS 19 criteria and the criteria established in the agreement) will be fully deductible, from 1 January 2012, for purposes of determining taxable income, in equal parts, according to the average life expectancy of pensioners whose responsibilities were transferred (16 years). This impact is recorded in the income statement.

Deferred tax assets arising from the transfer of pension benefits responsibilities and the accounting policy change on recognizing actuarial gains and losses will be recovered during 10 and 16 years, through equity and income statement, respectively.

Deferred taxes are calculated based on tax rates anticipated to be in force at the temporary differences reversal date, which corresponds to the rates enacted or substantively enacted at the balance sheet date.

For the year 2012, deferred tax calculation was broadly calculated based on an aggregate rate of 29%, resulting from the sum of the corporate tax rate (25%), a Municipal Surcharge rate (1.5%) and an additional fee of 2.5% on the State surcharge provided for under the additional Stability and Growth Program measures ("Programa de Estabilidade e Crescimento (PEC)") approved by Law no. 12-A/2010, of 30 June. For the year 2013, deferred tax was broadly calculated based on an aggregate rate of 29.5%, resulting from the sum of the corporate tax rate (23%) approved by Law No. 2/2014, of 16 January, Municipal Surcharge rate (1.5%) and an average expected rate of State Surcharge (5%).

The deferred tax on tax losses was specifically calculated based on income tax rate (23%) approved by Law No. 2/2014, of 16 January, which amended IRC Code.

The Portuguese Tax Authorities are entitled to review the annual tax return of the Group and its subsidiaries domiciled in Portugal for a period of four years or six years in case of tax losses. Hence, it is possible that some additional taxes may be assessed, mainly as a result of differences in interpretation of the tax law. However, the Board of Directors of the Group subsidiaries domiciled in Portugal are confident that there will be no material differences arising from tax assessments within the context of the financial statements.

Income taxes of the Group's entities located abroad are subject to the tax laws prevailing in the respective countries where they operate.

During the year ended 31 December 2013, BES voluntarily acceded to the exceptional tax debts regularization regime (RERD), approved by Decree-Law no. 151-A/2013, of 31 October. The accession to the above mentioned regime covers essentially tax litigation processes arising from additional corporate income tax assessments, regarding the years 2003 to 2007, which continues to pursue their respective administrative and court proceedings and which outcome we predict to be favourable to BES. Under this regime, BES voluntarily proceeded to the payment of euro 131 million, that will assure, in case BES experiences an unfavourable outcome, the benefit of remission of the administrative fines that would be payable without such accession.

The deferred tax assets and liabilities recognised in the balance sheet as at 31 December 2013 and 2012 can be analysed as follows:

						(in thousands of euro)
	Assets Assets		LiabilitiesLiabilities Liabilities		Net
	31 .1 2.201 3 2.201 3	31 .1 2.201 2 2.201 2	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 31 .1 22	31 .1 2.201 3 2.201 3 3	31 .1 2.201 2 2
Financial instruments	65 683	74 257	( 68 396)	( 1 06 71 7)	( 2 71 3)	( 32 460)
Loans and advances to customers impairment	465 291	402 750	-	-	465 291	402 750
Property and equipment	233	271	( 8 889)	( 8 901 )	( 8 656)	( 8 630)
Intangible assets	1 04	1 02	-	-	1 04	1 02
Investments in subsidiaries and associates	-	-	( 47 823)	( 1 63 986)	( 47 823)	( 1 63 986)
Provisions	57 759	54 356	-	-	57 759	54 356
Pensions	263 063	257 901	( 495)	( 35 507)	262 568	222 394
Long-term service benefits	8 283	7 726	-	-	8 283	7 726
Debt securities issued	-	-	( 462)	( 1 01 0)	( 462)	( 1 01 0)
Other	3 898	1 6 81 5	-	( 4 1 1 7)	3 898	1 2 698
Tax losses brought forward	1 98 940	80 654	-	296	1 98 940	80 950
Deferred tax asset / (liability) / (liability)	1 063 1 063 254	894 832 894	( 1 26 065) 065)	( 31 9 942) 942)	937 1 89 937 1 89	574 890 890
Assets / liabilities compensation for deferred taxes	( 28 936)	( 1 65 927)	28 936	1 65 927	-	-
Deferred tax asset / (liability), net / (liability), net	1 034 1 034 31 8 8	728 905 728	( 97 1 29) 29)	( 1 54 01 5) 5)	937 1 89 937 1 89	574 890 890

The Group has evaluated the deferred taxes recoverability considering the expectation of future taxable profits.

The changes in net deferred taxes were recognised as follows:

	(in thousands of euro)
	31 .1 2.201 3 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
B alance at the beginning of the period	574 890	601 624
Recognised in the income statement	31 9 888	52 434
Recognised in fair value reserve	( 20 282)	( 56 61 7)
Recognised in equity - other comprehensive income	1 303	9 882
Recognised in other reserves	( 7 1 52)	( 30 280)
Changes in the scope of consolidation	-	( 291 )
Amounts paid under the RE RD	65 375	-
E xchange differences and other	3 1 67	( 1 862)
B alance at the end of the period (Assets/ (Liabilities)) ies))	937 1 89 937	574 890 574 890

The current and deferred taxes recognised in the income statement and reserves, during 2013 and 2012 is analysed in the following table:

				(in thousands of euro)
		31 .1 2.201 3 3	31	31 .1 2.201 2 2
	Recognised in (profit) /loss	Recognised in reserves	Recognised in (profit) /loss	Recognised in reserves
Financial Instruments	( 50 029)	20 282	( 1 6 371 )	60 205
Loans and advances to customers impairment	( 62 541 )	-	( 69 029)	-
Property and equipment	26	-	( 1 53)	-
Intangible assets	( 2)		-
Investments in subsidiaries and associates	( 1 1 6 572)	409	81 689	( 3 528)
Provisions	( 3 403)	-	( 20 343)	-
Pensions	3 668	( 1 71 2)	4 005	( 6 354)
Long-term service benefits	( 557)	-	459	-
Debt securities issued	( 548)	-	1 21 4	-
Other	1 0 21 4	-	( 1 633)	-
Tax losses brought forward	( 1 00 1 44)	7 1 52	( 32 272)	26 692
Deferred taxes	( 31 9 888)	26 1 31	( 52 434)	77 01 5
Current taxes	1 47 349	( 64 228)	1 35 350	43 390
Total tax recognised (profit) /loss Total (profit) /loss	( 1 72 539) 72 539) ( 1 72 539)	( 38 097) ( 38 097)( 38 097)	82 91 6 82 91 6	1 20 405 1 20 405

The current tax accounted for in reserves during 2013 of euro 64 228 thousand, is related to non realised gains in fair value reserve in the assurance activity (31 December 2012: euro 59 247 thousand). As at 31 December 2012, the current tax accounted for in reserves included an IRC tax credit of euro 7 773 thousands from negative equity charges (primarily related to pension benefits)

The reconciliation of the income tax rate can be analysed as follows:

			(in thousands of euro)
	31 .1 2.201 3		31 .1 2.201 2
	% %	Valor Valor	%	Valor
Profit before taxes		( 687 41 0) ( 41 0)		202 752 202 752
Banking levy		27 289		27 91 0
Profit before tax for the tax rate reconciliation		( 660 1 21 ) ( )		230 662 662
Statutory tax rate	25.0		31 .5
Income tax calculated based on the statutory tax rate		( 1 65 030)		72 659
Tax-exempt dividends	1 .7	( 1 1 080)	(5.3)	( 1 2 1 47)
Tax-exempt profits (off shore)	2.2	( 1 4 836)	(1 4.1 )	( 32 449)
Diferences of tax rates between subsidiaries	(4.1 )	27 262	-	-
Net Income in consolidated Investment Funds	(5.0)	33 045	1 .2	2 803
(Profit)/Loss on taxes vs accounting	2.1	( 1 3 760)	27.7	63 887
Non-taxable share of profit in associates	0.0	( 273)	(1 .0)	( 2 41 0)
Non deductible (income)/costs	3.5	( 23 1 92)	8.8	20 375
Changes in estimates	7.2	( 47 490)	(26.0)	( 59 968)
Rates and tax base changes resulting from IRC	(4.8)	31 908	-	-
Non deductible losses arising from subsidiaries acquisition	-	-	1 4.4	33 230
Other	(1 .7)	1 0 907	(1 .3)	( 3 064)
	26.1 26.1	( 72 539) ( 1 72 539)	35.9	82 91 6 91

Following the Law No. 55-A/2010 of 31 December, was established a Banking levy, which is not eligible as a tax cost, and whose regime was extended by Law n.º 64-B/2011, of 30 December and by Law n.º 66-B/2012, of 31 December. As at 31 December 2013, the Group recognised a cost of euro 27.3 million (31 December 2012: euro 27.9 million, which was included in other operating income and expenses – Direct and indirect taxes (see Note 14).

NOTE42–SUBORDINATED DEBT SUBORDINATED DEBT SUBORDINATED DEBT

The balance subordinated debt is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 31 .1 2.201 2
Bonds	1 002 1 67	774 473
Perpetual Bonds	64 1 31	65 343
	1 066 298 1 298	839 81 6 839 81 6

The main features of the subordinated debt are presented as follows:

							(in thousands of euro)
					31 .1 2.201 3
Issuer Issuer	Designation	Currency Currency	Issue Date Date	Amount Issued	Carrying amount	Interest Rate	Maturity
BES Finance	Subordinated perpetual bonds	E UR	2002	30 843	23 603	3.06%	201 4	a)
BES Finance	Subordinated perpetual bonds	E UR	2004	95 767	20 21 1	4.50%	201 5	a)
BES Finance	Bonds	E UR	2008	20 000	20 1 65	8.73%	201 8
BESI	Bonds	BRL	2007	21 1 34	1 6 891	CDI 1 00%+1 .3%	201 4
BESI	Bonds	BRL	2008	8 41 6	7 91 8	CDI 1 00%+1 .3%	201 5
BESI	Bonds	BRL	2008	673	896	IPCA 1 00%+8.3%	201 5
BESI	Bonds	BRL	2008	1 01 0	944	CDI 1 00%+1 .3%	201 5
BESI	Bonds	E UR	2005	60 000	1 1 064	E uribor 3M + 0.95%	201 5
BESI	Bonds	E UR	2003	1 0 000	273	Indexada à CMS	2033
BES	Bonds	E UR	2004	25 000	22 590	E uribor 6M + 1 .25%	201 4
BES	Bonds	E UR	2008	41 550	3 848	E uribor 3M + 1 %	201 8
BES	Bonds	E UR	2008	638 450	83 055	E uribor 3M + 8.5%	201 9
BES	Bonds	E UR	2008	50 000	50 082	E uribor 3M + 1 .05%	201 8
BES	Bonds	E UR	201 1	8 1 74	8 1 82	Taxa fixa 1 0%	2021
BES	Bonds	E UR	201 3	750 000	751 964	Taxa fixa 7.1 25%	2023
BES Vida	Bonds	E UR	2002	45 000	24 295	E uribor 3M + 2.20%	2022
BES Vida	Subordinated perpetual bonds	E UR	2002	45 000	20 31 7	E uribor 3M + 2.50%	201 4	a)
				1 851 01 7 1 01 7	1 066 298 1 066 298

a) Call option date

The changes occurred in subordinated debt during the year ended 31 December 2013 are analysed as follows:

						(in thousands of euro)
	Balance as at 31 .1 2.201 2	Issues Issues	Repayments Repayments	Net Repurchases	Other movements (a)	B alance as at 31 .1 2.201 3

Bonds	774 473	750 000	( 1 945)	( 51 1 808)	( 8 553)	1 002 1 67
Perpetual Bonds	65 343	-	-	( 1 31 8)	1 06	64 1 31
	839 81 6 81	750 000 750 000	( 1 945) ( 1 945) ( 1 945)	( 51 3 1 26) ( 51 3 1 26) 51 3 1 26)	( 8 447) ( 8 447) ( 8 447)	1 066 298 1 066 298

a) Other movements include accrued interest, fair value and foreign exchange translation adjustments

In accordance with the accounting policy described in Note 2.8, debt issued repurchased by the Group is derecognised from the balance sheet and the difference between the carrying amount of the liability and its acquisition cost is recognised in the income statement. Following the repurchases performed in 2013 and 2012, the Group has recognised a gain of euro 4.6 million and of euro 39.6 million, respectively (see Notes 14 and 38).

NOTE43–OTHER LIABILITIES OTHER LIABILITIES LIABILITIES

	(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 .1
Public sector	1 1 0 227	1 35 693
Deposit accounts	21 5 61 7	1 73 955
Creditors from transactions with securities	60 433	89 357
Suppliers	56 380	49 61 9
Creditors from factoring operations	3 044	3 509
Creditors from insurance operations	25 202	2 040
Other sundry creditors	278 984	228 052
Long-term service benefits (see Note 1 6)	30 376	28 691
Other accrued expenses	1 80 499	1 27 430
Deferred income	31 807	22 267
Stock exchange transactions pending settlement	1 29 1 89	92 363
Foreign exchange transactions pending settlement	7 01 2	1 9 999
Other transactions pending settlement	90 953	1 72 627
	1 21 9 723 1 723	1 1 45 602 1 45

As at 31 December 2013 and 2012, the balance other liabilities is analysed as follows:

As at 31 December 2013, the deferred income includes the amount of euro 21 989 thousand relating to the value of the remaining in force contracts acquired of BES Vida, after reinsurance transaction of life insurance risk portfolio held in 2013 (see notes 13 and 31). This amount will be amortized to income over the remaining life of the respective contracts.

NOTE44–SHARE CAPITAL, SHARE PREMIUM, OTHER E SHARE E EQUITY INSTRUME QUITY INSTRUMENTS, FAIR VALUE RESERVES AND NTS, FAIR OTHER RESERVES AND RETAINED EARNINGS OTHER RESERVES EARNINGS

Ordinary shares Ordinary shares

As at 31 December 2013, the Bank's share capital in the amount of euro 5 040.1 million, was represented by 4 017 928 471 ordinary shares, which were subscribed and fully paid by the following entities:

GRUPO BANCO ES

	% Capital
	31 .1 2.201 3 .1 3	31 .1 2.201 2 31 2.201
BE SPAR - Sociedade Gestora de Participações Sociais, S.A.	35.29%	35.29%
Credit Agricole, S.A. (France)	1 0.81 %	1 0.81 %
Silchester International Investors Limited (United Kingdom)(3)	5.67%	5.76%
Bradport, SGPS, S.A. (1 )	4.83%	4.83%
Capital Research and Management Company (USA)(3)	4.1 4%	-
PT Prestações - Mandatária de Aquisições e Gestão de Bens, S.A.(2)	2.09%	2.09%
BlackRock, Inc. (USA)(3) (4)	2.00%	-
E spírito Santo Financial Group, S.A. (Luxembourg)	1 .38%	0.74%
Other	33.79%	40.48%
	1 00.00% 1 00.00%	1 00.00%

(1 ) Portuguese Law company wholly owned by Banco Bradesco (Brazil), to which are attributable the voting rights.

(2) Company fully and indirectly dominated by Portugal Telecom, SGPS, SA.

(3) Direct and indirect interest

(4) according to the BlackRock, Inc. notification, received in October 201 3

Preference shares

The BES Finance issued 450 thousand non-voting preference shares, which were listed in the Luxembourg stock Exchange in July 2003. In March 2004, 150 thousand preference shares were additionally issued forming a single series with the existing preference shares, in a total amount of euro 600 million. The face value of these shares is euro 1 000 and is wholly (but not partially) redeemable by option of the issuer at its face value, as at 2 July 2014, subject to prior approvals of BES and Bank of Portugal. During the year ended 31 December 2011, the Group acquired 338 thousand preference shares, issued by BES Finance, of which 197 thousand were acquired in scope of the exchange offer over securities referred to above. In the year ended 31 December 2012, the Group acquired 19,000 preference shares, having recorded a net gain in the amount of euro 4.5 million recognised in Other reserves. During the year 2013, the Group acquired 34 thousand preference shares, having recorded a net gain in the amount of euro 6.096 million. As at 31 December 2013, there were 159 thousands preference shares outstanding with a value of euro 159.3 million.

These preference shares pay an annual non cumulative preferred dividend, if and when declared by the Board of Directors of the issuer, of 5.58% per annum on nominal value. The dividend is paid on 2 July of each year, beginning 2 July 2004 and ending 2 July 2014.

If the issuer does not redeem these preference shares on 2 July 2014, the dividend applicable rate will be the 3 months Euribor plus 2.65%, with payments on 2 January, 2 April, 2 July and 2 October of each year, if declared by the Board of Directors of the issuer.

BES unconditionally guarantees dividends and principal repayment related to the above mentioned issue, until the limit of the dividends previously declared by the Board of Directors of the issuer.

These shares rank lower than any BES liability, and pari passu relative to any preference shares that may come to be issued by the Bank.

Share premiums Share premiums

In the year ended 31 December 2013, share premiums are represented by euro 1 067 559 thousand related to the premium paid by the shareholders following the share capital increases.

Other equity instruments Other equity instruments

The Group issued during 2010, perpetual subordinated bonds with interest conditioned in the total amount of euro 320 million, of which euro 270 million were issued by BES and the remaining euro 50 million by BESI. These bonds have an interest conditioned non-cumulative, payable only if and when declared by the Board of Directors.

In scope of the exchange offer over securities, during 2011, other equity instruments issued by BES reduced by an amount of euro 240 448 thousand and Non-controlling interests issued by BESI reduced by an amount of euro 46 269 thousand.

These bonds are subordinated in respect of any liability of BES and BESI and pari passu in respect of any subordinated bonds with identical characteristics that may be issued by the Bank. Given their characteristics, these obligations are considered as equity instruments in accordance withthe accounting policy described in Note 2.10.

						(in thousands of euro)
Issuer Issuer	Issue date Issue date	Currency CurrencyCurrency	B ook Value Value	Interest raterate Interest rate	Coupon date	Reimbursement possibility (2)
BE S	Dec/1 0	E UR	26 296	8.50%	1 5/Mar and 1 4/Sep	From Sep/1 5
BE S	Dec/1 0	USD	2 866	8.00%	1 5/Mar and 1 4/Sep	From Sep/1 5
			29 1 62
BE SI (1 )	Out/1 0	E UR	3 681	8.50%	20/Apr and 20/Oct	From Oct/1 5
			32 843

The main characteristics of these equity instruments are presented as follows:

(1 ) BESI issue is included in the balance non-controlling interest (see Note 45)

(2) The reimbursement of these securities may be performed in full, but not partially, at the option of the issuer, subject to prior approval of the Bank of Portugal.

During the year ended 31 December 2013, the Group made an interest payment in the amount of euro 2 089 thousand (euro 2 121 thousand, net of taxes), which was recorded as a deduction to equity.

Treasury stock Treasury stock

During 2011, BES acquired own shares under PRVIF (see Note 16). As at 27 January 2012, BES sold 67 184 shares, following the retirement of two directors to whom had been assigned 33 592 shares on the distribution of results in 2010, according to PRVIF approved by the General Meeting held on 6 April 2010 and in accordance with the proposal of the Board on the acquisition and disposal of own shares approved at the General Meeting on 31 March 2011.

The movement in treasury stocks is analysed as follows:

	31 .1 2.201 3 3 Amount Number of shares euro) 275 291 - - 275 291 1 0 1 1 2 91 5 - 2 1 54 826 ( 1 2 1 97 591 )		31 31 .1 2.201 2
Opening balance (1 ) Shares acquired Shares sold (2) Opening balance Changes in the scope of consolidation (3) Shares acquired		(thousands of	Number of shares	Amount (thousands of euro)
Transactions under PRVIF
		801	342 475	997
		-	-	-
		-	( 67 1 84)	( 1 96)
		801	275 291	801
Other Transactions
		6 1 90	-	-
		-	55 271 581	35 540
		1 925	1 4 085 500	6 964
Shares sold		( 8 058)	( 59 244 1 66)	( 36 31 4)
	70 1 50	57	1 0 1 1 2 91 5	6 1 90
Balance in the end of the period/exercise	345 441	858	1 0 388 206	6 991

(1 ) Includes shares acquired in 201 1 at a price of 2,909 euro per share

(2) Shares sold at a price of 1 .31 5 euro per share in J anuary 201 2.

(3) Respects to BE S shares in BE S Vida portfolio, following the control acquisition in May 201 2.

NOTE45–FAIR VALUE RESERVE, OTHER RESERVES AND RETAINED EA FAIR RESERVE, RESERVES EARNINGS AN NINGS AND NON CONTROLLING D CONTROLLING CONTROLLING INTEREST

Legal reserve Legal

The legal reserve can only be used to absorb accumulated losses or to increase the amount of the share capital. Portuguese legislation applicable to the banking sector (Article 97 of Decree-Law no. 298/92, 31 December) requires that 10% of the profit for the year be transferred to the legal reserve until it is equal to theshare capital.

Fair value reserve

The fair value reserve represents the amount of the unrealized gains and losses arising from securities classified as available-for-sale, net of impairment losses recognised in the income statement in the year/ previous years. The amount of this reserve is shown net of deferred taxes and non-controlling interests.

The changes in these balances were as follows:

		Fair value reserve				Other comprehensive income, other reserves and retained earnings			(in thousands of euro)
	Available for sale financial assets	Deferred tax reserves	Total fair value reserve	Actuarial deviations (net of taxes)	E xchange differences (net of taxes)	Legal reserve	Other reserves and retained earnings	Total Other reserves and retained earnings	Total
Balance as at 31 December 201 1	( 51 5 827)	70 652	( 445 1 75)	( 641 31 5)	92	85 000	1 361 868	805 645	360 470
Acquisition of preference shares (a)	-	-	-	-	-	-	4 478	4 478	4 478
Actuarial Deviations	-	-	-	( 1 73 1 71 )	-	-	-	( 1 73 1 71 )	( 1 73 1 71 )
Interest of other equity instruments	-	-	-	-	-	-	( 1 864)	( 1 864)	( 1 864)
Dividends from preference shares	-	-	-	-	-	-	( 6 1 37)	( 6 1 37)	( 6 1 37)
Changes in fair value	747 463	( 1 31 438)	61 6 025	-	-	-	-	-	61 6 025
E xchange differences	-	-	-	-	( 36 939)	-	-	( 36 939)	( 36 939)
Transactions with non-controlling interests	-	-	-	-	-	-	497	497	497
Other equity movements of associated companies	-	-	-	-	-	-	( 9 800)	( 9 800)	( 9 800)
Other	-	-	-	-	-	-	( 2 837)	( 2 837)	( 2 837)
Balance as at 31 December 201 2	231 636	( 60 786)	1 70 850	( 81 4 486)	( 36 847)	85 000	1 237 447	471 1 1 4	641 964
Acquisition of preference shares (a)	-	-	-	-	-	-	6 096	6 096	6 096
Actuarial Deviations	-	-	-	( 97 982)	-	-		( 97 982)	( 97 982)
Interest of other equity instruments	-	-	-	-	-	-	( 2 1 91 )	( 2 1 91 )	( 2 1 91 )
Dividends from preference shares	-	-	-	-	-	-	( 6 950)	( 6 950)	( 6 950)
Own shares variations	-	-	-	-	-	-	4 470	4 470	4 470
Changes in fair value	( 1 74 800)	43 946	( 1 30 854)	-	-	-	-	-	( 1 30 854)
E xchange differences	-	-	-	-	( 49 830)	-	-	( 49 830)	( 49 830)
Reserve recognition	-	-	-	-	-	1 2 1 97	83 904	96 1 01	96 1 01
Transactions with non-controlling interests	-	-	-	-	-	-	1 804	1 804	1 804
Other equity movements of associated companies	-	-	-	-	-	-	1 502	1 502	1 502
Other	-	-	-	-	-	-	4 755	4 755	4 755
Balance as at 31 December 201 3	56 836	( 1 6 840)	39 996	( 91 2 468)	( 86 677)	97 1 97	1 330 837	428 889	468 885

(a) - value net tax

The fair value reserve is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 2.201 3	31 .1 2.201 2
Amortised cost of available-for-sale financial assets	8 729 266	1 0 758 099
Accumulated impairment losses recognised	( 297 035)	( 237 967)
Amortised cost of available-for-sale financial assets, net of impairment	8 432 231	1 0 520 1 32
Fair value of available-for-sale financial assets	8 486 605	1 0 755 31 0
Net unrealised gains (losses) recognised in the fair value reserve	54 374	235 1 78
Fair value reserves related to securities reclassified as hel-to-maturity investments Income taxes	( 2 409) ( 1 6 840)	( 3 249) ( 60 786)
Fair value reserves of associates	3 207	1 705
Net fair value reserve	38 332	1 72 848
Non-controlling interest	1 664	( 1 998)
Fair value reserve attributable to equity holders of the B ank	39 996	1 70 850 1 70 850

The movement in the fair value reserve, net of deferred taxes, impairment losses and non-controlling interest is analysed as follows:

		(in thousands of euro)
B alance at the beginning of the period	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2
	1 70 850	( 445 1 75)
Changes in fair value	1 67 578	1 1 77 565
Disposals during the period	( 441 264)	( 600 206)
Impairment recognised during the period	98 886	99 308
Increase in share capital of subsidiaries (a)	-	70 796
Deferred taxes recognised in reserves during the period	43 946	( 1 31 438)
B alance at the end of the period	39 996	1 70 850

(a) BE S Vida

Non-controlling interest controlling interest

Non-controlling interests by subsidiary are analysed as follows:

				(in thousands of euro)
	31 .1 2.201 3	3	31 .1 2.201 2	2
		Income		Income
	B alance sheet	statement statement	B alance sheet B	statement
BE S ANGOLA	522 562	1 4 353	396 369	25 554
BE SI a)	3 681	-	3 681	-
AMAN BANK	37 1 87	2 775	34 974	1 745
E S CONCESSÕE S	23 404	( 4 372)	25 868	( 5 673)
FCR VE NTURE S II	1 2 549	( 3 846)	1 7 676	499
BE S Securities	4 398	( 1 1 4)	5 480	( 1 47)
BE S Investimento do Brasil	29 299	1 367	32 886	2 292
E SAF	1 3 642	2 090	1 2 887	1 991
BE S AÇORES	1 7 304	( 939)	1 8 01 8	530
E spirito Santo Investment Holding	-	( 1 522)	3 967	( 4 607)
BE ST	21 940	3 687	1 8 1 61	2 989
FUNGEPI	1 1 4 784	( 8 790)	56 537	( 570)
Others	1 853	( 2 002)	42 941	( 868)
	802 603 802	2 2 687	669 445 669	23 735 23

a) Corresponds to the issued amount of other equity instruments (see Note 44).

The movements in non-controlling interests in the year ended 31 December 2013 and 2012 are analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3	31 .1 2.201 2
Non-controlling interests at the beginning of the period	669 445 669 445	588 447 588 447
Changes in the scope of consolidation	32 21 5	74 293
Increase/ (decrease) in share capital of subsidiaries	1 58 702	1 3 527
Dividends paid	( 2 81 2)	( 2 924)
Changes in fair value reserve	3 1 75	22
Exchange differences and other	( 60 809)	( 27 655)
Profit for the year	2 687	23 735
Non-controlling interests at the end of the period	802 603 802 603	669 445 669 445

NOTE46–OFF-BALANCE SHEET ITEMS BALANCE ITEMS

		(in thousands of euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2
Contingent liabilities
Guarantees and stand by letters of credit	7 61 7 603	8 023 520
Assets pledged as collateral	20 425 200	21 632 555
Open documentary credits	4 230 944	3 776 399
Other	278 493	531 757
	32 552 240	33 964 231
Commitments
Revocable commitments	7 1 07 506	5 462 823
Irrevocable commitments	1 655 1 1 3	3 280 971
	8 762 61 9 61	8 743 794 8 743 794

As at 31 December 2013 and 2012 off-balance sheet items can be analysed as follows:

Guarantees and standby letters of credit are banking operations that do not imply any out-flow by the Group.

As at 31 December 2013, the balance assets pledged as collateral include:

Securities pledged as collateral to the Bank of Portugal in the scope of a liquidity facility collateralised by securities for an amount of euro 18.8 billion (31 December 2012: euro 19.6 billion);
Securities pledged as collateral to the Portuguese Securities and Exchange Commission (CMVM) in the scope of the Investors Indemnity System (Sistema de Indemnização aos Investidores) for an amount of euro 17.2 million (31 December 2012: euro 20.8 million);
Securities pledged as collateral to the Deposits Guarantee Fund (Fundo de Garantia de Depósitos) for na amount of euro 75.7 million (31 December 2012: euro 82.6 million);
Securities pledged as collateral to the European Investment Bank for an amount of euro 1 340.0 million (31 December 2012: euro 1 822.5 million).

The above mentioned securities pledged as collateral are booked in the available-for-sale portfolio and they can be executed in case the Group does not fulfil its obligations under the terms of the contracts.

Documentary credits are irrevocable commitments, by the Group, in the name of its clients, to pay or order to pay a certain amount to a supplier of goods or services, within a determined term, against the exhibition of the expedition documentation of the goods or service provided. The condition of irrevocable consists of the fact that the terms initially agreed can only be changed or cancelled with the agreement of all parties.

Revocable and irrevocable commitments represent contractual agreements to extend credit to Group's customers (eg. unused credit lines). These agreements are, generally, contracted for fixed periods of time or with other expiration requisites, and usually require the payment of a commission. Substantially, all credit commitments require that clients maintain certain conditions verified at the time when the credit was granted.

Despite the characteristics of these contingent liabilities and commitments, these operations require a previous rigorous risk assessment of the client and its business, like any other commercial operation. When necessary, the Group require that these operations are collateralised. As it is expected that the majority of these operations will mature without any use of funds, these amounts do not represent necessarily future out-flows.

(in thousands of euro) 31 .1 2.201 3 31 .1 2.201 2 31 2.201 3 2.201 Securities and other items held for safekeeping on behalf of customers 53 402 001 54 335 220 Assets for collection on behalf of clients 242 383 294 295 Securitised loans under management (servicing) 2 473 353 2 671 390 Other responsibilities related with banking services 6 242 923 8 784 286 62 360 660 66 085 1 91 62 360 66 085 1 91

Additionally, the off-balance sheet items related to banking services provided are as follows:

In the scope of the activity regarding the management of customers funds and considering the risk profile of each customer, the Group offers a variety of investment solutions which include the direct subscription of debt instruments issued by several entities, namely entities included in the Group's consolidation scope and other related parties from the non-financial sector of Espírito Santo Group (GES). In this context, the Group makes available to customers information on the risks associated with the subscription of such instruments as it is required by the applicable regulations. These debt instruments, which are held under custody are accounted as an off-balance sheet item under Securities and other items for the safekeeping on behalf of clients.

Under this activity, Group customers subscribed debt instruments issued by Espírito Santo International, S.A. ('ESI') and its subsidiaries Espírito Santo Property, S.A., Espírito Santo Industrial, S.A. e Espírito Santo Irmãos, S.A., in the amount of euro 3 054 million, of which euro 1 568 million were held, as at 31 December 2013, by private and retail customers and 1 486 million euro were held, on the same date, by institutional customers.

ESI Group has prepared a reorganization plan and a deleverage program in order to be able to rebalance its financial position and proceed with the reimbursement of its liabilities. The measures included in the referred reorganization plan and deleverage program were integrated in a business plan and the cash flow projections for the 10 year period up to 2023, which were subject to analysis made under the review of the loan impairment losses (Exercício Transvesal de Revisão da Imparidade da Carteira de Crédito – "ETTRIC"), led by the Bank of Portugal.

Considering the uncertainties associated with the ability to fully implement the internal reorganization plan and the deleverage program, the Board of Directors of ESFG approved an unconditional and irrevocable guarantee mechanism in favour of BES, with the objective of covering the risks that eventually may occur.

BES Board of Directors believe, considering the information included in ESI business plan and cash flow projections for the 10 year period up to 2023 and made available to the Supervisory Authority for analysis under ETTRIC, that the reimbursement of the debt instruments will be possible through implementation of the deleverage program, the

support of ESI shareholders, its capacity to obtain or renew credit lines in the financial markets and, additionally, through the support that may be necessary from ESFG.

Additionally Group retail and private customers subscribed debt instruments issued by Rio Forte Investments, S.A., Espírito Santo Saúde, S.G.P.S., S.A., ESPART - Espirito Santo Participações Financeiras, S.G.P.S., S.A., Quinta da Foz and Euroamerican Finance, S.A., in the amount of euro 479 million, euro 38 million, euro 24 million, euro 13 million and euro 9 million, respectively, with reference to 31 December 2013.

NOTE47–ASSETS UNDER MANAGEMENT ASSETS UNDER MANAGEMENTASSETS MANAGEMENT

In accordance with the legislation in force, the fund management companies and the depositary bank are jointly liable before the participants of the funds for the non fulfilment of the obligations assumed under the terms of the Law and the management regulations of the funds.

As at 31 December 2013 and 2012, the amount of the investment funds managed by the Group is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
Securities investment funds	4 044 866	5 1 1 5 043
Real estate investment funds	1 079 81 3	1 075 678
Pension funds	1 906 71 7	1 783 359
Bancassurance	1 59 965	89 662
Portfolio management	680 497	1 960 206
Discretionary management	2 388 878	1 378 639
	1 0 260 736	1 1 402 587 1 1 402 587

The amounts recognised in these accounts are measured at fair value determined at the balance sheet date.

NOTE48–RELATED PARTIES TRANSACTIONS RELATED

The entities considered to be BES Group related parties together with the subsidiaries referred in Note 1, as defined by

IAS 24, are as follows:

Group BES Associates companies	ESFG's subsidiaries, associates and related entities
Tranquilidade Corporação Angolana de Seguros, S.A.	Aveiro Incorporated
Fin Solutia - Consultoria e Gestão de Créditos, SA	Beach Heath Investments, Ltd
MCO2 – Sociedade Gestora de Fundos de Investimento Mobiliário Hlc - Centrais de Cogeração, SA	Companhia Agricola Botucatu, SA
Coporgest	Casas da Cidade - Residências Sénior, SA Cerca da Aldeia - Sociedade Imobiliária, SA
Synergy Industry and Technology, S.A.	Cimenta - Empreendimentos Imobiliários, SA
Salgar Investments	Cidadeplatina - Construção SA
2BCapital, SA	Clarendon Properties, Inc.
2B Capital Luxembourg S.C.A SICAR	Clube de Campo da Comporta - Actividades Desportivas e Lazer, Lda
2B Capital Luxembourg General Partners SARL Espírito Santo IBERIA I	Club de Campo Villar Ollala, SA Clup Vip - Marketing de Acontecimentos, SA
Banque Espirito Santo et de la Vénétie, SA	Clube Residencial da Boavista, SA
YUNIT - Serviços, SA	Companhia Brasileira de Agropecuária Cobrape
E.S. Contact Center - Gestão de Call Centers, SA	Coimbra Jardim Hotel - Sociedade de Gestão Hoteleira, S.A.
Fundo de Capital de Risco Espírito Santo Ventures Inovação e Internacionalização	Construcciones Sarrión, SL
Fundo Bem Comum FCR Esiam - Espirito Santo International Asset Management, Ltd	Ganadera Corina Campos y Haciendas, S/A E.S.B. Finance Ltd
Société 45 Avenue Georges Mandel, SA	Eastelco - Consultoria e Comunicação, SA
BES, Companhia de Seguros , SA	E.S. Asset Administration, Ltd.
Locarent - Companhia Portuguesa de Aluguer de Viaturas, SA	Espírito Santo Cachoeira Desenvolvimento Imobiliário Ltda
Esegur - Empresa de Segurança, SA	ES Comercial Agrícola, Ltda
Empark Aparcamientos y Servicios SA	Espírito Santo Guarujá Desenvolvimento Imobiliário Ltda
Ascendi Group, SGPS, SA Autovia De Los Vinedos, SA	ES Holding Administração e Participações, S/A Espírito Santo Hotéis, SGPS, SA
SOUSACAMP, SGPS, SA	Espirito Santo Industrial ( BVI ), SA
GLOBAL ACTIVE - GESTÃO P.S.SGPS, SA	Espírito Santo Indaiatuba Desenvolvimento Imobiliário Ltda
OUTSYSTEMS, SA	Espirito Santo Industrial, SA
Coreworks - Proj. Circuito Sist. Elect., SA	Espírito Santo Industrial ( Portugal ) - SGPS, SA
Multiwave Photonics, SA	Espirito Santo Irmãos - Sociedade Gestora de Participações Sociais, SA
BIO-GENESIS YDreams - Informática, SA	Espírito Santo Itatiba Desenvolvimento Imobiliário Ltda
Nutrigreen, S.A.	Espírito Santo Primavera Desenvolvimento Imobiliário Ltda ES Private Equity, Ltd
Advance Ciclone Systems, SA	Espirito Santo Property (Brasil) S/A
WATSON BROWN HSM, Ltd	Espírito Santo Services, SA
Domática, Electrónica e Informática, SA	Espirito Santo Tourism, Ltd
MMCI - Multimédia, SA	Espirito Santo Tourism ( Europe ), SA
Mobile World - Comunicações, SA Enkrott SA	Espírito Santo Venture Ltd Espírito Santo Viagens - Sociedade Gestora de Participações Sociais, SA
Rodi Sinks & Ideas, SA	ES Viagens e Turismo, Lda
Palexpo - Imagem Empresarial, SA	Espírito Santo Viagens - Consultoria e Serviços, SA
TLCI 2 - Soluções Integradas de Telecomunicações, SA	Escae Consultoria, Administração e Empreendimento, Ltda
BANCO DELLE TRE VENEZIE SPA	Escopar - Sociedade Gestora de Participações Sociais, SA
NANIUM , SA	ESDI Administração e Participações Ltda
IJAR LEASING ALGÉRIE Ascendi Pinhal Interior Estradas do Pinhal Interior, SA	Esger - Empresa de Serviços e Consultoria, SA
Unicre - Cartão Internacional de Crédito, SA	Espirito Santo International (BVI), SA E.S. International Overseas, Ltd.
Edenred Portugal, S.A.	Esim - Espirito Santo Imobiliário, SA
Multipessoal Recursos Humanos SGPS	E.S. - Espírito Santo, Mediação Imobiliária, S.A.
ESFG's subsidiaries, associates and related entities	Espirito Santo Property SA
	Espirito Santo Property Holding, SA
Espirito Santo Financial Group, SA Espirito Santo Financial ( Portugal ), SGPS, SA	Espírito Santo Property España, S.L.
Bespar - Sociedade Gestora de Participações Sociais, SA	Espart - Espirito Santo Participações Financeiras, SGPS, SA Espirito Santo Resources, Ltd
Partran - Sociedade Gestora de Participações Sociais, SA	Espirito Santo Resources ( Portugal ), SA
Companhia de Seguros Tranquilidade, SA	E.S. Resources Overseas, Ltd
T - Vida, Companhia de Seguros, SA	Espírito Santo Resources SA
Fundo de Investimento Imobiliário Fechado Corpus Christi	Estoril Inc
IMOPRIME - Fundo de Investimento Imobiliário Fechado (a)	Euroamerican Finance Corporation, Inc.
IMOCRESCENTE - Fundo de Investimento Imobiliário Fechado (a)	Euroamerican Finance SA
Fundo Especial de Investimentos Imõbiliario Fechado (Fundes) Seguros Logo, SA	Euroatlantic, Inc. Fafer - Empreendimentos Turisticos e de Construção, SA
Esumédica - Prestação de Cuidados Médicos, SA	Fimoges - Sociedade Gestora de Fundos de Investimento Imobiliário, SA
Europe Assistance - Companhia Portuguesa de Seguros de Assistência, SA	GES Finance Limited
Advancecare - Gestão e Serviços de Saúde, SA	Gesfimo - Espirito Santo, Irmãos, Soc. Gestora de Fundos de Investimento Imobiliários,SA
Tranquilidade Moçambique Vida	Gestres - Gestão Estratégica Espirito Santo, SA
Tranquilidade Moçambique Não Vida	Goggles Marine, Ltd
Espírito Santo Saúde SGPS, S.A. Clínica Parque dos Poetas, SA	Sociedade Agricola Golondrina, S/A HDC - Serviços de Turismo e Imobiliário, SA
Cliria - Hospital Privado de Aveiro, SA	Herdade da Comporta - Actividades Agro Silvícolas e Turísticas, SA
ES Saúde - Residência com Serviços Senior, S.A.	Hoteis Tivoli, SA
Espírito Santo - Unidades de Saúde e de Apio à Terceira Idade, S.A.	Hotelagos, SA
Genomed, Diagnóstico de Medicina Molecular, SA	Hospital Residêncial do Mar, SA
HCI - Health Care International, Inc	I.A.C. UK, Limited
HME Gestão Hospitalar	Inter-Atlântico, S/A
Hospital da Arrábida - Gaia, SA Hospital da Luz - Centro Clínico da Amadora, SA	Iber Foods - Produtos Alimentares e Biológicos, SA Imopca, SA
Hospital da Luz, SA	Lote Dois - Empreendimentos Turisticos SA
Hospor - Hospitais Portugueses, SA	Luzboa, SA
Instituto de Radiologia Dr. Idálio de Oliveira - Centro de Radiologia Médica, S.A.	Luzboa Um, SA
RML - Residência Medicalizada de Loures, SGPS, SA	Luzboa Dois, SA
Surgicare - Unidades de Saúde, SA	Luzboa Três, SA
Vila Lusitano - Unidades de Saúde, SA Esfil - Espírito Santo Financiére, S.A. ( Luxemburgo )	Luzboa Quatro, SA BEMS, SGPS, SA
Esfil - Espírito Santo Financiére, S.A. ( Luxemburgo ) sucusal de Pully	Margrimar - Mármores e Granitos, SA
Adepa Global Services	Marinoteis - Sociedade de Promoção e Construção de Hoteis, SA
Dassa Investments S.A.	Marmetal - Mármores e Materiais de Construção, SA
Banque Privée Espírito Santo	Metal - Lobos Serralharia e Carpintaria, Lda
Banque Privée Espírito Santo Sucursal Portugal	Multiger - Sociedade de Gestão e Investimento Imobiliário, SA
ES Wealth Management Key Space Investments LLC	Mundo Vip - Operadores Turísticos, SA Net Viagens - Agência de Viagens e Turismo, SA
ES Bank (Panama), SA	Novagest Assets Management, Ltd
ES Bankers (Dubai) Limited	Opca Angola, SA
ESFG International, Ltd	Opca Moçambique, Lda
SCA Mandel Partners	Opcatelecom - Infraestuturas de Comunicação, SA
Marignan Gestion, SA	OPWAY - Engenharia, SA
Société Lyonnaise de Marchands de Biens	OPWAY Imobiliária, SA
BESV Courtage SA	OPWAY - SGPS, SA
AOC Patrimoine, SA	Pavi do Brasil - Pré-Fabricação, Tecnologia e Serviços, Lda.
Goupe CFCA SAS ES Consultancy Singapore	Pavicentro - Pré-Fabricação, SA Pavilis - Pré-Fabricação, SA
	Paviseu - Materiais Pré-Fabricados, SA

Group Credit Agricole
	Pavitel, SARL Personda - Sociedade de Perfurações e Sondagens, SA
Saxo Bank The Atlantic Company ( Portugal ) - Turismo e Urbanização, SA Agribahia, S/A	Placon - Estudos e Projectos de Construção, Lda

ESFG's subsidiaries, associates and related entities	ESFG's subsidiaries, associates and related entities
Pontave - Construções, SA	Space - Sociedad Peninsular de Aviación, Comércio e Excursiones, SA
Agência Receptivo Praia do Forte, Ltda	Suliglor - Imobiliária do Sul, SA
Praia do Forte Operadora de Turismo, Ltda	TA DMC Brasil - Viagens e Turismo, SA
Grupo Proyectos y Servicios Sarrion, SA	Agência de Viagens Tagus, S.A.
Quinray Technologies Corp.	Construtora do Tamega Madeira SA
Recigreen - Reciclagem e Gestão Ambiental, SA	Construtora do Tamega Madeira SGPS SA
Recigroup - Industrias de Reciclagem, SGPS, SA	Terras de Bragança Participações, Ltda
Recipav - Engenharia e Pavimentos, Unipessoal, Lda	Timeantube Comércio e Serviços de Confecções, Ltda
Recipneu - Empresa Nacional de Reciclagem de Pneus, Lda	Tivoli Gare do Oriente - Sociedade de Gestão Hoteleira, S.A.
Rio Forte Investments, SA	TOP A DMC Viajes, SA
Rioforte (Portugal), SA	Top Atlântico - Viagens e Turismo, SA
Rioforte Investment Holding Mozambique, SGPS, SA	Top Atlântico DMC, SA
Santa Mónica - Empreendimentos Turísticos, SA	Transcontinental - Empreendimentos Hoteleiros, SA
Saramagos S/A Empreendimentos e Participações	Turifonte, Empreendimentos Hoteleiros, SA
Société Congolaise de Construction et Travaux Publiques, SARL	Turistrader - Sociedade de Desenvolvimento Turístico, SA
Series - Serviços Imobiliários Espirito Santo, SA	Ushuaia - Gestão e Trading Internacional Limited
Sociedade Gestora do Hospital de Loures, SA	Viveiros da Herdade da Comporta - Produção de Plantas Ornamentais, Lda
Sintra Empreendimentos Imobiliários, Ltda	Ribeira do Marchante, Administração de Bens Móveis e Imóveis, S.A.
Sisges, SA Desenvolvimento de Projectos de Energia	Casa da Saudade, Administração de Bens Móveis e Imóveis, S.A.
Solférias - Operadores Turísticos, Lda	Angra Moura-Sociedade de Administração de Bens,S.A.
Sopol - Concessões, SGPS, SA	Sociedade de Administração de Bens - Casa de Bons Ares, Lda.
Sotal - Sociedade de Gestão Hoteleira, S.A.	ACRO, Sociedade Gestora de Participações Sociais, S.A.
	Diliva, Sociedade de Investimentos Imobiliários, S.A.

As at 31 December 2013 and 2012, the total amount of the assets and liabilities of the Group with associates or related

companies, is as follows:

			31 .1 2.201 3					31 .1 2.201 2		(in thousands of euro)
	Assets	Liabilities	Guarantees	Income	E xpenses	Assets	Liabilities	Guarantees	Income	E xpenses
Associates companies
BE S VÉNÉ TIE	448 704	946	5 581	1 709	1	726 91 0	623	5 627	2 705	-
ASCE NDI GROUP SGPS	378 805	1 3 398	20 994	25 609	1 03	299 462	3 781	28 364	1 1 278	2
LOCARE NT	1 09 529	1 840	-	1 386	9 744	1 29 81 8	3 723	-	2 692	1 1 006
AE NOR DOURO	-	-	-	-	-	271 887	3 461	1 1 000	8 985	-
NANIUM	30 925	51 2	206	201	-	35 327	4 272	1 8 349	306	4
EMPARK	3 375	-	1 1 25	1 586	-	49 1 79	-	4 684	3 872	246
ASCE NDI PINHAL INTE RIOR	1 41 765	4 660	1 0 842	4 426	-	98 356	2 051	1 5 374	3 073	-
PALE XPO	-	-	26	-	-	7 266	1 24	26	537	-
BE S SEGUROS	37	1 7 545	-	363	22	630	1 8 456	-	41 5	1 6
ESE GUR	6 721	2	2 273	1 077	394	7 680	3	2 1 05	1 055	430
ES CONTACT CE NTER	1 929	-	40	1 23	-	1 858	-	43	90	874
UNICRE	1 5 038	3	-	1 20	-	26	2	-	1	-
Others	76 277	78 552	1 4 297	2 647	1 639	58 358	24 459	1 1 508	1 2 278	1 250
	1 21 3 1 05 1 1	1 1 7 458 1 7 458 1 1 7 458	55 384 55 384 55 384	39 247 39 247 39 247	1 1 903 1 1 903 1 903	1 686 757 1 686 757 686 757	60 955 60 955 60 955	97 080 97 080	47 287 47 287	1 3 828 1 3 828

Balances and transactions with the above referred entities relate mainly to loans and advances and deposits in the scope of the banking activity of the Group. The liabilities relate mainly to bank deposits taken.

As at 31 December 2013 and 2012, the total amount of assets and liabilities of BES Group with ESFG (Bank holding) and related companies, is as follows:

									(in thousands of euro)
					31 .1 2.201 3
			Assets
	Loans and advances to banks	Loans Loans	SecuritiesSecurities Securities	Other	Total	Guarantees	Liabilities	Income Income	E E xpenses
Shareholders
E S FINANCIAL GROUP	-	-	27 1 1 8	32	27 1 50	-	1 43	1 01 1	253
E SF PORTUGAL	-	-	37 647	-	37 647	-	75	907	-
BE SPAR	-	-	-	-	-	-	1 85	-	-
GRUPO CRÉDIT AGRICOLE	973	4	7 31 8	67	8 362	1 359	51 1	1 0	-
Subsidiaries, associates from shareholders					-
PARTRAN	-	-	-	-	-	-	41	-	-
E SPÍRITO SANTO FINANCIÉ RE , SA	-	7 251	21 766	-	29 01 7	-	43 039	36	-
COMPANHIA SE GUROS TRANQUILIDADE	-	440	-	476	91 6	21 463	6 745	1 737	1 1 59
BANQUE PRIVÉ E E SPÍRITO SANTO	1 5 597	-	-	7	1 5 604	7 943	46 065	426	41 0
E S BANK PANAMA	1 83 000	-	-	-	1 83 000	-	1 800	3 063	-
E S SAUDE	-	1 4 573	49 787	37	64 397	4 003	25 077	402	-
T - VIDA	-	-	277 348	1 74	277 522	-	1 1 4 280	425	7
E SUMÉ DICA	-	853	-	6	859	4		44	75
E UROP ASSISTANCE	-	-	-	1 3	1 3	25	1 287	47	8
Other					-
E S IRMÃOS	-	-	-	-	-	-	7 289	-	3
OPWAY	-	1 1 440	-	2 206	1 3 646	44 655	2 371	1 57	-
CONSTRUCCIONE S SARRION	-	1 5 393	-	-	1 5 393	8 1 1 5	-	1 31	-
E SPÍRITO SANTO RE SOURCE S	-	-	-	9	9	-	1 595	44	221
Others	25 1 50	48 31 7	28 587	41 4	1 02 468	9 702	64 987	8 1 90	2 844
TOTAL	224 720	98 271	449 571 571	3 441	776 003 776 003	97 269 97	31 5 490 490	1 6 630 1	4 980

									(in thousands of euro)
					31 .1 2.201 2
			Assets
	Loans and advances to banks	Loans Loans	Securities Securities Securities	Other	Total	Guarantees Guarantees	Liabilities	Income Income	E E xpenses
Shareholders
E S FINANCIAL GROUP	548	-	40 632	2	41 1 82	-	28	1 1 86	-
E SF PORTUGAL	-	-	72 666	-	72 666	-	1 09	2 349	-
BE SPAR	-	-	-	-	-	-	386	-	-
GRUPO CRÉDIT AGRICOLE	973	1 08	1 01 6	1 1 0	2 207	1 080	271	1 0	-
Subsidiaries, associates from shareholders
PARTRAN	-	-	-	-	-	-	22	-	-
E SPÍRITO SANTO FINANCIÉ RE , SA	-	7 579	-	-	7 579	-	1 53	-	-
COMPANHIA SE GUROS TRANQUILIDADE	-	1 50 1 50	-	520	1 50 670	21 979	1 1 6 657	1 582	1 200
BANQUE PRIVÉ E E SPÍRITO SANTO	1 5 794	-	-	1 1	1 5 805	8 01 8	32 904	503	351
E S BANK PANAMA	1 35 000	-	-	-	1 35 000	-	35 51 2	1 0 1 39	-
E S SAUDE	-	1 8 484	45 1 1 2	64	63 660	24 269	1 3 1 40	464	2
T - VIDA	-	55 560	9 291	1 63	65 01 4	-	98 61 1	492	364
E SUMÉ DICA	-	1 000	-	-	1 000	4	24	80	81
E UROP ASSISTANCE	-	24	-	34	58	25	2 749	57	-
Other
E S IRMÃOS	-	1 04 570	-	-	1 04 570	-	1	4 708	-
OPWAY	-	3 645	-	2 686	6 331	48 029	35 089	362	225
CONSTRUCCIONE S SARRION	-	1 6 527	-	-	1 6 527	8 745	-	233	-
E SPÍRITO SANTO RE SOURCE S	-	1 1	-	1 9	30	-	2 359	51	221
Others	-	62 048	20 971	1 075	84 094	1 7 294	32 368	5 1 62	2 438
TOTAL	1 52 31 5	41 9 706	1 89 688	4 684	766 393	1 29 443	370 383	27 378	4 882

As at 31 December 2013, loans granted by BES Group to the members of the Board of Directors of ESFG that are not simultaneously members of the Board of Directors of BES, amounted to euro 3 099 thousand (31 December 2012: euro 4 047 thousand).

All transactions with related parties are made on an arms length basis, under the fair value principle.

However, credit granted by the Group to members of the Board of Directors of credit institutions are regulated by article 85 of the Regime Geral das Instituições de Crédito e Sociedades Financeiras (RGICSF) and by the Instruction nr. 17/2011, which is in force since 21 August 2011.

From the above mentioned article and Instruction, the following rules should be highlighted:

(i) Credit concession is prohibited in any form, including guarantees, whether directly or indirectly:
to executive members of the Board of Directors, to Audit Committee members and to companies or other collective entities directly or indirectly controlled by those members, with the exception of operations with a social purpose, under the company policies, or resulting from the use of credit cards in conditions similar to the ones applied to the general clients with similar risk profile. All these exception are included in nr. 4 of article 85 of RGICSF;
to spouses and relatives in first degree of members of the Board of Directors or of the Audit Committee and to companies or other collective entities directly or indirectly controlled by those persons, unless (as established in nr. 2 of article 85 of RGICS) the credit granted to those persons and entities is indirect credit to the members of the Board of Directors or of the Audit Committee, whether the case may be, or in the situations in the scope of the nr. 4 of article 85 of RGICSF mentioned above
(ii) The operations have to comply with certain procedures, namely be communicated to the Bank of Portugal, in the case they are granted under the nr. 2 of article 85 of RGICS; and
(iii) The approval requirements establish that the operations have to be approved by a qualified majority of at least two thirds of the Board of Directors remaining members and is necessary to obtain a favourable opinion from the Audit Committee when the credit is granted to non executive members of the Board of Directors (those who are not members of the Executive Committee) and/or companies or other collective entities directly or indirectly controlled by them.

These rules are included in the internal normative.

Credit operations with Board Members and to the Fiscal Board have to comply with the above mentioned rules. The beneficiaries cannot intervene in the decision making process.

All credits granted to related parties are included in the impairment model, being subject to provisions in the same manner that the commercial credits granted by the Group. As at 31 December 2013 and 2012, none of the credits granted to related parties were subject to individual impairment. However, these credits are subject to an impairment evaluation on a portfolio basis, as referred in Note 2.5 – Loans and advances to customers.

NOTE49–SECURITIZATION TRANSACTIONS SECURITIZATION TRANSACTIONS TRANSACTIONS

As at 31 December 2013, the outstanding securitisation transactions performed by the Group were as follows:

				(in thousands of euro)
Designation Designation	Initial date date	Original amount amount	Current amount amount amount	Asset securitised securitised
Lusitano Mortgages No.1 plc	December 2002	1 000 000	329 803	Crédito à habitação (regime bonificado)
Lusitano Mortgages No.2 plc	November 2003	1 000 000	329 098	Crédito à habitação (regime geral e bonificado)
Lusitano Mortgages No.3 plc	November 2004	1 200 000	480 967	Crédito à habitação (regime geral)
Lusitano Mortgages No.4 plc	September 2005	1 200 000	556 1 30	Crédito à habitação (regime geral)
Lusitano Mortgages No.5 plc	September 2006	1 400 000	777 355	Crédito à habitação (regime geral)
Lusitano SME No.1 plc	October 2006	862 607	1 76 657	Crédito a pequenas e médias empresas
Lusitano Mortgages No.6 plc	J uly 2007	1 1 00 000	721 91 9	Crédito à habitação (regime geral)
Lusitano Project Finance No.1 , FTC	December 2007	1 079 1 00		1 1 8 81 0 (1 ) Crédito Project Finance
Lusitano Mortgages No.7 plc	September 2008	1 900 000	1 71 9 046	Crédito à habitação (regime geral)
Lusitano Leverage finance No. 1 BV	February 201 0	51 6 534 (2)	52 395	Crédito Leverage Finance
Lusitano Finance N.º 3	November 201 1	657 981	289 678	Crédito a particulares
IM BE S E mpresas 1	November 201 1	485 000	272 068	Crédito a pequenas e médias empresas

(2) This securitisation includes the amount of euro 382 062 thousand of mortgage loans from BE S and an amount of euro 1 34 472 thousand of mortgage loans from BESI and BE S Vénétie, (1 ) In March 201 1 , the credit portfolio associated to this securitisation was partially sold, with the remaining (domestic credit) been to "Lusitano Project Finance Nº. 1 FTC".

As permitted by IFRS 1, the Group has applied the derecognition requirements of IAS 39 for the transactions entered into after 1 January 2004. Therefore, the assets derecognised until that date, in accordance with the previous accounting policies of the Group, were not restated in the balance sheet.

The assets sold in the securitization transactions Lusitano Mortgages No.3, Lusitano Mortgages No. 4 and Lusitano Mortgages No. 5, performed after 1 January 2004, were derecognised considering that the Group has transferred substantially all the risks and rewards of ownership.

In accordance with SIC 12, the Group fully consolidates Lusitano SME No. 1 plc, Lusitano Mortgages No. 6, plc, Lusitano Project Finance No. 1 FTC, and Lusitano Mortgages No. 7 plc, as it retains the majority of the risks and rewards associated with the activity of these SPE. Therefore, the respective assets and liabilities are included in the consolidated balance sheet of the Group. The other securitization vehicles are not included in the consolidated financial statements of the Group as it has not retained the majority of the risks and rewards of ownership.

In 2011 there were two securitization transactions: loans to households (Lusitano Finance No. 3) with loan

originated by BES and other of corporate loans (IM BES Empresas 1) with loans originated by BES Spanish branch. During 2010 it was set-up two securitization operations of corporate loans (Lusitano Leverage Finance No. 1) which includes loans from BES London Branch, BESI and ES Vénétie and other of corporate loans and commercial paper (Lusitano SME No. 2), and the latter been repaid in March 2012. These loans were not derecognised considering that the group has not transferred substantially all the risks and rewards of ownership.

(in thousands of euro)

As at 31 December 2013, the Group had also two synthetic securitization operations underway. In these operations the Group contracted a credit default swap (CDS), with the objective of eliminating the credit risk of a portfolio of loans. The loans related to this portfolio continue to be recognized in the Group balance sheet in the loans and advances to customers caption.

Notes issued amount ( par amount ( par Maturity date value) value) value) Moody's Fitch Moody's Moody's S&P DB RS Fitch Moody's Moody's Moody's S&P Fitch Lusitano Mortgages No.1 plc Classe A 91 5 000 233 768 77 December 2035 AAA Aaa AAA - A Baa3 A-/- Classe B 32 500 32 500 - December 2035 AA Aa3 AA - A Ba1 A-/- Classe C 25 000 25 000 3 000 December 2035 A A2 A - A Ba3 A-/- Classe D 22 500 22 500 - December 2035 BBB Baa2 BBB - BBB+ B2 BB Classe E 5 000 5 000 - December 2035 BB Ba1 BB - BB+ Caa1 B- Classe F 1 0 000 1 0 000 - December 2035 - - - - - - - - Lusitano Mortgages No.2 plc Classe A 920 000 246 61 2 3 780 December 2036 AAA Aaa AAA - A Baa3 A-/- Classe B 30 000 30 000 1 2 500 December 2046 AA Aa3 AA - A Ba2 A-/- Classe C 28 000 28 000 5 000 December 2046 A A3 A - A B2 BB Classe D 1 6 000 1 6 000 4 000 December 2046 BBB Baa3 BBB - BBB+ Caa1 B - Classe E 6 000 6 000 - December 2046 BBB- Ba1 BB - BB Caa3 B- - Classe F 9 000 9 000 - December 2046 - - - - - - - Lusitano Mortgages No.3 plc Classe A 1 1 40 000 425 907 3 51 2 December 2047 AAA Aaa AAA - A Ba1 A-/- Classe B 27 000 1 6 71 3 - December 2047 AA Aa2 AA - A B2 BBB - Classe C 1 8 600 1 1 51 3 - December 2047 A A2 A - BBB Caa1 BB- - Classe D 1 4 400 8 91 3 - December 2047 BBB Baa2 BBB - BB- Caa2 B- - Classe E 1 0 800 8 335 - December 2047 - - - - - - - Lusitano Mortgages No.4 plc Classe A 1 1 34 000 468 862 6 884 December 2048 AAA Aaa AAA - BBB- Ba1 A-/- - Classe B 22 800 21 553 - December 2048 AA Aa2 AA - BBB- B3 BBB - Classe C 1 9 200 1 8 1 50 3 309 December 2048 A+ A1 A+ - BB Caa1 B+ - Classe D 24 000 22 687 4 925 December 2048 BBB+ Baa1 BBB+ - CCC Caa3 B- - Classe E 1 0 200 1 0 200 1 320 December 2048 - - - - - - - Lusitano Mortgages No.5 plc Classe A 1 323 000 686 71 1 5 1 91 December 2059 AAA Aaa AAA - BBB- Ba2 A-/- - Classe B 26 600 25 494 - December 2059 AA Aa2 AA - BB Caa1 BBB- - Classe C 22 400 21 469 - December 2059 A A1 A - B Caa3 B - Classe D 28 000 26 836 5 500 December 2059 BBB+ Baa2 BBB - CCC Ca B- - Classe E 1 1 900 1 1 900 1 700 December 2059 - - - - - - - Lusitano SME No.1 plc Classe A 759 525 40 509 1 0 345 December 2028 AAA - AAA - A - A-/- - Classe B 40 974 32 506 - December 2028 AAA - AAA - AAA - AAA - Classe C 34 073 27 031 - December 2028 BB - BB - CCC - B Classe D 28 035 22 241 22 241 December 2028 - - - - - - - Classe E 8 626 4 31 3 4 31 3 December 2028 - - - - - - - Lusitano Mortgages No.6 plc Classe A 943 250 536 21 3 46 41 6 March 2060 AAA Aaa AAA - A Ba1 A-/- Classe B 65 450 65 450 58 950 March 2060 AA Aa3 AA - BBB Ba3 BBB- Classe C 41 800 41 800 31 800 March 2060 A A3 A - BB B3 BB Classe D 1 7 600 1 7 600 1 7 600 March 2060 BBB Baa3 BBB - B Caa2 B Classe E 31 900 31 900 31 900 March 2060 BB - BB - CCC - CCC Classe F 22 000 22 000 22 000 March 2060 - - - - - - - - Lusitano Project Finance No.1 FTC 1 98 1 01 1 1 2 333 1 1 2 333 March 2025 - - - - - - - - Lusitano Mortgages No.7 plc Classe A 1 425 000 1 236 330 1 236 330 October 2064 - - AAA AAA - - A-/*- Classe B 294 500 294 500 294 500 October 2064 - - BBB- - - - BB- - Classe C 1 80 500 1 80 500 1 80 500 October 2064 - - - - - - - - Classe D 57 000 57 000 57 000 October 2064 - - - - - - - - Lusitano Leverage finance No. 1 BV Classe A 352 000 - - J anuary 2020 - - AAA - - - - - Classe X 21 850 21 850 20 633 J anuary 2020 - - - - - - - - Classe Sub 206 800 1 1 0 21 9 85 298 J anuary 2020 - - - - - - - - Lusitano Finance N.º 3 Classe A 450 700 1 07 273 1 07 273 November 2029 - - - - - - - Classe B 207 200 207 200 207 200 November 2029 - - - - - - - Classe C 24 800 1 0 000 1 0 000 November 2029 - - - - - - -	Designation	Issued	Current	Interest held by group (par		Initial Ratings Initial Ratings		ActualRatings
									DBRS
									-
									-
									-
									-
									-

									-
									-
									-


									-
									-



									-




									-




									-



									-
									-
									-
									-
									-
									-
									-
									-


									AAH







									-
									-
									-
IM BES Empresas 1 Classe A 242 500 1 8 998 - November 2043 - AAA - - - A3 -									-
Classe B 242 500 242 500 242 500 November 2043 - Caa2 - - - Caa2 -									-

The main characteristics of these transactions, as at 31 December 2013, can be analysed as follows:

NOTE50–FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES FAIR LIABILITIES

The fair value of financial assets and liabilities, for the Group, is analysed as follows:

						(in thousands of euro)
			Fair value
	Amortised Cost	Quoted Market Prices	Valuation models based on observable market information	Valuation models based on observable market information	Book value value	Fair value
		(Level 1 ) )	(Level 2)2) (Level 2)	(Level 3) (Level 3)
B alance as at 31 December 201 3
Cash and deposits at central banks	1 71 9 363	-	-	-	1 71 9 363	1 71 9 363
Deposits with banks	542 945	-	-	-	542 945	542 945
Financial assets held for trading	-	1 061 702	1 422 741	23 489	2 507 932	2 507 932
Securities
Bonds issued by government and public entities	-	952 852	-	-	952 852	952 852
Bonds issued by other entities Shares	-	76 583 30 894	28 622 69	23 489	1 28 694 30 963	1 28 694 30 963
Other variable income securities	-	1 373		-	1 373	1 373
Derivatives	-		-	-
E xchange rate contracts	-	-	69 500	-	69 500	69 500
Interest rate contracts	-	-	1 231 01 7	-	1 231 01 7	1 231 01 7
Credit default contracts	-	-	34 839	-	34 839	34 839
Others	-	-	58 694	-	58 694	58 694
Other Financial assets at fair value through profit or loss	-	2 345 664	780 402	748 281	3 874 347	3 874 347
Bonds issued by government and public entities	-	1 234 070	-	-	1 234 070	1 234 070
Bonds issued by other entities	-	491 650	71 4 723	31 843	1 238 21 6	1 238 21 6
Shares and other variable income securities	-	61 9 944	65 679	71 6 438	1 402 061	1 402 061
Available-for-sale financial assets	6 547	4 665 582	2 469 851	1 344 625	8 486 605	8 486 605
Bonds issued by government and public entities	-	2 867 307 705 898	1 1 39 328 1 1 97 806	- 1 1 2 71 7	4 006 635 2 01 6 421	4 006 635 2 01 6 421
Bonds issued by other entities Shares	- a) 6 547	541 766	81 248	588 552	1 21 8 1 1 3	1 21 8 1 1 3
Other variable income securities	-	550 61 1	51 469	643 356	1 245 436	1 245 436
Loans and advances to banks	5 432 464	-	-	-	5 432 464	5 432 464
Loans and advances to customers	45 748 073	-	586 823	-	46 334 896	43 61 1 856
Held-to-maturity investments	1 499 639	-	-	-	1 499 639	1 448 439
Bonds issued by government and public entities	322 405	-	-	-	322 405	31 1 374
Bonds issued by other entities	1 1 77 234	-	-	-	1 1 77 234	1 1 37 065
Derivatives for risk management purposes	-	-	363 391	-	363 391	363 391
E xchange rate contracts	-	-	1 726	-	1 726	1 726
Interest rate contracts	-	-	31 7 1 32	-	31 7 1 32	31 7 1 32
Credit default contracts	-	-	25 1 88	-	25 1 88	25 1 88
Others	-	-	1 9 345	-	1 9 345	1 9 345
Financial assets	54 949 031 54 031	8 072 948	5 623 208 208	2 1 1 6 395 2 1 1	70 761 582 70	67 987 342 987
Deposits from central banks	9 530 1 31	-	-	-	9 530 1 31	9 530 1 31
Financial liabilities held for trading	-	7 262	1 277 01 0	-	1 284 272	1 284 272
Derivatives
E xchange rate contracts	-	-	48 61 2	-	48 61 2	48 61 2
Interest rate contracts	-	-	1 097 058		1 097 058	1 097 058
Credit default contracts	-	-	1 8 387	-	1 8 387	1 8 387
Others	-	-	1 05 731	-	1 05 731	1 05 731
Other financial liabilities held for trading	-	7 262	7 222	-	1 4 484	1 4 484
Deposits from banks	4 775 384	-	224 1 09	-	4 999 493	4 937 1 48
Due to customers	27 384 721	-	9 446 1 72	-	36 830 893	36 830 893
Debt securities issued Derivatives for risk management purposes	8 673 1 40 -	- -	3 246 31 0 1 30 71 0	- -	1 1 91 9 450 1 30 71 0	1 4 340 559 1 30 71 0
E xchange rate contracts	-	-	1 501	-	1 501	1 501
Interest rate contracts	-	-	79 667	-	79 667	79 667
Credit default contracts	-	-	1 0 949	-	1 0 949	1 0 949
Others	-	-	38 593	-	38 593	38 593
Investment contracts	2 608 643	-	1 669 423	-	4 278 066	3 1 86 1 99
Subordinated debt	1 066 025	-	273	-	1 066 298	1 055 294
Financial Liabilities	54 038 044 54 044	7 262	1 5 994 007 1 007	-	70 039 31 3 70 31	71 295 206 295

a) Assets at acquisition cost net of impairment losses. These assets refer to equity instruments issued by non-quoted entities in relation to which no recent transactions were identified or is not possible to estimate reliably its fair value.

(in thousands of euro)

			Fair value
	Amortised Cost	Quoted Market Prices	Valuation models based on observable market information	Valuation models based on observable market information	B ook value ook value	Fair value value
		(Level 1 ) )	(Level 2) 2)	(Level 3) 3)
B alance as at 31 December 201 2
Cash and deposits at central banks	1 377 541	-	-	-	1 377 541	1 377 541
Deposits with banks	681 077	-	-	-	681 077	681 077
Financial assets held for trading	-	1 484 1 1 2	2 441 287	-	3 925 399	3 925 399
Securities
Bonds issued by government and public entities	-	1 347 806	-	-	1 347 806	1 347 806
Bonds issued by other entities	-	94 1 57	1 65 046	-	259 203	259 203
Shares	-	40 1 35	1 1 776	-	51 91 1	51 91 1
Other variable income securities	-	2 01 4	-	-	2 01 4	2 01 4
Derivatives
E xchange rate contracts	-	-	75 826	-	75 826	75 826
Interest rate contracts	-	-	1 996 798	-	1 996 798	1 996 798
Credit default contracts	-	-	44 91 3	-	44 91 3	44 91 3
Others	-	-	1 46 928	-	1 46 928	1 46 928
Other Financial assets at fair value through profit or loss Bonds issued by government and public entities	- -	1 387 979 51 5 994	1 1 53 990	279 584	2 821 553 51 5 994	2 821 553 51 5 994
Bonds issued by other entities		272 936	- 800 091	- 45 398	1 1 1 8 425	1 1 1 8 425
Shares and other variable income securities	- -	599 049	353 899	234 1 86	1 1 87 1 34	1 1 87 1 34
Available-for-sale financial assets	8 605	5 008 676	4 778 336	959 693	1 0 755 31 0	1 0 755 31 0
Bonds issued by government and public entities	-	3 1 1 1 939	1 293 450	-	4 405 389	4 405 389
Bonds issued by other entities	-	785 749	3 251 669	1 9 297	4 056 71 5	4 056 71 5
Shares	a) 8 605	787 1 78	1 04 451	508 688	1 408 922	1 408 922
Other variable income securities	-	323 81 0	1 28 766	431 708	884 284	884 284
Loans and advances to banks	5 1 22 234	-	304 284	-	5 426 51 8	5 426 51 8
Loans and advances to customers	47 498 232	-	208 1 60	-	47 706 392	44 684 1 22
Held-to-maturity investments	941 549	-	-	-	941 549	879 265
Bonds issued by government and public entities	295 271	-	-	-	295 271	304 496
Bonds issued by other entities	646 278	-	-	-	646 278	574 769
Derivatives for risk management purposes	-	-	51 6 520	-	51 6 520	51 6 520
E xchange rate contracts	-	-	5 356	-	5 356	5 356
Interest rate contracts	-	-	460 692	-	460 692	460 692
Credit default contracts	-	-	1 0 21 6	-	1 0 21 6	1 0 21 6
Others	-	-	40 256	-	40 256	40 256
Financial assets	55 629 238 629 238	7 880 767 880 7 880 767	9 402 577 9 402 577 577	1 239 277 1 239 277 1 239	74 1 51 859 74 1 51 859 51	71 067 305 71 067 305
Deposits from central banks	1 0 893 320	-	-	-	1 0 893 320	1 0 893 320
Financial liabilities held for trading	-	796	2 1 21 229	-	2 1 22 025	2 1 22 025
Derivatives
Credit default contracts	-	-	31 478	-	31 478	31 478
E xchange rate contracts	-	-	79 634	-	79 634	79 634
Others	-	-	2 01 0 1 1 7	-	2 01 0 1 1 7	2 01 0 1 1 7
Other financial liabilities held for trading	-	796	-	-	796	796
Deposits from banks	4 476 381	-	61 2 277	-	5 088 658	4 898 506
Due to customers	25 743 341	-	8 796 982	-	34 540 323	34 540 323
Debt securities issued Derivatives for risk management purposes	1 2 764 479 -	- -	2 659 582 1 25 1 99	- -	1 5 424 061 1 25 1 99	1 5 990 921 1 25 1 99
E xchange rate contracts			232		232	232
Interest rate contracts	- -	- -	65 437	- -	65 437	65 437
Credit default contracts	-	-	1 8 340	-	1 8 340	1 8 340
Others	-	-	41 1 90	-	41 1 90	41 1 90
Investment contracts	1 298 933	-	2 1 1 4 630	-	3 41 3 563	3 61 5 405
Subordinated debt	839 553	-	263	-	839 81 6	81 1 686
Financial Liabilities	56 01 6 007 01 007	796	1 6 430 1 62 1 1	-	72 446 965 446	72 997 385 72

The Group determines the fair value of its financial assets and liabilities in accordance with the following hierarchy:

Quoted market prices (level 1) – this category includes prices (level 1) financial assets with available quoted market prices in official markets and with dealer prices quotations provided by entities that usually provide transaction prices for these assets/liabilities traded in active markets.

Valuation models based on observable market informati models on observable information (level 2) rmation 2) – consists on the use of internal va on luation techniques, namely discounted cash flow models and option pricing models which imply the use of estimates and require judgments that vary in accordance with the complexity of the financial instrument. Notwithstanding, the Group uses observable market data such as interest rate curves, credit spreads, volatility and market indexes. Includes also instruments with dealer price quotations but which are not traded in active markets.

Valuation models based on non based on nonbased non-observable market information (level 3) observable market information (level 3) observable market (level 3) – consists on the use of internal valuation techniques, mainly discounted cash flow models, or quotations provided by third parties but which imply the use of non-observable market information. Changes in the parameters used in 2013 and 2012, have no significant impact to the Group consolidated financial statements.

A portion of the financial assets included in level 3, around euro 981 million (31 December 2012: euro 769 million) corresponds to participation units in closed investment funds, which fair value is calculated from Net Asset Value (NAV) determined by the Management Company, in accordance with the audited financial statements of each Fund. The net assets of each Fund is comprised by a diversified portfolio of assets and liabilities valued at fair value through internal valuation techniques applied by the Management Company. Although the impractibility of doing a sensitivity analysis to the different components regarding the assumptions used by the Management Companies to the NAV, a change in +/- 10% in NAV would have an impact of +/- euro 98 million (31 December 2012: +/-euro 77 million) in the financial statements of Group BES.

The movements of the financial assets valued based on non-observable market information, during 2013 and 2012, can be analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 3	31 .1 2.201 2 31 .1 2.201 2
B alance as at 1 J anuary	1 239 277	263 1 94
Acquisitions	41 9 947	989 342
Disposals	( 1 1 0 879)	( 1 7 604)
Transfer	599 968	6 593
Changes in value	( 31 91 8)	( 2 248)
B alance as at 31 December	2 1 1 6 395	1 239 277

The main assumptions and inputs used in the valuation models are presented as follows:

Interest rates curves

The short term rates presented reflect benchmark interest rates for the money market, being that for the long term the presented values represent the swap interest rate for the respective years:

		31 .1 2.201 3 31 .1 3			31 .1 2.201 2 31 .1 2.201 2
	E UR E UR	USD USD	GB P	E UR	USD	GB P
Overnight	0.1 1 00	0.1 1 00	0.41 00	0.0700	0.1 000	0.4700
1 month	0.1 941	0.1 600	0.41 00	0.1 759	0.2300	0.4600
3 months	0.2870	0.3300	0.5200	0.1 870	0.41 50	0.4800
6 months	0.3890	0.41 00	0.7350	0.3200	0.4400	0.6200
9 months	0.3981	0.4500	0.81 00	0.31 78	0.5900	0.7900
1 year	0.41 30	0.3050	0.641 2	0.3200	0.3260	0.541 1
3 years	0.771 5	0.8560	1 .4342	0.4700	0.4765	0.7783
5 years	1 .2580	1 .7490	2.1 337	0.7650	0.8260	1 .01 69
7 years	1 .6820	2.4270	2.5770	1 .1 250	1 .2435	1 .3563
1 0 years	2.1 550	3.0280	2.9876	1 .5700	1 .7500	1 .8560
1 5 years	2.5809	3.5230	3.31 60	2.01 84	2.2800	2.41 35
20 years	2.71 39	3.7200	3.41 70	2.1 71 5	2.5020	2.7230
25 years	2.7399	3.8080	3.4380	2.2203	2.6240	2.8800
30 years	2.7309	3.8520	3.4360	2.241 3	2.6880	2.9535

Credit spreads

The credit spreads used by the Group on the valuation of the credit derivatives are disclosed on a daily basis by Markit representing observations constituted for around 85 renowned international financial entities. The evolution of the main indexes, understood as being representative of the credit spreads behaviour in the market throughout the year, is presented as follows:

						(basis points)
Index Index	Series Series	1 year 1 year1 year	3 years 3 years3 years	5 years 5 years5 years	7 years 7 yearsyears	1 0 years 1 0 years
Year 201 3
CDX USD Main	21	7.67	29.88	62.44	88.95	1 07.99
iTraxx E ur Main	20	-	35.1 7	70.1 5	96.97	1 1 8.1 7
iTraxx E ur Senior Financial	20	-	-	87.06	-	1 35.1 8
Year 201 2
CDX USD Main	1 9	33.02	58.73	95.39	1 1 8.68	1 36.1 4
iTraxx E ur Main	1 8	-	76.38	1 1 7.43	1 41 .58	1 54.60
iTraxx E ur Senior Financial	1 8	-	-	1 42.44	-	1 74.98

Interest rate volatility

The values presented below, refer to the implied volatilities (at the money) used for the valuation of the interest rate options:

		31 .1 2.201 3 31 .1 3			31 .1 2.201 2 31 2.201
	E UR E UR	USD USD	GB P	E UR	USD	GB P
1 year	1 1 2.77	75.90	49.1 8	1 97.1 8	66.60	54.1 0
3 years	65.30	72.76	55.78	84.70	72.90	64.90
5 years	53.30	50.62	45.99	67.50	63.22	60.80
7 years	45.20	38.21	38.55	52.90	51 .03	49.60
1 0 years	36.80	31 .55	31 .80	39.70	42.33	37.20
1 5 years	30.68	35.58	26.58	31 .43	35.80	27.80

Exchange rates and volatility

Presented below are the exchange rates (European Central bank) at the balance sheet date and the implied volatilities (at the money) for the main currencies used on the derivatives valuation:

					Volatility (%)
E xchange Rates	31 .1 2.201 3 2.201 3	31 .1 2.201 2 .1 2 2	1 month month	3 months months 3 months	6 months months	9 months months 9 months	1 year

EUR/USD	1 .3791	1 .31 94	7.65	7.75	7.88	8.1 5	8.32
EUR/GBP	0.8337	0.81 61	6.55	6.73	7.00	7.1 3	7.33
EUR/CHF	1 .2276	1 .2072	3.25	3.83	4.23	4.58	4.89
EUR/NOK	8.3630	7.3483	8.05	8.03	7.95	8.00	7.98
EUR/PLN	4.1 543	4.0740	5.00	5.84	6.56	7.08	7.53
EUR/RUB	45.3246	40.3295	7.37	7.89	8.43	8.90	9.41
USD/BRL a)	2.3621	2.0491	1 2.95	1 3.38	1 3.60	1 3.80	1 4.00
USD/TRY b)	2.1 467	1 .7850	1 4.50	1 3.80	1 3.60	1 3.60	1 3.60

a) Calculation based inE UR/USD and E UR/BRL exchanges rates

b) Calculation based in E UR/USD and E UR/TRY exchanges rates

Concerning the exchange rates, the Group uses in the valuation models the spot rate observed in the market at the time of the valuation.

Equity indexes

In the table below, is presented the evolution of the main market equity indexes and the respective volatilities used for the valuation of equity derivatives:

		Quote			Historical volatility	Implied
	31 .1 2.201 3 31 .1 2.201 3	31 .1 2.201 2 31 .1 2.201 2	% Change	1 month month	3 month	volatitlity

DJ E uro Stoxx 50	3 1 09	2 636	17.9	1 4.90	1 3.72	1 3.44
PSI 20	6 559	5 655	16.0	1 2.91	1 3.65	-
IBE X 35	9 91 7	8 1 68	21.4	1 5.39	1 5.34	-
FTSE 1 00	6 749	5 898	14.4	1 0.1 1	9.83	1 0.69
DAX	9 552	7 61 2	25.5	1 3.23	1 2.04	1 3.56
S&P 500	1 848	1 426	29.6	8.74	1 0.31	1 1 .21
BOVE SPA	51 507	60 952	-15.5	1 9.34	20.22	-

The methods and assumptions used in estimating the fair values of financial assets and liabilities measured at amortised cost in the balance sheet are analysed as follows:

					(in thousands of euro)
			J usto valor
	Amortised cost	Quoted market prices	Valuation models based on observable market information	Valuation models based on non observable	Book value
		(Level 1 ) (Level 1 )	(Level 2) 2) 2)	(Level 3) 3)
B alance as at 31 December 201 3
Cash and deposits at central banks	1 71 9 363	1 71 9 363	-	-	1 71 9 363
Deposits with banks	542 945	542 945	-	-	542 945
Available-for-sale financial assets	6 547	-	-	6 547	6 547
Loans and advances to banks	5 432 464	-	5 432 464	-	5 432 464
Loans and advances to customers	45 748 073	-	43 025 033	-	43 025 033
Held-to-maturity investments	1 499 639	469 359	977 61 2	1 468	1 448 439
Bonds of public issuers	322 405	308 91 0	2 464	-	31 1 374
Bonds of other issuers	1 1 77 234	1 60 449	975 1 48	1 468	1 1 37 065
Financial assets	54 949 031 949	2 731 667 2 731 2 731 667	49 435 1 09 49 435 1 09 1	8 01 5 8 01 5 8	52 1 74 791 52 1 74 791
Deposits from central banks	9 530 1 31	9 530 1 31	-	-	9 530 1 31
Deposits from banks	4 775 384	-	4 71 3 039	-	4 71 3 039
Due to customers	27 384 721	-	27 384 721	-	27 384 721
Debt securities issued	8 673 1 40	5 845 601	5 01 4 51 6	234 1 32	1 1 094 249
Investment contracts	2 608 643	-	1 51 6 776	-	1 51 6 776
Subordinated debt	1 066 025	81 9 831	235 1 90	-	1 055 021
Financial liabilities	54 038 044 038	1 6 1 95 563 6 95 1 6 1 95 563	38 864 242 38 864 242	234 1 32 234 1 32	55 293 937 55 293 937

Cash and deposits at central banks, Deposits with banks and Loans and advances to banks

Considering the short term nature of these financial instruments, carrying value is a reasonable estimate of its fair value.

Loans and advances to customers

The fair value of loans and advances to customers is estimated based on the discount of the expected future cash flows of capital and interest, assuming that the installments are paid on the dates that have been contractually defined. The expected future cash flows of loans with similar credit risk characteristics are estimated collectively. The discount rates used by the Group are current interest rates used in loans with similar characteristics.

Held-to-maturity investments

The fair values of these financial instruments are based on quoted market prices, when available. For unquoted securities the fair value is estimated by discounting the expected future cash-flows.

Deposits from central banks and Deposits from other banks

Considering the short term nature of these financial instruments, carrying value is a reasonable estimate of its fair value.

Due to customers

The fair value of these financial instruments is estimated based on the discount of the expected future cash flows of capital and interest. The discount rates used by the Group are the current interest rates used in instruments with similar characteristics. Considering that the applicable interest rates to these instruments are floating interest rates and that the period to maturity is substantially less than one year, the difference between fair value and book value is not significant.

Debt securities issued and Subordinated debt

The fair value of these instruments is based on market prices, when available. When not available, the Group estimates its fair value by discounting the expected future cash-flows.

NOTE51–RISK MANAGEMENT RISK MANAGEMENTRISK MANAGEMENT

A qualitative outlook of the risk management at the Group is presented below:

Credit risk

Credit risk represents the potential financial loss arising from the failure of a borrower or counterparty to honour its contractual obligation. Credit risk is essentially present in traditional banking products – loans, guarantees granted and contingent liabilities – and in trading products – swaps, forwards and options (counterparty risk). Regarding credit default swaps, the net exposure between selling and buying positions in relation to each reference entity, is also considered as credit risk to the Group. The credit default swaps are accounted for at fair value in accordance with the accounting policy described in Note 2.4.

Credit portfolio management is an ongoing process that requires the interaction between the various teams responsible for the risk management during the consecutive stages of the credit process. This approach is complemented by the continuous introduction of improvements in the methodologies, in the risk assessment and control tools, as well as in procedures and decision processes.

The risk profile of BES Group is analysed on a regular basis by the risk committees, especially in what concerns the evolution of credit exposures and monitoring of credit losses.

BES Group credit risk exposure is analysed as follows:

		(in thousands of euro)
	31 .1 2.201 3 31 3	31 .1 2.201 2 .1

Deposits with banks	3 466 945	3 799 1 29
Financial assets held for trading	2 475 596	3 871 474
Other financial assets at fair value through profit or loss	2 472 286	1 634 41 9
Available-for-sale financial assets	6 023 056	8 462 1 04
Loans and advances to customers	46 334 896	47 706 392
Held-to-maturity investments	1 499 639	941 549
Derivatives for risk management purposes	363 391	51 6 520
Other assets	61 1 726	480 754
Guarantees granted	7 61 7 603	8 023 520
Stand by letters of credit	4 230 944	3 776 399
Irrevocable commitments	1 655 1 1 3	3 280 971
Credit risk associated to the credit derivatives reference entities	1 76 305	489 884
	76 927 500 76 500	82 983 1 1 5 82 983 1 1 5

The Group computes the impairment on an individual basis for all financial assets that are past due. If the amount of collaterals net of haircuts equals or exceeds exposure, impairment may be nil. Thus, the Group does not have any overdue financial assets for which has not performed a review about its recovery and subsequent recognition of impairment when necessary.

(in thousands of euro)

The analysis of the risk exposure by sector of activity, as at 31 December 2013 and 2012, can be analysed as follows:

										(in thousands of euro)
						31 .1 2.201 3
	Loans and advances to customers		Financial assets held	Other financial assets at fair value through	Derivatives for risk management	assets	Available-for-sale financial	Held-to-maturity investments		Guarantees granted
	Gross amount	Impairment	for trading	profit and loss	purposes	Gross amount		Impairment Gross amount Impairment
Agriculture	474 905	( 29 573)	8 596	-	-	7 01 7	-	-	-	36 054
Mining	256 767	( 1 5 077)	3 083	6 1 1 5	-	1 3 392	( 777)	-	-	41 035
Food, beverage and tobacco	983 444	( 45 806)	26 696	47 396	-	1 1 605	( 52)	4 594	-	69 924
Textiles	361 240	( 37 1 33)	645	-	-	38 778	( 3 957)	-	-	1 3 736
Shoes	75 046	( 6 609)	205	-	-	499	( 499)	-	-	1 543
Wood and cork	1 39 638	( 29 582)	302	80 627	-	1 5 528	( 1 329)	-	-	7 801
Printing and publishing	396 424	( 36 462)	3 983	-	-	33 734	( 1 0 000)	-	-	59 427
Refining and oil	3 007	( 1 71 )	274	22 273	-	80 721	-	-	-	5 461
Chemicals and rubber	644 899	( 1 6 951 )	9 71 5	26 062	-	23 731	( 1 3 1 45)	-	-	95 966
Non-metallic minerals	31 1 791	( 30 756)	253	-	-	1 2 730	( 7 586)	-	-	21 1 46
Metallic products	956 384	( 69 669)	7 208	3 223	7 564	3 604	-	-	-	1 81 404
Production of machinery, equipment and electric devices	243 660	( 1 0 535)	1 264	257	-	1 2 645	( 3 582)	-	-	1 1 7 996
Production of transport material	1 33 638	( 6 238)	541	36 01 1	-	36 871	( 1 08)	-	-	71 1 54
Other transforming industries	387 087	( 30 205)	736	1 4 01 7	-	40 222	( 1 6 490)	-	-	41 268
E lectricity, gas and water	1 355 31 0	( 1 3 769)	1 24 426	28 689	-	237 1 06	( 3 278)	-	-	480 074
Construction	3 459 290	( 460 961 )	208 439	1 38 846	-	290 620	( 1 687)	3 946	-	2 025 041
Wholesale and retail	3 293 690	( 369 869)	8 333	73 1 92	-	65 948	( 22 649)	3 705	-	476 695
Tourism	1 422 938	( 1 21 539)	3 1 35	1 7 91 2	-	23 982	( 401 )	-	-	1 01 704
Transports and communications	2 1 40 639	( 62 71 1 )	1 84 269	63 668	3	1 95 468	( 5 21 3)	5 649	-	1 092 754
Financial activities	3 588 1 27	( 21 4 469)	687 459	1 795 71 6	355 824	2 536 21 5	( 1 1 6 696)	1 029 71 5	( 8 808)	1 85 436
Real estate activities	5 627 21 6	( 61 6 989)	1 7 675	1 25 439	-	1 21 1 55	( 4 1 77)	1 304	-	265 482
Services provided to companies	5 053 097	( 469 1 63)	228 639	95 886	-	735 571	( 37 803)	64 272	-	1 325 1 01
Public services	1 594 1 88	( 25 454)	957 328	1 234 070	-	4 006 635	-	322 405	-	1 96 1 68
Non-profit organisations	3 459 283	( 288 679)	23 737	64 662	-	232 430	( 47 602)	77 470	( 4 61 3)	463 271
Mortgage loans	1 0 81 4 726	( 1 85 863)	-	-	-	-	-	-	-	6
Consumers loans	2 382 973	( 1 92 364)	-	-	-	-	-	-	-	238 801
Other	1 62 901	( 81 5)	991	286	-	7 433	( 4)	-	-	3 1 55
TOTAL	49 722 308 722	(3 387 41 2) 2)	2 507 932 932	3 874 347 347	363 391 391	8 783 640 640	( 297 035) ( 035)	1 51 3 060 1	( 1 3 421 ) 1 3 421 )	7 61 7 603 7 603

					31 .1 2.201 2
	Loans and advances to customers		Financial assets held	Other financial assets at fair value through	Derivatives for risk management		Available-for-sale financial assets	investments	Held-to-maturity	Guarantees granted
	Gross amount	Impairment	for trading	profit and loss	purposes	Gross amount	Impairment	Gross amount	Impairment
Agriculture	434 485	( 27 1 52)	1 4 202	-	-	1 0 725	( 6)	-	-	36 677
Mining	309 229	( 1 1 966)	3 742	1 1 708	-	1 2 969	( 675)	-	-	53 656
Food, beverage and tobacco	974 407	( 50 542)	25 727	2 685	-	1 0 395	( 52)	-	-	1 02 293
Textiles	31 6 309	( 31 090)	862	-	-	1 0 425	( 3 958)	-	-	1 2 779
Shoes	63 359	( 6 843)	38	-	-	499	( 499)	-	-	2 063
Wood and cork	1 47 345	( 23 1 21 )	480	2 236	-	4 366	( 1 330)	-	-	7 466
Printing and publishing	331 889	( 1 5 601 )	6 683	-	-	1 1 968	( 1 1 968)	-	-	84 260
Refining and oil	6 976	( 45)	4 81 7	3 385	-	1 1 61 8	-	-	-	5 425
Chemicals and rubber	61 6 899	( 1 4 1 49)	20 744	1 471	-	24 009	( 1 3 276)	-	-	1 02 280
Non-metallic minerals	363 449	( 28 435)	431	-	-	1 3 1 03	( 7 958)	-	-	20 1 52
Metallic products	877 1 38	( 48 939)	1 4 592	1 94	-	2 407	-	-	-	1 55 603
Production of machinery, equipment and electric dev 280 584	ices	( 1 1 883)	3 079	584	-	31 249	( 5 632)	-	-	1 20 022
Production of transport material	1 1 3 698	( 9 677)	630	1 0 741	1 4	33 298	( 3 438)	-	-	34 662
Other transforming industries	389 355	( 27 340)	1 61 1	2 642	-	31 758	( 1 1 280)	-	-	38 449
E lectricity, gas and water	1 458 334	( 1 1 032)	1 55 360	23 846	-	687 307	-	-	-	487 693
Construction	4 429 927	( 368 41 7)	41 6 606	57 643	-	27 858	( 1 688)	-	-	2 292 61 9
Wholesale and retail	3 1 88 671	( 289 276)	1 0 81 0	1 366	-	33 764	( 1 5 430)	1 537	-	546 904
Tourism	1 453 1 73	( 91 21 5)	1 4 625	65 301	-	39 439	( 379)	-	-	1 01 949
Transports and communications	2 1 52 1 59	( 46 964)	291 1 75	1 8 483	-	271 487	( 8 91 6)	9 894	-	1 01 0 767
Financial activities	3 952 1 38	( 1 23 257)	1 045 792	1 901 531	51 6 506	3 650 620	( 70 301 )	526 584	( 20 794)	1 61 474
Real estate activities	6 249 967	( 431 61 1 )	52 371	70 000	-	201 741	( 1 891 )	1 299	-	456 531
Services provided to companies	4 749 1 80	( 369 927)	344 883	91 424	-	1 1 56 930	( 33 1 97)	39 1 39	-	1 484 41 4
Public services	954 941	( 22 959)	1 361 1 85	51 5 994	-	4 405 389	-	295 271	-	227 1 98
Non-profit organisations	2 682 267	( 268 571 )	1 33 1 28	38 356	-	303 008	( 46 089)	1 06 936	( 1 8 31 7)	402 493
Mortgage loans	1 1 1 33 822	( 1 67 01 9)	-	-	-	-	-	-	-	9
Consumers loans	2 627 780	( 1 80 039)	-	-	-	-	-	-	-	70 704
Other	1 41 253	( 1 5 272)	1 826	1 963	-	6 945	( 4)	-	-	4 978
TOTAL	50 398 734 50 398	(2 692 342)(2 692 342) (2 692 342)	3 925 399 3 925 399 3 925 399	2 821 553 2 821 553 821	51 6 520 51 6 520	1 0 993 277 1 0 993 277 277	( 237 967) ( 237 967)( 967)	980 660 980 660	( 39 1 1 1 ) ( 39 1 1 1 )1 )	8 023 520 8 023 520

As at 31 December 2013 and 2012, the analysis of the loan portfolio by rating is as follows:

		31 .1 2.201 3		31 .1 2.201 2	(in million of euro)
Rating/Scoring models models	Internal scale Internal scale	Credit amount	(%)	Credit amount	(%)
	[aaa;a-]	8	0.02%	8	0.02%
	[bbb+;-bbb-]	2 1 1 9	4.26%	2 31 3	4.59%
Large companies	[bb+;bb-]	4 549	9.1 5%	4 997	9.91 %
	[b+;b-]	7 074	1 4.23%	8 080	1 6.02%
	ccc+	1 981	3.98%	1 277	2.53%
	8-9	488	0.98%	535	1 .06%
	1 0-1 1	403	0.81 %	532	1 .06%
	1 2-1 3	553	1 .1 1 %	632	1 .25%
	1 4-1 5	467	0.94%	438	0.87%
Medium enterprises	1 6-1 7	502	1 .01 %	567	1 .1 3%
	1 8-1 9	380	0.76%	342	0.68%
	20-21	468	0.94%	347	0.69%
	22-23	231	0.46%	294	0.58%
	24-25	1 527	3.07%	1 659	3.29%
	A	62	0.1 2%	71	0.1 4%
	B	334	0.67%	305	0.61 %
	C	556	1 .1 2%	620	1 .23%
Small enterprises	D	268	0.54%	31 1	0.62%
	E	1 37	0.28%	251	0.50%
	F	556	1 .1 2%	557	1 .1 1 %
	01	1 220	2.45%	1 1 96	2.37%
	02	4 398	8.85%	4 341	8.61 %
	03	1 427	2.87%	1 492	2.96%
	04	680	1 .37%	71 0	1 .41 %
Mortgage loans	05	506	1 .02%	503	1 .00%
	06	496	1 .00%	488	0.97%
	07	61 7	1 .24%	679	1 .35%
	08	71 2	1 .43%	953	1 .88%
	01	74	0.1 5%	86	0.1 7%
	02	57	0.1 1 %	66	0.1 3%
	03	1 1 8	0.24%	1 30	0.26%
	04	238	0.48%	31 2	0.62%
Private individuals	05	1 1 8	0.24%	1 36	0.27%
	06	1 70	0.34%	1 98	0.39%
	07	1 49	0.30%	1 44	0.29%
	08	1 32	0.27%	1 09	0.22%
	09	1 83	0.37%	260	0.52%
	1 0	2	-	4	0.01 %
No internal rating/scoring loans		1 5 762	31 .70%	1 4 456	28.68%
TOTAL		49 722	1 00.00% 00.00%	50 399	1 00.00% 1 00.00%

Market risk

Market risk is the possible loss resulting from an adverse change in the value of a financial instrument due to fluctuations in interest rates, foreign exchange rates or share prices, commodities prices, volatility and credit spread.

The market risk management is integrated with the balance sheet management through the Asset and Liability Committee (ALCO) at the Group entities level. These committees are responsible for defining policies for the structuring and composition of the balance sheet, and for the control of exposures to interest rate, foreign exchange and liquidity risk.

The main measure of market risk is the assessment of potential losses under adverse market conditions, for which the Value at Risk (VaR) valuation criteria is used. Group's VaR model uses the Monte Carlo simulation, based on a confidence level of 99% and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As a complement to VaR, stress testing has been developed, allowing to evaluate the impact of potential losses higher than the ones considered by VaR.

				(in thousands of euro)
		31 .1 2.201 3
	December	Annual average	Maximum	Minimum
E xchange Risk	1 1 1 66	9 1 92	1 0 957	7 371
Interest rate risk	5 532	7 1 08	9 342	5 566
Shares and commodities	1 1 1 86	1 2 640	21 441	1 0 538
Volatility	3 055	5 81 7	4 089	2 857
Credit Spread	1 6 775	23 944	33 893	1 6 941
Diversification effect	( 1 0 901 )	( 1 1 023)	( 1 4 773)	( 8 725)
Total	36 81 3 36	47 678 678 47 678	64 949 64 949 949	34 548 34 548

				(in thousands of euro)
		31 .1 2.201 2
	December	Annual average	Maximum	Minimum
E xchange Risk	3 399	1 1 272	1 3 723	3 399
Interest rate risk	8 793	1 8 426	28 532	8 793
Shares and commodities	1 5 026	1 4 439	1 1 1 27	1 5 026
Volatility	7 1 1 2	7 222	7 1 73	7 1 1 2
Credit Spread	1 3 887	40 21 2	71 556	1 3 887
Diversification effect	( 1 0 1 05)	( 1 7 030)	( 20 347)	( 1 0 1 05)
Total	38 1 1 2 38	74 541 74 541	1 1 1 764 1	38 1 1 2

Group has a VaR of euro 36 814 million (31 December 2012: euro 38 112 million), for its trading positions.

Following the recommendations of Basel II (Pilar 2) and Instructions nº 19/2005, of the Bank of Portugal BES Group calculates its exposure to interest rate risk based on the methodology of the Bank of International Settlement (BIS), classifying all balance and off-balance balances which are not part of the trading portfolio, by repricing intervals.

							(in thousands of euro)
				31 .1 2.201 3
	E ligible amounts	Non sentitive	Up to 3 months	3 to 6 months	6 to 1 2 months	1 to 5 years	More than 5 years

Cash and deposits	7 692 459	376 865	7 1 64 01 2	93 062	44 638	269	1 3 61 3
Loans and advances to customers Securities	48 660 744 1 4 848 731	- 6 240 499	30 239 988 3 240 1 96	7 759 707 1 1 1 9 973	2 024 753 854 262	6 021 1 47 850 547	2 61 5 1 49 2 543 254
Technical Reserves of Reinsurance
ceded	-	-	-	-	-	-	-
Total			40 644 1 96 40 644 1 96	8 972 7428 972 742 8 972 742	2 923 653 2 923 653 653	6 871 963 6 871 963871 963	5 1 72 01 6 5 1 72 01 6

Deposits from Banks	1 4 368 1 95	-	1 2 640 480	387 797	623 992	264 750	451 1 77
Due to customers	36 281 992	-	1 7 727 91 2	3 340 480	6 71 1 979	8 476 804	24 81 7
Securities issue	1 2 71 6 252	-	2 821 877	1 859 458	380 806	4 550 71 7	3 1 03 393
Investments contracts	4 278 066	1 61 9 788	-	-	-	2 658 278	-
Technical Reserves of Direct
Insurance	1 754 655	37 538	-	807 033	-	-	91 0 084
Total			33 1 90 269 33 1 269	6 394 7686 394 768 6 394 768	7 71 6 777 7 71 6 777 6 777	1 5 950 549 1 5 950 5491 950 549	4 489 471 4 489 471
GAP (assets - liabilities)	(3 1 57 264)		7 453 927	2 577 974	(4 793 1 25)	(9 078 585)	682 545
Off Balance sheet	( 1 1 783)		(8 473 342)	(1 271 568)	6 1 20 832	3 703 51 1	( 92 400)
Structural GAP	(3 1 70 232) (3 1 232)		(1 01 9 41 5)9 5) (1 01 9 41 5)	1 306 406 1 306 4061 306 406	1 327 707 1 327 707 707	(5 375 074) (5 375 074)074)	590 1 45 590 1 45
Accumulated GAP			(1 01 9 41 5) 9	991 991 286 991	1 61 4 698 4 698	(3 760 376) 376)	(3 1 70 232) (3 232)

							(in thousands of euro)
				31 .1 2.201 2
	E ligible amounts	Non sentitive	Up to 3 months	3 to 6 months	6 to 1 2 months	1 to 5 years	More than 5 years
Cash and deposits with banks	7 492 060	438 71 3	6 664 597	269 579	1 03 370	1 5 754	46
Loans and advances to customers	49 673 250	-	29 71 2 842	8 957 736	2 736 21 0	5 965 359	2 301 1 03
Securities	1 6 725 064	7 367 973	4 002 972	1 359 061	1 058 477	1 742 554	1 1 94 026
Technical Reserves of Reinsurance
ceded	3 804	3 804	-	-	-	-	-
Total			40 380 41 1 1	1 0 586 376586 376 1 0 586 376	3 898 057 3 898 0573 057	7 723 668 7 723 6687 723 668	3 495 1 75 3 495 1 75
Deposits from Banks	1 5 867 594	-	1 4 1 82 895	525 694	648 472	270 027	240 506
Due to customers	34 031 479	-	22 337 278	2 929 281	3 066 320	5 685 1 75	1 3 424
Securities issue	1 5 858 652	-	5 1 39 450	752 979	279 880	6 547 539	3 1 38 805
Investments contracts	3 31 9 944	545 779	25 622	371 293	-	1 671 301	705 950
Technical Reserves of Direct
Insurance	1 547 697	1 531 1 05	-	-	-	5 904	1 0 689
Total			41 685 244 244	4 579 247 579 247 4 579 247	3 994 673 3 994 673 3 673	1 4 1 79 946 4 79 946 4 79 946	4 1 09 373 4 1 09 373
GAP (assets - liabilities)	(2 464 796)		(1 304 833)	6 007 1 29	( 96 61 6)	(6 456 278)	( 61 4 1 98)
Off Balance sheet			(6 1 1 4 471 )	( 751 350)	509 366	6 289 980	66 475
Structural GAP	(2 464 796) 464 796)		(7 41 9 305)9 305) (7 41 9 305)	5 255 779 5 255 779255 779	41 2 750 41 2 41 750	( 1 66 298) ( 1 66 298)( 298)	( 547 723) ( 547 723)
Accumulated GAP			(7 41 9 305) 9 305)	(2 1 63 525) 525) 525) (2 1	(1 750 775) 750 775)	(1 91 7 073) (1 073)073)	(2 464 796) 464

Sensitivity analysis to the interest rate risk of the bank prudential portfolio are performed, based on the duration model approach and considering several scenarios of movements of the yield curve at all interest rate levels.

			31 .1 2.201 3			31 .1 2.201 2
	Parallel increase of 1 00 bp	Parallel decrease of 1 00 bp	Increase of 50 bp after 1 year	Decrease of 50 bp after 1 year	Parallel increase of 1 00 bp	Parallel decrease of 1 00 bp	Increase of 50 bp after 1 year	Decrease of 50 bp after 1 year

At 31 December	( 22 275)	22 275	( 1 256)	1 256	( 85 483)	85 483	( 34 1 38)	34 1 38
Average for the year	( 70 993)	70 993	( 21 050)	21 050	( 22 320)	22 320	( 976)	976
Maximum for the year	( 1 1 0 480)	1 1 0 480	( 37 706)	37 706	( 1 24 700)	1 24 700	60 383	( 60 383)
Minimum for the year	( 80 224)	80 224	( 24 1 88)	24 1 88	1 3 477	( 1 3 477)	22 242	( 22 242)

The following table presents the average balances, interests and interest rates in relation to the Group's major assets and liabilities categories, for the period ended 31 December 2013 and 2012:

						(in thousands of euro)
		31 .1 2.201 3			31 .1 2.201 2
	Average balance for the year	Interest for the year	Average interest rate	Average balance for the year	Interest for the year	Average interest rate
Monetary assets	4 508 358	262 61 3	5.83%	4 885 099	1 92 458	3.94%
Loans and advances to customers	49 847 991	2 308 840	4.63%	50 31 5 71 5	2 527 274	5.02%
Securities	1 4 226 281	700 1 02	4.92%	1 4 242 252	850 845	5.97%
Differencial applications	-	-	-	-	-	-
Financial Assets	68 582 630 630	3 271 555 555	4.77%	69 443 066 066	3 570 577 577	5.1 4% 4%
Monetary Liabilities	1 5 233 1 1 7	340 201	2.23%	1 7 566 965	41 9 1 67	2.39%
Due to consumers	36 223 1 1 2	1 005 520	2.77%	34 029 787	1 037 769	3.05%
Other	1 4 034 205	891 526	6.35%	1 6 564 422	933 1 33	5.63%
Differencial liabilities	3 092 1 95	-	-	1 281 892	-	-
Financial Liabilities Liabilities	68 582 630 630 68 582 630	2 237 247 2 237 247 247	3.26%	69 443 066 69 443 066 066	2 390 069 2 390 069 069	3.44%
Net interest income		1 034 308	1 .51 % 1 .51 %		1 1 80 508 1 80 508	1 .70% .70% .70%

In relation to foreign exchange risk, the breakdown of assets and liabilities, by currency, as at 31 December 2013 and 2012, is analysed as follows:

									(in thousands of euro)
			31 .1 2.201 3				31 .1 2.201 2
		Spot Spot	Forward Forward	Other elements	Net exposure exposure	Spot Spot	Forward Forward	Other elements	Net exposure
	USD United Stades Dollars	1 52 396	( 242 532)	7 997	( 82 1 39)	( 802 201 )	842 328	32 097	72 224
	GBP Great Britain Pounds	488 580	( 477 91 0)	65	1 0 735	466 1 68	( 467 042)	( 1 057)	( 1 931 )
BRL	Brazillian real	1 49 020	( 1 48 1 91 )	( 21 8)	61 1	1 87 801	( 1 83 686)	( 4 738)	( 623)
	DKK Danish Krone	3 1 91	( 3 278)	-	( 87)	21 947	( 21 579)	-	368
J PY	J apanese yene	( 1 3 732)	1 9 1 1 0	( 1 6 882)	( 1 1 504)	27 297	5 1 71	( 40 1 66)	( 7 698)
	CHF Swiss franc	7 632	1 427	( 8 054)	1 005	9 944	( 6 962)	( 1 286)	1 696
SEK	Swedish krone	( 1 3 232)	1 3 203	-	( 29)	7 403	( 7 778)	( 53)	( 428)
	NOK Norwegian krone	( 43 087)	43 1 56	-	69	( 49 539)	49 807	69	337
	CAD Canadian Dollar	( 1 048)	1 1 728	-	1 0 680	22 866	( 23 290)	( 7 227)	( 7 651 )
ZAR	Rand	( 1 4 340)	1 4 287	-	( 53)	( 5 569)	4 475	497	( 597)
	AUD Australian Dollar	( 2 022)	2 760	-	738	( 8 51 0)	1 0 1 24	1 7	1 631
	AOA Kwanza	( 1 56 583)	-	-	( 1 56 583)	( 53 208)	-	-	( 53 208)
	CZK Czach koruna	1 05	-	-	1 05	5	-	-	5
	MXN Mexican Peso	42 900	( 43 878)	-	( 978)	63 789	( 75 772)	9 338	( 2 645)
	Others	( 93 61 6)	55 649	27 090	( 1 0 878)	1 6 727	45 008	34 626	96 361
		506 1 64 506 1	( 754 469) 469) ( 754 469)	9 998 9	( 238 308) 238 308)	( 95 080) 95 080) 080)	1 70 804 1	22 1 1 7 1 7	97 841

Note: asset / (liability)

Exposure to peripheral Eurozone countries public debt

As at 31 December 2013 and 2012 the exposure to public debt from peripheral Eurozone countries which are monitored by the Group is analysed as follows:

(in thousands of euro)

				31 .1 2.201 3
	Loans and Advances to Customers	Financial Assets held for trading at fair value	Derivatives instruments (1 )	Available-for-sale financial assets	Held-to-maturity investments	Total
Portugal	91 3 897	1 308 896	1 8 652	2 1 87 679	52 428	4 481 552
Spain	92 786	60 31 2	( 47)	497 200	-	650 251
Greece	-	725	-	29 451	-	30 1 76
Italy	-	1 0 402	-	1 45 421	-	1 55 823
	1 006 683 006	1 380 335 380 335	1 8 605 1 8 605	2 859 751 2 751	52 428	5 31 7 802 802

(1 ) Net values: receivable/(payable)

						(in thousands of euro)
				31 .1 2.201 2
	Loans and Advances to Customers	Financial Assets held for trading at fair value	Derivatives instruments (1 )	Available-for-sale financial assets	Held-to-maturity investments	Total
Portugal	935 771	592 985	31 1 43	2 468 941	1 28 1 47	4 1 56 987
Spain	1 1 1 1 21	568	( 76)	605 499	-	71 7 1 1 2
Greece	-	3 439	-	-	-	3 439
Irland	-	-	-	-	24 894	24 894
Italy	-	6 225	-	21 290	-	27 51 5
Hungary	-	-	-	-	-	-
	1 046 892 046	603 21 7 603 7	31 067 067	3 095 730 3 730	1 53 041	4 929 947 947

(1 ) Net values: receivable/(payable)

All the exposures presented above, except loans and advances to customers, are recorded in the Group's balance sheet at fair value, which is based on market quotations or, in relation to derivatives, based on valuation techniques with observable market data.

A detailed exposure regarding securities recorded in financial assets held for trading, available-for-sale financial assets and held-to-maturity investments can be analysed as follows:

		31 .1 2.201 3
	Nominal Amount	Market value	Accrued interest	B ook value ook value	Impairment	Fair value reserves
Available-for-sale financial assets
Portugal Portugal	2 291 1 71	2 1 31 653 31	56 026 56	2 1 87 679 1 679	-	( 2 41 3) 41
Maturity up to 1 year	251 206	249 784	56	249 840	-	223
Maturity exceeding 1 year	2 039 965	1 881 869	55 970	1 937 839	-	( 2 636)
Spain	471 055	487 587	9 61 3	497 200 497 200	-	( 761 )
Maturity up to 1 year	235 000	234 21 6	-	234 21 6	-	1 64
Maturity exceeding 1 year	236 055	253 371	9 61 3	262 984	-	( 925)
Greece	53 003	28 552 28	899	29 451 451	-	938
Maturity up to 1 year	-	-	-	-	-	-
Maturity exceeding 1 year	53 003	28 552	899	29 451	-	938
Italy	1 45 000 1 45 000	1 45 003 1 45 003 45	41 8 41 8	1 45 421 1 45 421 1 421	-	707
Maturity up to 1 year	1 35 000	1 34 502	21 1	1 34 71 3	-	330
Maturity exceeding 1 year	1 0 000	1 0 501	207	1 0 708	-	377
	2 960 229	2 792 795	66 956 66	2 859 751 859 751	-	( 1 529) (
Financial assets held for trading
Portugal	99 627	94 064	1 931	95 995	-	-
Spain	45 1 1 4	50 674	2 338	53 01 2	-	-
	1 44 741	1 44 738 1 44 738 44	4 269	1 49 007 1 49 007 1 007	-	-
Financial assets at fair value
Portugal	1 243 256	1 206 368	6 533	1 21 2 901	-	-
Spain	7 290	7 291	9	7 300	-	-
Greece	1 21 9	705	20	725	-	-
Italy	1 0 400	1 0 402	-	1 0 402	-	-
	1 262 1 65	1 224 766	6 562	1 231 328 231 328	-	-
Financial assets held to maturity
Portugal	57 000	57 321	533	52 428	-	-
	57 000	57 321 57 321 57	533	52 428 52 428 428	-	-

(in thousands of euro)

		31 .1 2.201 2
	Nominal Amount	Market value	Accrued interest	B ook value B ook value	Impairment Impairment	Fair value reserves
Available-for-sale financial assets
Portugal Portugal	2 669 666 2 2 669 666	2 421 241 2 421 241	47 700 47 700 47 700	2 468 941 2 468 941	-	1 91 1 42 1 91 1 42
Maturity up to 1 year	1 87 331	1 86 1 35	1 1 3	1 86 248	-	498
Maturity exceeding 1 year	2 482 335	2 235 1 06	47 587	2 282 693	-	1 90 644
Spain Spain	61 6 092 6 61 6 092	597 401 597 401	8 098 8 098 8 098	605 499 605 499	-	2 1 90 2 1 90
Maturity up to 1 year	389 350	383 681	325	384 006	-	796
Maturity exceeding 1 year	226 742	21 3 720	7 773	221 493	-	1 394
Italy	20 000	20 867 20	423	21 290 21	-	478
Maturity up to 1 year	-	-	-	-	-	-
Maturity exceeding 1 year	20 000	20 867	423	21 290	-	478
	3 305 758 3	3 039 509 3 039 509	56 221 56 221 56 221	3 095 730 3 095 730	-	1 93 81 0 1 93 81 0
Financial assets held for trading
Portugal	1 58 946	1 41 676	3 807	1 45 483	-	-
Spain	304	302	-	302	-	-
	1 59 250	1 41 978 1 41	3 807	1 45 785 45	-	-
Financial assets at fair value
Portugal	523 775	439 544	7 958	447 502	-	-
Spain	260	259	7	266	-	-
Greece	1 29 655	3 439	-	3 439	-	-
Italy	5 969	6 224	1	6 225	-	-
	659 659	449 466 449 466	7 966	457 432 457 432	-	-
Financial assets held to maturity
Portugal	1 37 000	1 26 431	1 71 6	1 28 1 47	-	-
Ireland	24 000	24 051	844	24 894	-	-
	1 61 000	1 50 482 1 50	2 560	1 53 041 53	-	-

Liquidity risk

Liquidity risk derives from the potential inability to fund assets while satisfying the maturity dates of commitments and from potential difficulties in liquidating portfolio positions without incurring excessive losses. Liquidity risk can be divided into two types:

Asset liquidity (market liquidity risk) – The inability to sell a particular asset due to lack of liquidity in the market, which results in increasing the bid / offer spread or applying a haircut to market value;

Funding (funding liquidity risk) – The inability to, within the desired timeframe and currency, fund assets in the market and / or refinance debt that comes due. This inability can be reflected by a significant increase of financing cost or of collateral requirements in order to obtain funds. Difficulties of (re) financing can lead to asset sales, even incurring in significant losses. The risk of (re) financing should be minimized through adequate diversification of funding sources and maturities.

The year 2013 maintained the trend of market improvement, with a reduction of the levels of risk aversion and declining yields of sovereign debt of peripheral countries strongly supported by expansionary policies of central banks, although there were peaks of increased instability policy during the year. In Portugal, the economic indicators have come to prove successively more positive, suggesting the beginning of a cycle of recovery in economic activity, having

been possible to the Republic to access the markets, in December, for a swap of Treasury bonds and already in January with a new issue of 5 years in the amount of euro 3 250 million.

Throughout the year there was a significant number of banks which repaid the LTRO (Long Term Operation Refinacing) granted in December 2011, amounting to euro 446 billion. The Group repaid earlier euro 1 000 million.

Taking advantage of the favourable conditions, the Group has accessed the international capital markets at the beginning of the year with an issuance of unsecured senior debt, with a maturity of five years, in the amount of euro 500 million, in antecipation of reimbursements that will occur along the year (euro 1.6 billion) and in November with an issue of subordinated debt in the amount of euro 750 million. These issues, combined with the performance of client deposits and the reduction of the credit portfolio, enabled the Group to meet the repayments of 2013, repurchase debt and reduce the liquidity facility at the ECB. Taking advantage of the market improvement, already in January 2014, BES Group conducted a five year debt issue in the amount of euro 750 million with a coupon of 4%, which corresponds to a spread of 285 b.p. over the mid-swap rate at 5 years. This placement level was equal to the emission to 5 year conducted in 2009.

At year end, assets eligible as collateral for rediscount operations were euro 20.9 billion, of which euro 18.6 billion were eligible at the European Central Bank.

In order to evaluate the global exposition to liquidity risk, reports have been prepared which permit not only the identification of negative mismatches, but also lead to the coverage of these situations.

							(millions of euro)
				31 .1 2.201 3
	Eligible amounts	Up to 7 days	From 7 days to 1 month	From 1 to 3 months	From 3 to 6 months	From 6 months to 1 year	More than 1 year
ASSE TS
Cash and deposits at central banks	377	377	-	-	-	-	-
Loans and advances to banks	7 31 6	6 290	261	583	88	54	39
Loans and advances to customers	41 767	493	1 41 8	1 1 89	1 289	1 894	35 484
Securities	25 331	2 441	835	1 946	1 202	2 31 3	1 6 593
Technical Reserves of reinsurance ceded	1	-	1	-	-	-	-
Other Assets, net	1 839	71 8	1 6	61	4	1 23	91 7
Off Balance sheet (Commitments and Derivatives)	2 360	77	222	823	382	536	320
Total		1 0 396 396 1 0 396 396	2 753 2 753	4 602	2 965	4 920	53 353
LIAB ILITIE S
Deposits from banks, central banks and other loans	1 4 646	1 667	459	886	1 96	91 4	1 0 522
Due to customers	36 002	2 390	457	643	396	647	31 470
Securities	1 2 661	3	9	1 490	1 963	495	8 701
Investments contracts	4 278	236	1 01	47	69	1 1 3	3 71 3
Technical Reserves of Direct Insurance	1 755	1 0	5	1 8	1 1	29	1 681
Other short-term liabilities	1 469	1 286	1 28	1 2	-	1 0	34
Off Balance sheet (Commitments and Derivatives)	1 0 591	1 1 6	306	959	484	552	8 1 73
Total		5 5 708	1 465 1 465 1 465	4 055	3 1 1 9 3 1 1 1 1 1 1 9	2 760	64 294
GAP (Assets - Liabilities)		4 689 4	1 288 1 288 1 288	547	( 1 55) ( 1 55)( 1 55)1 55)	2 1 60 2 1
Accumulated GAP		4 689 4	5 977 5 977	6 525	6 370	8 530
B uffer > 1 2 months							2 1 27 2 1 27

(millions of euro)

	31 .1 2.201 2
	E ligible amounts	Up to 7 days	From 7 days to 1 month	From 1 to 3 months	From 3 to 6 months	From 6 months to 1 year	More than 1 year
ASSE TS
Cash and deposits at central banks	420	420	-	-	-	-	-
Loans and advances to banks	7 072	5 61 4	504	607	223	95	30
Loans and advances to customers	43 500	561	1 1 70	1 41 1	1 501	2 291	36 566
Securities	25 684	2 601	1 1 40	2 226	889	1 500	1 7 328
Technical Reserves of reinsurance ceded	4	4	-	-	-	-	-
Other Assets, net	1 81 6	1 81 6	-	-	-	-	-
Off Balance sheet (Commitments and Derivatives)	6 570	31 3	1 39	268	454	51 3	4 883
Total		1 1 329 1 329 329	2 953 2 953	4 51 2	3 067	4 399	58 807
LIAB ILITIE S
Deposits from banks, central banks and other loans	1 6 1 1 0	2 092	51 5	680	479	770	1 1 573
Due to customers	33 789	594	957	1 974	731	1 38	29 396
Securities	1 5 862	1 76	441	1 936	927	278	1 2 1 03
Investments contracts	3 320	21	1	83	63	1 62	2 989
Technical Reserves of Direct Insurance	1 548	1 0	5	1 4	28	71	1 41 8
Other short-term liabilities	1 589	1 589	-	-	-	-	-
Off Balance sheet (Commitments and Derivatives)	1 0 1 88	330	201	41 7	624	520	8 096
Total		4 81 2 2 81	2 1 20 2 20 20	5 1 04	2 852	1 939	65 575
GAP (Assets - Liabilities)		6 51 5 5 51 5	833 833	( 593) ( 593)593)	21 4	2 459
Accumulated GAP		6 51 5 5 51	7 348 7 348	6 755	6 970	9 429
B uffer > 1 2 months							581

The one year cumulative gap went from euro 9 429 million in December 2012 to euro 8 530 million as of December 2013. It should be noted that this amounts includes BES Vida.

Additionally, and in accordance with Instruction 13/2009 of the Bank of Portugal, the liquidity gap is defined by the indicator [(Net Assets - Volatile Liabilities) / (Assets - Net assets) * 100] on each residual cumulative maturity scale. Net assets include cash and net securities and volatile liabilities include debt issued, commitments, derivatives and other liabilities. This indicator allows a characterization of the wholesale risk of institutions.

As at 31 December 2013, BES Group one year liquidity gap was -0.07, which compares to -1.7 from the same period last year. Note that the above figures, calculated in accordance with Instruction no. 13/2009 of Bank of Portugal, do not include BES Vida, who's Notes to the Consolidated Financial Statements 133 activity is regulated by the Portuguese Insurance Authority ("Instituto de Seguros de Portugal"), which establishes exposure limits for diversification and prudential spread.

In order to try to anticipate possible constraints, BES Group considers extreme scenarios in terms of liquidity (moderate and severe), different timeframes and different impact areas (systemic, specific to the Bank and combined). For example, in the systemic scenario is simulated the closure of the wholesale market, while in the specific scenario to the Bank is simulated the run-off of customer deposits from retail and non-retail, with different severity levels.

From 1 January 2014 is in force the CRD/CRR, under the Basel III framework. In what concerns Liquidity Risk, the highlights are the mandatory requirements regarding the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). As at 31 December 2013, the Group had met the ratio the limit set for 2015 in what concerns LCRA. In January the Bank of International Settlements published a document in connection with the NSFR calculation review. The Group continues to follow every legislative change in order to comply with its regulatory obligations.

Operational risk

Operational risk represents the risk of losses resulting from failures in internal procedures, people behaviours, information systems and external events. It is understood, therefore, operational risk as the sum of the following risks: operational, information systems, compliance and reputation.

To manage operational risk, it was developed and implemented a system that standardizes, systematizes and regulates the frequency of actions with the objective of identification, monitoring, controlling and mitigation of risk. The system is supported at organizational level by a unit within the Global Risk Department, exclusively dedicated to this task, and by representatives designated by each of the relevant departments and subsidiaries.

Insurance business specific risk (life insurance)

Underwriting

There are written rules that establish the guidelines to consider in the risk acceptance, and which were based on the analysis performed over several portfolio indicators to enable matching the best possible price to the risk. The information provided by the Company's reinsurers is also taken into account and the underwriting policies are defined by business segment.

Pricing

The Company aims to set prices sufficient and adequate to cover all commitments (outstanding claims, expenses and cost of capital).

Upstream, the price suitability is tested through techniques of realistic cash flow projections and downstream, the profitability of each product or group of products is monitored annually when calculating the Market Consistent Embedded Value.

There are metrics and guidelines defined by the Company setting out the minimum requirements for profitability of any new product, as well as to perform sensitivity analysis. The calculation of the Market Consistent Embedded Value is conducted once a year by the Company and reviewed by external consultants.

Reserving

In general, the Company's policy is prudential and uses recognized actuarial methods fulfilling the legislation in force. The main policy objective is to record appropriate and adequate reserves so that the Company meets all its future liabilities. For each line of business, the Company records reserves within their liabilities for future claims and segregate assets to represent these reserves. This requires the preparation of estimates and the use of assumptions that may affect the assets and liabilities amounts in future years.

Such estimates and assumptions are periodically evaluated, including through statistical analysis of historical internal and/ or external data. The adequacy of estimated liabilities for the insurance activity is reviewed annually. If the technical reserves are not sufficient to cover the present value of expected future cash flows (claims, costs and commissions), the insufficiency is immediately recognized through additional reserves.

Claims management

The risk derived from claims management arises from the possibility of liability increase due to insufficient or inadequate quality of data used in the reserving process or an increase of management expenses. To address this risk, a clear set of rules and procedures is established, along-side with specific internal controls for claims management.

Reinsurance

BES Vida has signed reinsurance treaties to limit the risk exposure. Reinsurance coverage can be on a policy by policy basis (facultative reinsurance), namely where the level of cover required by the policyholder exceeds internal underwriting limits or, on portfolio basis (treaty reinsurance) when individual policyholder exposures are within internal limits but where an unacceptable risk of accumulation.

Insurance specific risks

Biometric risks

Biometric risks include the risks of longevity, mortality and disability. The longevity risk covers the uncertainty in the ultimate loss due to policyholders living longer than expected and can arise for example, in annuities. The longevity risk is managed through pricing, underwriting policy and by regularly reviewing the mortality tables used to set prices and create reserves in compliance. The mortality risk is linked to an increase of the mortality rate which may have an impact on insurances that guarantee capital in the event of death. This risk is mitigated through underwriting policies, regular review of the mortality tables used and reinsurance. The disability risk covers the uncertainty of actual losses due to disability rates higher than expected.

The sensitivity of the portfolio to biometric risks is analyzed through realistic cash flow projections - Market Consistent Embedded Value.

Non-collection risk

The non-collection risk relates to the risk of nonpayment of premiums and cancellation of policies. The redemption and cancellation rates are monitored regularly in order to monitor its impact on the Company's portfolio. The portfolio's sensitivity to this risk is analyzed through realistic cash flow projections – Market Consistent Embedded Value Model.

The main assumptions used by type of contract are as follows:

	Mortality Table Mortality Table	Technical rate Technical rate
Retirements savings plans and capitalization products
Up to December 1 997	GKM 80	4%
From J anuary 1 998 to February 1 999	GKM 80	3.25%
From J uly 1 999 to February 2003	GKM 80	2.25% and 3%
From Mars 2003 to December 2003	GKM 80	2.75%
After J anuary 2004	GKM 80	Set per calendar year (*)
Insurance in case of life
Rents
Up to J une 2002	TV 73/77	4%
From J uly 2002 to December 2003	TV 73/77	3%
From J anuary 2004 to August 2006	GKF 95	3%
After September 2006	GKM - 3 years	2%
Other insurance
Insurance in case of death
Up to December 2004	GKM 80	4%
After J anuary 2005	GKM 80	0% to 2%
Insurance mixed
Up to September 1 998	GKM 80	4%
After October 1 998	GKM 80	3%

(*) In the year of 201 3 the technical rate was 3% (201 2: 2% )

For liability adequacy test purposes, the mortality assumptions are based on best estimates derived from portfolio experience investigations. Future cash flows are evaluated using the Market Consistent Embedded Value model and discounted at government bonds rate. BES Vida used the model adopted by the CFO Forum.

The mortality assumptions used are as follows:

Mortality Table
Annuities	GRM 95
Savings and Other contracts	30% GKM 80

The following table shows the sensitivity analyzes in Market Consistent Embedded Value of insurance activity:

		(in thousands euro)
	31 .1 2.201 3 31 2.201 3	31 .1 2.201 2 31 2
1 0% growth in expenses	( 2 905)	( 3 883)
1 0% growth in redemptions	509	( 3 873)
Decrease of 1 0% in redemptions	( 31 7)	4 896
5% growth in mortality rate (life except rents)	1 86	( 1 789)
Decrease of 5% in mortality rate (life except rents)	( 1 98)	2 055

The following table presents the sensitivity analysis on the impact net of tax reserves and gains and losses from changes in the interest rate without risk and the market value of the shares of insurance activity:

		(in thousands euro)
	31 .1 2.201 3
	Profit for the period	Reserve net taxes
1 00pb growth in risk-free rate	1 7 1 45	( 33 805)
Decrease of 1 00pb in risk-free rate	( 7 1 28)	51 088
Devaluation of 1 0% in the market value of shares	-	33 61 6
1 0% appreciation in the market value of shares	-	( 33 61 6)

Capital Management and Solvency Ratio

The main objective of the Group capital management is to ensure compliance with the Group's strategic objectives in terms of capital adequacy, respecting and enforcing the minimum capital requirements set by supervisors.

The strategy for capital adequacy management is determined by the Executive Committee and is integrated into the strategic goals of the Group.

The Group is subject to prudential supervision by the Bank of Portugal which, in accordance with the Capital Adequacy Directive of the EU, establishes the prudential rules to be observed by the institutions under its supervision. These rules determine a minimum ratio of Own funds to Capital requirements of risks assumed, which institutions are required to fulfil.

In the scope of the implementation of the new capital accord Basel II, and using the permission granted by the new prudential regime established by Decree-Law 103/2007 and Decree-Law 104/2007, the Group was authorized to use, starting 31 March 2009, the approach based in the use of internal models for credit risks (Foundation Internal Rating Based Approach – IRBF) for credit risk and the Standardized Approach – TSA) for operational risk.

The capital elements of BES Group are divided into: Basic Own Funds, Complementary Own Funds and Deductions, as follows:

• Core Tier I: This category includes mainly the share capital, share premiums, eligible reserves, the net profit for the year retained when certified and non-controlling interests. The fair value reserves are excluded except for the deduction of negative fair value reserves associated with shares or other equity instruments, is also deductible to Core Tier I the following balance sheets amounts goodwill, intangible assets, negative actuarial deviations arising from liabilities with post-employment benefits to employees above the prudential corridor limit and, where applicable, the net loss for the period.

• Basic Own Funds (BOF): In addition to the amounts considered as Core Tier I, this category includes the preference shares and hybrid capital instruments. It can be deducted from capital half of the value converted into equity, above 10%, in financial institutions and insurance companies. Following the implementation of the IRB method for credit risk, is now also adjusted 50% of the expected loss amount for exposures on the part that exceeds the sum of value adjustments and existing reserves.

• Complementary Own Funds (COF): Essentially incorporates the subordinated eligible debt and 45% of the positive fair value reserve associated with equity securities. The book value of investments in banking and insurance associates is deducted in 50% of its value and since 2009, is also deducted 50% of the expected losses of the risk positions less any existing provisions, following the application of the IRBF method for credit risk.

• Deductions (D): Essentially incorporates the prudential amortization of assets received as a recovery of nonperforming loans.

Additionally there are several rules that limit the composition of the capital basis. The prudential rules determine that the COF cannot exceed the BOF. Also, some components of the COF (Lower Tier II) cannot exceed 50% of the BOF.

In May 2011 and in the context of the negotiation of the Financial Assistance Programme to Portugal – with the European Commission, the European Central Bank and the International Monetary Fund – the Bank of Portugal issued the Notice 3/2011, establishing new minimum levels of solvency to be followed by the financial groups subject to its supervision. Therefore, Portuguese credit institutions must reach a Core Tier I ratio of no less than 9% by 31 December 2011 and 10% by 31 December 2012. At the same time, European banks must reach a Core Tier I ratio of 9% as defined by the European Banking Authority (EBA).

As at 2013 and 2012, the main movements occurred in Basic Own Funds (Tier I) are as follows:

		(millions of euro)
	31 .1 2.201 3 2.201 3	31 31 .1 2.201 2
Balance at the beggining of the period	6 439	6 1 71 71
Capital increase	-	995
Hybrid instuments	( 34)	( 1 9)
E legible reserves and retained earnings (excluding fair value reserves)	( 460)	42
Non-controlling interest, excluding hybrids	80	2
Goodwill	1 01	( 1 66)
Changes on actuarial Losses	( 1 07)	( 526)
Recognition of the impact of adopting IFRS	( 6)	( 1 2)
Deduction in connection with investments held in banking and insurance entities	( 59)	( 1 64)
Fair value reserves with an impact in BOF	( 24)	1 42
Other effects	29	( 26)
Balance at the end of the period	5 959	6 439 439

The capital adequacy of BES Group as at 31 December 2013 and 2012 is presented as follows:

			(millions of euro)
		31 .1 2.201 3 2.201 3	31 .1 2.201 2 31 .1 2.201 2
A - Capital Requirements
Share Capital, Issue Premium and Treasury stock		6 1 01	6 074
E legible reserves and retained earnings (excluding fair value reserves)		777	1 237
Non-controlling interest		667	587
Intangible assets		( 1 39)	( 1 41 )
Changes on actuarial Losses		( 848)	( 741 )
Goodwill		( 405)	( 506)
Fair value reserves with an impact on BOF		( 76)	( 52)
Recognition of the impact of adopting IFRS		7	1 3
B asic own funds excluding preference shares (Core Tier I) ier I)	( A1 ) ) ( A1 )	6 084 6 084	6 471 6 471
Hybrid instuments, elegible for Tier I		1 92	226
Deductions in connection with investments held in banking and insurance entities		( 31 7)	( 258)
Own Funds for the determination of the E B A Core Tier I ratio r ratio	( ( C ) )	5 646	6 092 092
B asic own funds (Tier I)	( A2 ) ( A2 )	5 959 5 959	6 439 6 439
Positive fair value reserves (45% )		49	47
E ligible subordinated debt		1 022	801
Deductions in connection with investments held in banking and insurance entities		( 206)	( 258)
Complementary own funds (Tier II)		865	590 590
Deductions		( 84) ( 84)	( 72) ( 72)
E ligible own funds	( A3 ) )	6 740	6 957 957
B - Risk Weighted Assets
Calculated according Notice 5/2007 (Credit Risk)		52 851	56 484
Calculated according Notice 8/2007 (Market Risk)		1 227	1 503
Calculated according Notice 9/2007 (Operational Risk)		3 254	3 694
Risk Weighted Assets Total	( B ) ) ( )	57 332	61 681 681
C- Prudential Ratios
Core Tier 1	( A1 / B )	1 0.6%	1 0.5%
Core Tier 1 E BA	(C / B )	9.8%	9.9%
Tier 1	( A2 / B )	1 0.4%	1 0.4%
Solvency Ratio	( A3 / B ) A3 / )	1 .8% .8% 1 1 .8%	1 1 .3% .3%

The risk assets were computed under the terms established in this note. Considering that Bank of Portugal, at the present date, has still not concluded the prudential impact analysis related with the sovereign guarantee to BES Angola, the risk assets as at 31 December 2013 do not include the potential mitigation impact of guarantee, which could reduce the risk assets in the amount of euro 3.8 billion.

Plans Financing and capitalization (2011 – 2015)

Following the signing of the Memorandum of Economic and Financial Policies, the Portuguese Government and the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF), Portuguese banks, and financial holding companies that consolidate Portuguese banking subsidiaries, have had to develop, quarterly, financing and capital plans for the period from 2011 to 2015, in order to demonstrate the achievement of the following objectives:

The loan to deposit ratio should, preferably, be reduced to a maximum value of 120% as from December 2014;
The stable funding ratio should be 100% as from December 2014;
The Core Tier I ratio must be at least 10% as of 31 December 2012 and 10% as of 31 December 2012, as established in Notice 3/2011 of Bank of Portugal.

Additionally, the dependence of their branches and subsidiaries abroad on domestic Portuguese funding should be minimized; the institutions must reduce their dependence on funding from the ECB; and they should develop policies to support sectors of the Portuguese economy, namely small and medium enterprises. The financing and capital plans should consider moderate access to short-term markets and a gradual opening of medium and long term markets from the fourth quarter of 2013.

In order to prepare the initial plan and the subsequent quarterly reviews, projections of relevant domestic macroeconomic variables, of GDP growth in the geographic areas of greatest relevance to the activities of the banks and further projections of interest rates and other parameters necessary for drawing up the plans were provided by the Bank of Portugal after consultation with the EC/ECB/IMF. Together with the plan for the period in reference, a stress test exercise is required, where the banks should, in an extreme scenario, present a Core Tier I ratio higher than 6% during the period (2011-2015).

NOTE52–CONTRACTUAL COMMITMENTS CONTRACTUAL COMMITMENTS

Securitization commitments

Following the downgrade by Moody's of the Portuguese Republic in February 2012, this agency set the maximum rating attributable to bonds issued in securitized operations as Baa1. Consequently, the operation of securitization of small and medium enterprises put together by BES in December 2010 – Lusitano SME No.2 – lost its eligibility as collateral for rediscounting at ECB and as a result BES chose to exercise its call option on 23 March 2012.

Contract Support Annex (CSA)

BES has a set of contracts negotiated with counterparties with whom it deals in derivative in the OTC market. CSA takes the form of a collateral agreement established between two parties negotiating derivatives with each other on this market, with the main objective to provide protection against credit risk, establishing for that purpose a set of rules regarding collateral. Derivatives transactions are regulated by the International Swaps and Derivatives Association (ISDA) and have minimum margin requirements that may change according to the rating of the parties.

NOTE53–ASSETS TRANSFER ASSETS TRANSFER TRANSFER

As part of the restructuring process of the Portuguese real estate sector, several initiatives have been launched in order to create financial, operational and management conditions to revitalize the sector. Accordingly, the Government, in close liaison with the business and the financial sector, including the BES Group, encouraged the creation of companies and specialized funds that, through merger, consolidation and integrated management, would obtain the required synergies to recover the sector. Pursuing the goals established, were created companies (parent companies), where BES Group has minority interests (in partnership with other banks that also have a minority interest), and which in turn now hold almost all of the capital of certain subsidiaries (subsidiaries of those parent companies) in order to acquire certain real estate bank loans.

During 2013 and 2012, BES transferred financial assets (mainly corporate loans) to the subsidiaries of the parent companies. These entities are responsible for managing the assets received as collateral, which after the transfer of loans are received in Exchange for the loans, and have the goal to implement a plan to increase its value.

Almost all of the financial assets transferred in these operations were derecognised from the balance sheet of the Group, since a substantial portion of the risks and rewards associated with these, as well as the respective control, were transferred to those third parties.

These acquiring entities (the subsidiaries of the parent companies) have a specific management structure, fully autonomous from the banks, selected on the date of their incorporation and have the following main responsibilities:

define the entity's purpose;
administer and manage on an exclusive and independent way the assets acquired, determine objectives and investment policy and the manner to conduct the entity's management and affairs.

The acquiring entities are predominantly financed through the issuance of senior equity instruments fully underwritten by the parent company. The amount of capital represented by senior securities equals the fair value of the underlying asset, determined through a negotiation process based on valuations made by both parties. These securities are remunerated at an interest rate that reflects the risk of the company holding the assets. Additionally, the funding can be supplemented through banks underwriting of junior capital instruments equal to the difference between the book value of the loans transferred and the fair value based on the senior securities valuation. These junior instruments, when signed by BES Group will be entitled to a contingent positive amount if the assets transferred value, when sold, exceeds the amount of senior securities plus its remuneration. Normally, the amount of the junior security is limited to a maximum of 25% of the total amount resulting from the senior and junior securities issued.

Given that these junior securities reflect a different assessment of the assets transferred fair value, based on valuation performed by independent bodies and a negotiation process between the parties, they are fully provided for in the Group's balance sheet.

Therefore, following transfer of assets occurred the Group subscribed:

equity instruments, representing the parent companies' share capital on which the cash flows that will enable its recovery come from a wide range of assets transferred by the various banks. These securities are recorded under financial assets available for sale and are measured at market value with valuation regularly reported by those parent companies whose accounts are audited at the end of each year;
junior instruments issued by the acquiring companies (the subsidiaries of the parent companies), which are fully provided for thus reflecting the best impairment estimation of the financial assets transferred.

The instruments subscribed by BES Group clearly resulted in a minority position in the capital of the parent companies and of its subsidiaries.

In this context, having no control but being exposed to some risk and rewards of ownership in relation to the transferred assets through the securities subscribed as referred to above, the Group, in accordance with IAS 39.21, conducted an analysis in order to compare the exposure to the variability of risks and rewards of the transferred assets before and after the operation and concluded that it has not retained substantially all the risks and rewards of ownership. Additionally, and considering that also no control has been retained, it proceeded in accordance with IAS 39.20c (i) to the derecognition of the assets transferred and the recognition of the assets received in return, as shown in the following table:

(in thousands of euro)

	Amounts at transfer date
	Amount of the assets transferred					Securities subscribed
	Net assets transferred	Transfer amount	Result of the transfer	Shares (senior securities)	J unior securities	Total	Impairment	Net amount
As at 31 December 201 2
Tourism Recovery Fund, FCR	282 1 21	282 1 21	-	256 892	34 906	291 798	(34 906)	256 892
FLIT SICAV	252 866	254 547	1 681	235 31 8	23 247	258 565	(23 247)	235 31 8
Discovery Portugal Real E state Fund	96 1 96	93 208	(2 988)	96 733	-	96 733	-	96 733
Vallis Construction Sector Fund	66 272	66 272	-	81 002	21 992	1 02 994	(21 992)	81 002
Recovery Fund, FCR	1 45 564	1 49 883	4 31 9	1 48 787	36 1 82	1 84 970	(23 000)	1 61 970
As at 30 December 201 3
Vallis Construction Sector Fund	1 8 552	1 8 552	-	1 606	2 874	4 480	(2 874)	1 606
FLIT SICAV	80 769	80 1 35	( 634)	85 360	-	85 360	-	85 360
Discovery Portugal Real E state Fund	51 809	45 387	(6 422)	51 955	-	51 955	-	51 955
Tourism Recovery Fund, FCR	1 1 066	1 1 066	-	-	-	-	-	-
Recovery Fund, FCR	52 983	52 963	( 20)	726	-	726	-	726
E ntrepreneurial Restructuring Fund, FCR	67 836	67 836	-	99 403		99 403	-	99 403
	1 1 26 034 1	1 21 970 1 1 21 970	(4 064) 064)	1 057 782 057	1 1 9 201 1 9	1 1 76 983 76	(1 06 01 9) 06	1 070 964

As at 31 December 2013, the Group's total exposure in operations related to transfer of loans/assets amounted to euro 1 135.6 billion (euro 984.7 million, net of impairment).

As showed in the table above, the junior securities underwritten specifically as part of the transfer of assets are fully provided for. Although the junior securities are fully provided for, the Group also maintains an indirect exposure to the assets transferred through its minority interest in the parent companies capital and therefore, in all pool of assets that resulted from the various assets transfers performed by the banks (shareholders of the parent companies). There was however an operation with the company FLITPTREL VIII in which, as the acquiring company substantially holds assets transferred by BES Group and considering the holding of junior securities, the variability test resulted in a substantial exposure to all risks and rewards. In this circumstance, the operation, amounting to euro 60 million, remained recognized in the Group's balance sheet under Loans and advances to customers.

NOTE54–BUSINESS COMBINATIONS BUSINESS COMBINATIONS COMBINATIONS

BES VIDA

Until 30 April 2012, BES held a 50% interest in BES-Vida, Companhia de Seguros, S.A. (BES Vida), a life insurance company, which distributes its products in Portugal and Spain, through BES branch network. Crédit Agricole owned the remaining 50 % and controlled its activities.

As referred in Note 1, in May 2012, BES acquired, from Credit Agricole, the remaining 50% of the share capital of BES Vida with the objective of leveraging the marketing of BES Vida's insurance products.

Following this acquisition, BES became to hold the entire share capital of BES Vida and has the management control over its activities. Therefore, BES Vida, which qualified as an associate and was included in the consolidated financial statements of BES following the equity method, has become a subsidiary and is being fully consolidated since May 2012.

The total investment amounted to euro 225 million, paid in cash and BES Vida reimbursed, in October 2012, the additional paid-in capital amounting to euro 125 million.

This transaction was accounted for in accordance with the provisions of paragraph 42 of IFRS 3 related with business combination achieved in stages, which requires any previously held equity interest in the acquire, to be remeasured to fair value at the acquisition date and the resulting gain or loss to be recognised in the income statement. The amounts recognised in the fair value reserve up to the date in which control in acquired, are required to be recycled to the income statement.

The Balance Sheet of BES Vida reported on 1 May 2012, including the consolidated financial statements of BES can be analysed as follows:

	BES VIDA Balance sheet
	01.05.2012
	(in thousands of euro)
Assets
Cash and deposits with banks	1 98 648
Other financial assets at fair value through profit or loss	2 759 1 00
Available-for-sale financial assets	1 91 7 328
Held-to-maturity investments	1 59 551
Property and equipment	93 864
Intangible assets	1 07 768
Technical reserves of reinsurance ceded	2 51 2
Income tax assets	1 1 2
Other assets	1 78 71 2
	5 41 7 595
Liabilities
Technical reserves	1 880 631
Investment contracts	3 053 344
Other financial liabilities	1 94 434
Income tax liabilities	33 469
Other liabilities	40 291
	5 202 1 69
E quity
Share Capital	50 000
Other reserves and retained earnings	1 65 426
	21 5 426
	5 41 7 595

The fair value of recognised identifiable assets acquired and liabilities assumed include, under Intangible assets, the amount of euro 107 768 thousand related to the present value of the business in force acquired related to life insurance contracts (Value in Force) (euro 76 515 thousand net of taxes). This asset will be amortised over the remaining lifetime of the contracts.

It should be mentioned, however, that following the reinsurance treaty signed in 2013 by BES Vida, described in Note 31, the net amount of euro 137 476 thousand in relation to the value in force acquired was derecognised, having the remaining amount, been recognised under Other liabilities.

The goodwill recognised as a result of this acquisition amounts to euro 234 574 thousand, as follows:

	%	in thousands of euro
Goodwill as the excess of: Consideration paid		225 000
Fair value, determined at the aquisition date, of the 50% interest previously held in BE S Vida		225 000
		450 000
Over: Fair value of identifiable assets and liabilities acquired	1 00	21 5 426
Goodwill		234 574

The goodwill is attributable mainly to the potential growth of the market where BES-Vida operates.

The impact in the 2012 income statement of measuring at fair value the previously held equity interest in BES Vida, representing 50% of its share capital, following the requirements of paragraph 42 of IFRS 3, can be analysed as follows:

	in thousands of euro
50% interest previously held in BE S Vida Fair value Book value	225 000 243 790
Loss on remeasurement of the previously held equity interest in BES Vida Recognition in the income statement of the fair value reserve of BE S Vida appropriated by BES on the consolidation up to the acquisition date	( 1 8 790) ( 70 796)
Loss arising from the acquisition of control in BE S Vida	( 89 586)

The impact of fully consolidating BES Vida resulted in a gain of euro 68.7 million included in the Group's profit for the year, detailed as follows:

measurement of the 50% share capital already held by the Group in the amount of euro -89.6 million; which deducted from the intra-group transactions amounting to euro 35.5 million, brings the total impact in the first full consolidation to euro -54.1 million, net of taxes;
appropriation trough the equity method of the net profit generated by BES Vida from 1 January to 30 April 2012, amounting to euro 2.8 million; and
appropriation through the consolidation method of the net profit generated by BES Vida from 1 May until 31 December 2012, net of consolidation adjustments, amounting to euro 120.0 million.

If BES Vida had been fully consolidated since 1 January 2012, the net profit for the period would be higher by about euro 2 761 thousands.

BANQUE ESPÍRITO SANTO ET DE LA VÉNÉTIE

As at 31 December 2013 BES held, through it subsidiary ES Tech Ventures, S.G.P.S., SA, a shareholding of 42.69% in Banque Espírito Santo et de la Vénétie ("BESV"), a commercial bank headquartered in France, which activity has as main focus corporate banking and rendering financial services to the Portuguese community in France. This entity was accounted in the Group's consolidation scope through the equity method.

As at 13 February 2014, Banco Espírito Santo acquired from ESFIL - Espírito Santo Financiére an additional shareholding of 44.81%, which this company had in the share capital and voting rights of BESV, by an amount of euro 55.0 million. After this operation, BES Group holds 87.5% of BESV's share capital and will fully consolidate BESV financial statements, once it has the control of the company. Additionally, the Group also acquired from ESFIL the subordinated loans that this company had granted to BESV, in the amount of euro 19.4 million.

This transaction will be accounted for in accordance with the provisions of paragraph 42 of IFRS 3 related with business combination achieved in stages, which requires any previously held equity interest in the acquire, to be remeasured to fair value at the acquisition date and the resulting gain or loss to be recognised in the income statement. The amounts recognised in the fair value reserve up to the date in which control in acquired, are required to be recycled to the income statement.

Moreover, in accordance with paragraph 45 of IFRS 3, this acquisition will be accounted on a provisional basis, once this acquisition took place in February 2014 and the Group is in the process of quantifying the fair value of the assets and liabilities acquired. The Group has until February 2015 to conclude this process.

As at 31 December 2013, the balance sheet of BESV, included in the BES Group consolidated financial statements can be analysed as follows:

	BES Vénétie
	(million of euros)
Assets	1 429.7
Cash and deposits with banks	1 8.7
Securities and derivatives	41 .8
Loans and advances to customers	1 330.6
Other assets	38.6
Liabilities	1 257.0
Resources	1 1 44.8
Debt securities issued	32.0
Other liabilities	80.2
Equity	1 72.7
Share capital	75.1
Revaluation reserves	0.1
Other reserves and retained earnings	93.4
Profit of the year	4.1

NOTE55 –RECENTLY ISSUED PRONOUNCEMENTS RECENTLY PRONOUNCEMENTS

Recently issued pronouncements already adopted by the Group

In the preparation of the consolidated financial statements for the year ended 31 December 2013, the Group adopted the following standards and interpretations that are effective since 1 January 2013:

IAS 19 Revised – IAS 19 Revised –Employee Benefits Employee Benefits

In 2013, the Group adopted the amendments to "IAS 19 – Employee Benefits" issued in 2011 and effective (with retrospective application) for annual periods beginning on or after 1st January 2013. Those amendments were endorsed by European Commission Regulation 475/2012, 5th June. The amendments to IAS 19, included the elimination of the corridor mechanism and the concept of expected returns on plan assets.

The Group made a voluntary change in the accounting police related to actuarial gains and losses arising from its post employment benefits which from 2011 are charged to equity, under other comprehensive income, therefore the adoption of IAS 19 (revised) had no impact in the Group's financial statements in what concerns the recognition of actuarial gains and losses.

However, as a result of IAS 19 (2011), the Group has changed its accounting policy with respect to the basis for determining the income or expense related to defined benefit. Under IAS 19 (2011), the Group determines the net interest expense (income) for the period on the net defined benefit liability (asset) by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) at the beginning of the annual period. Consequently, the net interest expense (income) includes interest cost on

the defined benefit obligation net of a theoretical return on the plan assets, both calculated using the discount rate applied in the determination of the defined benefit obligation.

Previously, the Group determined interest income on plan assets based on their long-term rate of expected return.

IFRS 13 – IFRS 13 –Fair Value Measurement Fair Value Measurement

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date.

In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance prospectively.

Notwithstanding the above, the change had no significant impact on the measurement of the Group's assets and liabilities.

IAS 1 Presentation of Financial Statements IAS 1 Presentation of Financial Statements -Presentation of items of other comprehensive incom Presentation of items of other comprehensive income

As a result of the amendments to IAS 1, the Group has modified the presentation of items of other comprehensive income in its consolidated statement of other comprehensive income, to present separately items that would be reclassified to profit or loss in the future from those that would never be. Comparative information has also been represented accordingly.

The adoption of the amendment to IAS 1 has no impact on the recognised assets, liabilities and comprehensive income of the Group.

IFRS 7 (Amended) - IFRS 7 (Amended) -Financial Instruments: Disclosure Financial –Offsetting Financial Assets and Financial Liabilit Offsetting Financial Assets and Liabilities

The IASB, issued on 16th December 2011, amendments to "IFRS 7 – Financial Instruments: Disclosure – Offsetting Financial Assets and Financial Liabilities", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. Those amendments were endorsed by EU Commission Regulation 1256/2012, 11th December.

These amendments required an entity to disclose information about what amounts have been offset in the statement of financial position and the nature and extend of rights to set-off and related arrangements (e.g. collateral arrangements).

The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32.

The adoption of the amendment to IFRS 7 had no impact on the consolidated financial statements.

Improvements to IFRS (2009- (2009-2011)

The annual improvements cycle 2009-2011, issued by IASB on 17th May 2012, introduce amendments, with effective date on, or after, 1st January 2013, to the standards IFRS1, IAS1, IAS16, IAS32, IAS34 and IFRIC2.

IAS 1 Presentation of Financial Statements

This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period.

IAS 16 Property Plant and Equipment

This improvement clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory

IAS 32 Financial Instruments, Presentation and IFRIC 2

The improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes, avoid any interpretation that may mean any either application.

IAS 34 Interim Financial Reporting

The amendments align the disclosure requirement for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures in relation to the changes of profit and loss account and other comprehensive income.

The adoption of these improvements had no impact on the consolidated financial statements.

IFRIC 20 - -Stripping Costs in the Production Phase of a Surfa Stripping Costs in the Surface Mine

The International Financial Reporting Interpretations Committee (IFRIC), issued on 19th October 2011, "IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. Those amendments were endorsed by EU Commission Regulation 1255/2012, 11th December.

Give the nature of the Group´s operation, this interpretation did not have any impact on the consolidated financial statements.

The Group decided to opt for not having an early application of the following standards endorsed by EU but not yet mandatory effective

The new standards and interpretations that have been issued, but that are not yet effective and that the Group has not yet applied, are analysed below. The Group will apply these standards when they are effective.

IAS 32 (Amended) - IAS -Financial Instruments: Presentation nancial Instruments: Presentation nancial Presentation –Offsetting Financial Assets and Financial Liabilit Offsetting Financial Assets and Financial Liabilities

The IASB, issued on 16th December 2011, amendments to "IAS 32 – Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities", effective (with retrospective application) for annual periods beginning on or after 1st January 2014. Those amendments were endorsed by EU Commission Regulation 1256/2012, 11th December.

The IASB amended IAS 32 to add application guidance to address the inconsistent application of the standard in practice. The application guidance clarifies that the phrase 'currently has a legal enforceable right of set-off' means that the right of set-off must not be contingent on a future event and must be legally enforceable in the normal course of business, in the event of default and in the event of insolvency or bankruptcy, of the entity and all of the counterparties.

The application guidance also specifies the characteristics of gross settlement systems in order to be considered equivalent to net settlement.

The Group is not expecting a significant impact from the adoption of the amendment to IAS 32.

IAS 27 (Revised) – IAS 27 (Revised) –Separate Financial Statements Separate Statements

The IASB, issued on 12th May 2011, amendments to "IAS 27 – Separate Financial Statements", effective (with prospective application) for annual periods beginning on or after 1st January 2014. Those amendments were endorsed by EU Commission Regulation 1254/2012, 11th December.

Taking in consideration that IFRS 10 addresses the principles of controls and the requirements relating to the preparation of consolidated financial statements, IAS 27 was amended to cover exclusively separate financial statements.

The amendments aimed, on one hand, to clarify the disclosures required by an entity preparing separate financial statements so that the entity would be required to disclose the principal place of business (and country of incorporation, if different) of significant investments in subsidiaries, joint ventures and associates and, if applicable, of the parent.

The previous version required the disclosure of the country of incorporation or residence of such entities.

On the other hand, it was aligned the effective dates for all consolidated standards (IFRS10, IFRS11, IFRS12, IFRS13 and amendments to IAS 28).

The Group expects no impact from the adoption of this amendment on its financial statements.

IFRS 10 Consolidated Financial Statements IFRS 10 Consolidated

The IASB, issued on 12th May 2011, "IFRS 10 Consolidated Financial Statements", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. These amendments were endorsed by EU Commission Regulation 1254/2012, 11th December, which allows a delayed on mandatory application for 1st January 2014.

IFRS 10, withdraw one part of IAS 27 and SIC 12, and introduces a single control model to determine whether an investee should be consolidated.

The new concept of control involves the assessment of power, exposure to variability in returns and a linkage between the two. An investment controls an investee when it is exposed, or has rights, to variability returns from its involvement with the investee and is able to affect those returns through its power over the investee (facto control).

The investor considers whether it controls the relevant activities of the investee, taking into consideration the new concept. The assessment should be done at each reporting period because the relation between power and exposure variability in returns may change over the time.

Control is usually assessed over a legal entity, but also can be assessed over only specified assets and liabilities of an investee (referred to as silo).

The new standard also introduce other changes such as: i) accounting requirements for subsidiaries in consolidation financial statements are carried forward from IAS 27 to this new standards and ii) enhanced disclosures are requires, including specific disclosures for consolidated and unconsolidated structured entities.

The Group has not carried out a thorough analysis of the impacts of the application of this standard. Given the introduction of a new control model the Group may need to change its consolidation conclusion in respect of its investees.

IFRS 11 – IFRS 11 –Joint Arrangements Joint ArrangementsJoint Arrangements

The IASB, issued on 12th May 2011, "IFRS 11 Joint arrangements", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. These amendments were endorsed by EU Commission Regulation 1254/2012, 11th December, that allows a delayed on mandatory application for 1st January 2014.

IFRS 11, withdraw IAS 31 and SIC 13, defines "joint control" by incorporating the same control model as defined in IFRS 10 and requires an entity that is part of a "join arrangement" to determine the nature of the joint arrangement ("joint operations" or "joint ventures") by assessing its rights and obligations.

IFRS 11 removes the option to account for joint ventures using the proportionate consolidation. Instead, joint arrangements that meet the definition of "joint venture" must be account for using the equity method (IAS 28).

The Group expects no impact form the adoption of this amendment on its financial statements.

IAS 28 (Revised) – IAS 28 (Revised) –Investments in Associates and Joint Ventures Investments in Associates Joint Ventures Ventures

The IASB, issued on 12th May 2011, "IAS 28 Investments in Associates and Joint Ventures", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. These amendments were endorsed by EU Commission Regulation 1254/2012, 11th December, that allows a delayed on mandatory application for 1st January 2014.

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed as IAS 28 Investments in Associates and Joint ventures, and describes the application of the entity method to investments in joint ventures and associates.

The Group expects no impact form the adoption of this amendment on its financial statements.

IFRS 12 – IFRS 12 –Disclosures of Interest in Other Entities Disclosures of Interest in Other Entities Disclosures of in Other Entities

The IASB, issued on 12th May 2011, "IFRS 12 Disclosures of Interests in Other Entities", effective (with retrospective application) for annual periods beginning on or after 1st January 2013. These amendments were endorsed by EU Commission Regulation 1254/2012, 11th December, that allows a delayed on mandatory application for 1st January 2014.

The objective of this new standard is to require an entity to disclose information that enables users of its financial statements to evaluate: (a) the nature of, and risks associated with, its interests in other entities; and (b) the effects of those interests on its financial position, financial performance and cash flows.

IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special vehicles and other off balance sheet vehicles.

The Group is yet assessing the full impact of the new IFRS 12 in line with the adoption of IFRS 10 and IFRS 11.

Investment Entities – Entities –Amendments AmendmentsAmendmentsto IFRS 10, IFRS12 and IAS 8 (issued by IASB on 31 to IFRS 10, IFRS12 and IAS 8 (issued by IASB on 31st October 2012) t October 2012)t 2012)

The amendments apply to a particular class of business that qualify as investment entities. The IASB uses the term 'investment entity' to refer to an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. An investment entity must also evaluate the performance of its investments on a fair value basis. Such entities could include private equity organisations, venture capital organisations, pension funds, sovereign wealth funds and other investment funds.

The amendments provide an exception to the consolidation requirements in IFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendments also set out disclosure requirements for investment entities.

The amendments are effective from 1 January 2014 with early adoption permitted. This option allows investment entities to apply the Investment Entities amendments at the same time they first apply the rest of IFRS 10.

The Group does not expect any major impact from the adoption of this amendment on its financial statements.

IAS 36 (Revised) – IAS 36 (Revised) –Recoverable Amount Disclosures for Non Recoverable Non Non-Financial Assets Financial Assets

The IASB issued on 29th May 2013, this amendment, effective (with retrospective application) for annual periods beginning on or after 1st January 2014. These amendments were endorsed by EU Commission Regulation 1374/2013, 19th December.

The objective of the amendments is to clarify that the scope of the disclosures of information about the recoverable amount of assets, where that amount is based on fair value less costs of disposal, is limited to impaired assets.

IAS 39 (Revised) – IAS 39 (Revised) –Novation of Derivatives and Continuation of Hedge Novation of Derivatives and Continuation of Hedge Accounting ccountingccounting

The IASB issued on 27th June 2013, this amendment, effective (with retrospective application) for annual periods beginning on or after 1st January 2014. These amendments were endorsed by EU Commission Regulation 1375/2013, 19th December.

The objective of the amendments is to provide relief in situations where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations. Such a relief means that hedge accounting can continue irrespective of the novation which, without the amendment, would not be permitted.

Recently Issued pronouncements that are not yet effective for the Group ective the Group

IAS 19 (Revised) – IAS 19 (Revised) –Defined Benefit Plans: Employee Contributions Defined Benefit Plans: Employee ContributionsContributions

The IASB issued on 21th November 2013, this amendment, effective (with retrospective application) for annual periods beginning on or after 1st July 2014.

The Amendment clarifies the guidance on attributing employee or third party contributions linked to service and require entities to attribute the contributions linked to service in accordance with paragraph 70 of IAS 19 (2011). Therefore, such contributions are attributed using plan's contribution formula or on a straight line basis.

The amendment addresses the complexity by introducing a practical expedient that allows an entity to recognise employee or third party contributions linked to service that are independent of the number of years of service (for

example a fixed percentage of salary), as a reduction in the service cost in the period in which the related service is rendered.

IFRIC 21 21–Levies

The IASB issued on 20th May 2013, this interpretation, effective (with retrospective application) for annual periods beginning on or after 1st January 2014.

IFRIC 21 defines a levy as an outflow from an entity imposed by a government in accordance with legislation. It confirms that an entity recognises a liability for a levy when – and only when – the triggering event specified in the legislation occurs. IFRIC 21 is not expected to have any effect on the Group's financial statements.

Improvements to IFRS (2010- (2010-2012)

The annual improvements cycle 2010-2012, issued by IASB on 12th December 2013, introduce amendments, with effective date on, or after, 1st July 2014, to the standards IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS16, IAS24 and IAS38.

IFRS 2 – definition of vesting condition

The amendment clarify the definition of 'vesting conditions' in Appendix A of IFRS 2 Share-based Payment by separate the definition of performance condition and service condition from the definition of vesting condition to make the description of each condition clear.

IFRS 3 – Accounting for contingent consideration in a business combination

The objective of this amendment is to clarify certain aspects of accounting for contingent consideration in a business combination, namely: classification of contingent consideration in a business combination and subsequent measurement, taking into account if such contingent consideration is a financial instrument or a non-financial asset or liability.

IFRS 8 – Aggregation of operation segments and reconciliation of the total of the reportable segments' assets to entity's assets

The amendment clarify the criteria for aggregation of operating segments and requires entities to disclose those factors that are used to identify the entity's reportable segments when operating segments have been aggregated. To achieve consistency, reconciliation of the total of the reportable segments' assets to the entity's assets should be disclosed, if that amount is regularly provided to the chief operating decision maker.

IFRS 13 – Short-term receivables and payables

IASB amends the basis of conclusion in order to clarify that, by deleting IAS 39AG79, in applying IFRS 3, IASB did not intend to change the measurement requirements for short-term receivables and payables with no interest, that should be discount if such discount is material, noting that IAS 8.8 already permits entities not apply accounting polices set out in accordance with IFRSs when the effect of applying them is immaterial.

IAS 16 & IAS 38 – Revaluation method – proportionate restatement accumulated depreciation or amortization In order to clarify the calculation of the accumulated depreciation or amortization at the date of the revaluation, IASB amended paragraph 35 of IAS 16 and paragraph 80 of IAS 38 to clarify that: the determination of the accumulated depreciation (or amortization) does not depend on the selection of the valuation technique; and the accumulated depreciation (or amortization) is calculated as the difference between the gross and the net carrying amounts.

IAS 24 – Related Party Transactions – Key management personal services

In order to address the concerns about the identification of key management personal (KMP) costs, when KMP services of the reporting entity are provided by entities (management entity e.g. in mutual funds), IASB clarifies that, the disclosure of the amounts incurred by the entity for the provision of KMP services that are provided by a separate management entity shall be disclosed but it is not necessary to present the information required in paragraph 17.

Improvements to IFRS (2011- (2011-2013)

The annual improvements cycle 2011-2013, issued by IASB on 12th December 2013, introduce amendments, with effective date on, or after, 1st July 2014, to the standards IFRS 1, IFRS 3, IFRS 13 and IAS 40.

IFRS 1 – meaning of "effective IFRS"

IASB clarifies that if a new IFRS is not yet mandatory but permits early application, that IFRS is permitted, but not required, to be applied in the entity's first IFRS financial statements.

IFRS 3 – Scope exceptions for joint ventures

The amendment excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3. The scope exception only applies to the financial statements of the joint venture or the joint operation itself.

IFRS 13 – Scope of paragraph 52 – portfolio exception

Paragraph 52 of IFRS 13 includes a scope exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis. This is referred to as the portfolio exception. The objective of this amendment was to clarify that the portfolio exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation.

IAS 40 – interrelationship with IFRS 3 when classify property as investment property or owner-occupied property

The objective of this amendment was to clarify that judgment is needed to determine whether the acquisition of investment property is the acquisition of an asset, a group of assets or a business combination in the scope of IFRS 3 and that this judgment is based on the guidance in IFRS 3.

IFRS 9 Financial instruments (issued in 2009 and revised in 2010) vised in 2010)

IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. IFRS 9 (2010) introduces additions relating to financial liabilities. IFRS 9 (2013) introduces the hedging requirements. The IASB

currently has an active project of additional disclosures requirements limited amendments to the classification and measurement requirements of IFRS 9 and new requirements to address the impairment of financial assets.

The IFRS 9 (2009) requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.

For an investment in an equity instrument that is not held for trading, the standard permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in OCI. No amount recognised in OCI would ever be reclassified to profit or loss at a later date. However, dividends on such investments would be recognised in profit or loss, rather than OCI, unless they clearly represent a partial recovery of the cost of the investment.

Investments in equity instruments in respect of which an entity does not elect to present fair value changes in OCI would be measured at fair value with changes in fair value recognised in profit or loss.

The standard requires derivatives embedded in contracts with a host that is a financial asset in the scope of the standard not to be separated; instead, the hybrid financial instrument is assessed in its entirety for whether it should be measured at amortised cost or fair value.

IFRS 9 (2010) introduces a new requirement in respect of financial liabilities designated under the fair value option to generally present fair value changes that are attributable to the liability's credit risk in OCI rather than in profit or loss. Apart from this change, IFRS 9 (2010) largely carries forward without substantive amendment the guidance on classification and measurement of financial liabilities from IAS 39.

IFRS 9 (2013) introduces new requirements for hedge accounting that align hedge accounting more closely with risk management. The requirements also establish a more principles-based approach to hedge accounting and address inconsistencies and weaknesses in the hedge accounting model in IAS 39.

The mandatory effective date of IFRS 9 is not specified but will be determined when the outstanding phases are finalised.

The Group has started the process of evaluating the potential effect of this standard but is awaiting finalisation of the limited amendments before the evaluation can be completed. Given the nature of the Group's operations, this standard is expected to have a pervasive impact on the Group's financial statements.

In the preparation of the consolidated financial statements for the year ended 31 December 2013, the Group adopted the following standards and interpretations that are effective since 1 January 2013:

NOTE56–SUBSEQUENT EVENTS SUBSEQUENT EVENTS

Banco Espírito Santo, S.A. informed the market, in 13 January 2014, that it has successfully placed a new senior, unsecured, unguaranteed debt issue, amounting to euro 750 million. The notes have a maturity of 5 years and pays a coupon of 4%. The final order book reached circa euro 2.5 billion (3.3 times oversubscribed), with approximately 300 accounts of which 95% was subscribed by international investors.
As at 16 January 2014 Banco Espírito Santo informed that will exercise the early redemption option simultaneously with the payment of the next coupon, of 638 450 notes of BES Subordinada 2008, due 20 February 2019, in the amount of euro 638 450 thousand.
As at 10 February 2014 Banco Espírito Santo announced the signing of a three years funding agreement of US dollar 200 million with The Export-Import Bank of China (China Eximbank). This is the first funding operation of China Eximbank granted to a Portuguese financial institution and comes as a complement to various initiatives to promote and facilitate trade with China that BES has undertaken.
As at 13 February 2014, Banco Espírito Santo informed that had acquired to ESFIL Espírito Santo Financiére a 44.81% stake in Banque Espírito Santo et de la Vénétie. The total investment amounted to euro 55 million, and after this operation Banco Espírito Santo holds directly and indirectly 87.5% of the share capital of Banque Espírito Santo et de la Vénétie.

2. Appendix Appendix-Adoption of the Financial Stability Forum (FSF) an Adoption the Financial and Committee of European Banking Supervisors (CEBS) Recommendations concerning the Transparency of Information and the Valuation of Assets of Assets

(Bank of Portugal's Circular Letters no. 97/2008/DSB, of 3 Decemberand no. 58/2009/DSB of 5 August)

In its Circular Letter no. 58/2009/DSB of August 5th, 2009, the Bank of Portugal reiterated "the need for institutions to maintain adequate compliance with the recommendations of the Financial Stability Forum (FSF), as well as those issued by the Committee of European Banking Supervisors (CEBS), concerning the transparency of information and the valuation of assets, taking into account the proportionality principle", as set out in Circular Letters no. 46/08/DSBDR of July 15th, 2008 and no. 97/08/DSB of December 3rd, 2008.

The Bank of Portugal recommends the inclusion in the reporting documents of a specific chapter or annex exclusively dedicated to the issues dealt with in the CEBS and FSF recommendations.

This chapter aims to ensure compliance with the Bank of Portugal's recommendation, including references to where the information provided may be found within the body of the Management Report or in the Notes to the Financial Statements for fiscal years 2012 and 20.

I. BUSINESS MODEL BUSINESS MODELMODEL

1. Description of the business model of the model

A description of the Group's business model is provided in Item 4 of the Management Report. The performance of the main business areas (operational segments) of the Group is also presented in Note no. 4¹ .

2. Strategy and Objectives Strategy and ObjectivesObjectives

A description of the Group's strategy and objectives is provided in Item 1 of the Management Report and in Note no. 51, under Funding and Capitalisation Plans (2011—2015). The securitisation transactions are detailed in Note 49.

3., 4. and 5. Activities developed and contribution 4. and contribution to the busine business

Item 4 of the Management Report and Note no. 4 contain information about the activity and contribution to the business.

II. RISK AND RISK MANAGEMENT AND RISK MANAGEMENTMANAGEMENT

6. and 7. Description and nature of the risks incurred

Item 6 of the Management Report describes how the risk management function is organised within BES Group. Note 51 contains diverse information that in total allows the market to form a thorough perception about the risks

incurred by the Group and the management mechanisms in place to monitor and control such risks.

III. IMPACT OF THE PERIOD OF FINANCIAL TURMOIL ON THE RESULTS HE

8.,9., 10 and 11. Qualitative and quantitative desc 11. Qualitative and quantitative description of the res ription results and comparison of impacts be ults and comparison between periods periods tween periods

Activity during 2012 was conducted in a climate of adverse economic and financial conditions in Portugal and in Europe in general. This led to a further deterioration of credit risk, and consequently the Group reinforced provisions by a total of EUR 1,199.4 million (EUR 351.1 million more than in 2011). The situation of the financial markets and

¹ The numbering refers to the Notes to the Consolidated Financial Statements.

Notes to the Consolidated Financial Statements 177

sovereign risk context, influenced by the effects of the monetary policy measures implemented by the ECB, had a positive impact on the value of financial assets, leading to a EUR 747.5 million increase in the fair value reserve.

The referred adverse factors persisted during 2013, leading to a new increase in risk. The Group consequently increased provisions by a total of EUR 1,422.8 million (EUR 223.4 million more than in 2012).

12. Decomposition of realised and non realised write-downs

The profit and loss of assets and liabilities held for trading, assets and liabilities at fair value and assets available for sale are detailed by financial instrument in Notes 7 and 8. In addition, non realised gains and losses on assets available for sale are detailed in Notes 23 and 45, while the most significant positions are decomposed in Note 23.

13. Financial turmoil and the price of the BES shar the price the BES share share

Item 1 of the 2013 Management Report presents the evolution of the BES share price and the factors that influenced its performance.

14. Maximum loss risk 14. Maximum loss risk

Item 6 of the Management Report and Note 51 contain the relevant information about potential losses in market stress situations.

15. Debt issued by the Group and results issued by Group results

Note 50 contains information on the impact of debt revaluation and the methods used to calculate this impact on the results.

IV. LEVEL AND TYPE OF EXPOSURES AFFECTED BY THE PERIOD TYPE OF EXPOSURES AFFECTED BY THE PERIODOF TURMOIL OF TURMOIL

16. Nominal and fair value of exposures Nominal of exposures exposures

Credit risk mitigators mitigators mitigators

18. Information about the Group's exposures exposures

At the end of 2012 BES Group's exposure to Portuguese public debt totalled EUR 3,190 million. As regards exposures to public debt of other peripheral European countries, BES Group had EUR 606 million of Spanish debt, EUR 28 million of Italian debt, EUR 25 million of Irish debt and EUR 3 million of Greek debt.

At December 31st, 2013 the Group's exposure to Portuguese Public debt was EUR 3549 million. Its exposure to Spanish, Italian and Greek public debt was EUR 558 million, EUR 156 million, and EUR 30 million, respectively.

The information about the Group's exposures is provided in Note 51.

19. Movement in exposures between periods periods

Note 51 contains diverse information comparing the exposures and results in 2012 and 2013. The disclosed information is considered sufficient, given the detail and quantification provided.

20. Non consolidated exposure exposure

All the structures related to securitisation operations originated by the Group are presented in Note 49. None of the SPEs were consolidated due to the market turbulence.

21. Exposure to monoline insurers and quality of the a monoline insurers quality assets insured sets insured

The Group does not have exposures to monoline insurers.

V. ACCOUNTING POLICIES AND VALUATION METHODS ACCOUNTING POLICIES AND VALUATION METHODS POLICIES AND METHODS

22. Structured Products Structured ProductsStructured Products

These situations are described in Note 2 – Main accounting policies.

23. Special Purpose Entities (SPEs) and consolidation and consolidationconsolidation

Disclosure available in Notes 2 and 49.

24. and 25. Fair value of financial instruments 24. and Fair value instruments

See the comments to item 16 of this Appendix. Notes 2 and 50 contain the conditions for utilisation of the fair value option as well as the methodology used to value the financial instruments.

VI. OTHER RELEVANT ASPECTS OF DISCLOSURE RELEVANT ASPECTS OF DISCLOSURE DISCLOSURE

26. Description of the disclosure policies and princip of the disclosure principles

The BES Group, within the context of accounting and financial information disclosure, aims to satisfy all the regulatory requirements, defined by the accounting standards or by the supervisory and regulatory entities.

At the same time, the Group aims to meet the best market practices in information disclosure, balancing the cost of preparing the relevant information with the benefit that it may provide to the users.

From the information made available to the Group's shareholders, clients, employees, supervisory entities and the public in general, we highlight the Annual, Interim and Quarterly Management Reports, the Financial Statements and the respective Notes, and the Corporate Governance Report.

The management reports and financial statements, released on a quarterly basis, are prepared under IFRS that comply with the highest degree of disclosure and transparency and facilitate comparison to other domestic and international banks.

The Corporate Governance Report provides a detailed view about the governing structure of the Group.

The Sustainability Report, which forms an integral part of the Annual Management Report, conveys the Group's perspective about social responsibility in the context of the numerous challenges that the modern world faces, whether of an environmental or social nature, or pertaining to innovation and entrepreneurship.

A detailed description of the principal means used by the Group to communicate with the shareholders, investors, financial community and the public in general is provided in items 56. and 57 of the 2013 Corporate Governance Report.

3. Auditors' Report on Auditors' Report on . onthe Consolidated Financial Stat the Consolidated Financial Stat the Consolidated Financial Statements

KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A. Edifício Monumental Av. Praia da Vitória, 71 - A, 11º 1069-006 Lisboa Portugal

Telephone: +351 210 110 000 Fax: +351 210 110 121 Internet: www.kpmg.pt

AUDITORS' REPORT

CONSOLIDATED FINANCIAL STATEMENTS

(ISSUED BY THE STATUTORY AUDITOR, A CMVM REGISTERED AUDITOR)

(This report is a free translation to English from the original Portuguese version)

Introduction

1. In accordance with the applicable legislation, we present our Audit Report on the consolidated financial information included in the Report of the Board of Directors and in the accompanying consolidated financial statements as at and for the year ended 31 December 2013, of Banco Espírito Santo, S.A., which comprise the consolidated balance sheet as at 31 December 2013 (showing total assets of Euro 80,608,016 thousand and total equity attributable to the equity holders of the Bank of Euro 6,246,693 thousand, including a net loss attributable to the equity holders of the Bank of Euro 517,558 thousand), the consolidated statements of income, of comprehensive income, of cash flows and of changes in equity for the year then ended, and the corresponding notes.

Responsibilities

2. The Board of Directors is responsible for:
a) the preparation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, that present fairly, the consolidated financial position of the Group of companies included in the consolidation, the consolidated results of its operations, its consolidated comprehensive income, its consolidated changes in equity and its consolidated cash flows;
b) maintaining historical financial information, prepared in accordance with generally accepted accounting principles which is complete, true, current, clear, objective and lawful as required by the Portuguese Securities Code ("Código dos Valores Mobiliários");
c) the adoption of adequate accounting policies and criteria;
d) maintaining an appropriate system of internal control; and
e) the communication of any relevant matter that may have influenced the activity of the bank and its subsidiaries, their financial position or results.
3. Our responsibility is to verify the consolidated financial information included in the above referred documents, namely as to whether it is complete, true, current, clear, objective and lawful as required by the "Código dos Valores Mobiliários", in order to issue a professional and independent report based on our audit.

Scope

4. We conducted our audit in accordance with the Technical Standards and Guidelines issued by the Portuguese Institute of Statutory Auditors ("Ordem dos Revisores Oficiais de Contas"), which require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. Accordingly our audit included:
verification that the financial statements of the companies included in the consolidation have been properly audited and, in those significant cases in which they were not, verification, on a test basis, of the information underlying the figures and its disclosures contained therein, and an assessment of the estimates, based on the judgements and criteria defined by the Board of Directors, used in the preparation of the referred financial statements;
-verification of the consolidation procedures and of the application of the equity method;
-evaluation of the appropriateness of the accounting policies used and of their disclosure, taking into account the applicable circumstances;
assessing the applicability of the going concern basis of accounting;
assessment of the appropriateness of the overall presentation of the consolidated financial statements; and
assessment of whether the consolidated financial information is complete, true, current, clear, objective and lawful.
5. Our audit also included the verification that the consolidated financial information included in the Board of Directors report is consistent with the consolidated financial statements, as well as the verification of the disclosures required by numbers 4 and 5 of the article 451, of the Portuguese Companies Code ("Código das Sociedades Comerciais").
6. We believe that our audit provides a reasonable basis for our opinion.

Opinion

7. In our opinion, the consolidated financial statements referred to above present fairly in all material respects the consolidated financial position of Banco Espírito Santo, S.A. as at 31 December 2013, the consolidated results of its operations, consolidated comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and the information contained therein is complete, true, current, clear, objective and lawful.

Emphasis of Matter

8. Without qualifying our opinion included in the previous paragraph, we draw attention to Note 46, which describe the situation related with the subscription by BES customers of debt instruments issued by Espírito Santo International S.A. ('ESI') and refers the Bank's Board of Directors expectations in relation to the possible means to the reimbursement of the debt instruments, through the implementation of the deleverage program by ESI, the support of ESI shareholders, its capacity to obtain or renew credit lines in the financial markets and, additionally, through the eventual support that may be necessary from ESFG and BES.

Report on Other Legal Requirements

9. It is also our opinion that the consolidated financial information included in the Executive Board of Directors report is consistent with the consolidated financial statements and that the Report on Corporate Governance includes the information required by the article 245.º-A of the Portuguese Securities Market Code ('CVM').

Lisbon, 9 April 2014

KPMG & Associados, Sociedade de Revisores Oficiais de Contas, S.A. (n.º 189) represented by Sílvia Cristina de Sá Velho Corrêa da Silva Gomes (ROC n.º 1131)

4. Report of the Audit Committee 4. Report of the Audit Committee . Report Audit Committee

AI Terminal

Banco Comercial Portugues

1913_10-k_2014-04-11_ea2ee92c-9ff1-476b-889a-9d32ef847bd6.pdf

II.FINANCIAL STATEMENTS AND NOTES II.FINANCIAL AND NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013 AS AT 31 DECEMBER 2013

Table of Contents

II. Consolidated Financial Statements

1. Consolidated 1. ConsolidatedFinancial Statements Financial Statementsand Notes to the Financial Statement and Notes to Statement

GRUPO B ANCO E SPÍRITO SANTO

CONSOLIDATED INCOME STATE MENT FOR THE YE ARS E NDE D 31 DECE MB E R 201 3 AND 201 2

GRUPO BANCO E SPÍRITO SANTO

CONSOLIDATE D STATE ME NT OF COMPRE HE NSIVE INCOME FOR THE YE ARS E NDE D AS AT 31 DE CE MB E R 201 3 AND 201 2

GRUPO BANCO E SPÍRITO SANTO

CONSOLIDATE D BALANCE SHE E T AS AT 31 DE CE MB E R 201 3 AND 201 2

B ANCO E SPÍRITO SANTO, S.A.

CONSOLIDATE D STATE ME NT OF CHANGE S IN E QUITYFOR THE PE RIODS E NDE D AS AT 31 DE CE MBE R 201 3 AND 201 2

GRUPO B ANCO E SPÍRITO SANTO

Banco Espírito Santo Espírito SantoGroup

Notes to the Consolidated Financial Notes to the Consolidated FinancialStatements as at 31 December 2013 Statements as at 31 December 2013 2013

NOTE 1 – –ACTIVITY AND GROUP STRUCTURE ACTIVITY STRUCTURE

a) Sub-groups:

Additionally, in accordance with SIC 12, the Group consolidates the following special purpose entities:

The consolidation of these entities had the following impact on the Group's accounts:

NOTE 2 – –SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES SUMMARY OF SIGNIFICANT PRINCIPLES

2.1. Basis of preparation 2.1. Basis preparation

2.2. Basis of consolidation 2.2. Basis consolidation consolidation

Subsidiaries Subsidiaries

Associates

Special purpose entities ("SPE") purpose entities ("SPE")

Investment funds managed by the Group

Goodwill

Transactions with non- Transactions with non-controlling interest controlling interestcontrolling interest

Foreign currency translation

Balances and transactions eliminated in consolidati and transactions consolidation consolidation

2.3 Foreign currency transactions

2.4 Derivative financial instruments and hedge accounting

Classification

Recognition and measurement measurement

Hedge accounting

Embedded derivatives

2.5. Loans and advances to customers 2.5.

Impairment

2.6. Other financial asse assets

Classification Classification

Initial recognition, initial measurement and dereco Initial recognition, initial measurement and derecognition l derecognition gnition

Subsequent measurement

Reclassifications between categories Reclassifications between categories ssifications between categories

Impairment Impairment

2.7. Sale and repurchase agreements 2.7. Sale agreements agreements

2.8. Financial l 2.8. Financial liabilities iabilities iabilities

2.9. Financial guarantees 2.9. guarantees

2.10. Equity instr Equity instr instruments

2.11. Offsetting financial instruments 2.11. Offsetting financial instruments Offsetting financial instruments

2.12. Non 2.12. Non-current assets held for sale current assets held for sale current assets

a) Market Method

b) Income Method

c) Cost Method

2.13. Property and equipment 2.13. Property and equipment

2.14. Intangible assets Intangible assets

2.15. Leases Leases

Operating leases

Finance leases leases nce leases

• As lessee

• As lessor

2.16. Employee benefits

Pensions Pensions

Health care benefits

Long term service benefits Long term benefits

Variable remuneration payment plan on financial instruments (PRVIF) truments (PRVIF)

Bonus to employee

2.17. Income tax 2.17. Income tax

2.18. Provisions 2.18. Provisions

2.19. Interest income and expense

2.20. Fee and commission income

2.21. Dividend income 2.21. Dividend income

2.22. Segmental reporting reporting

2.23. Earnings per share 2.23. Earnings per share

2.24. Cash and cash equivalents Cash equivalents equivalents

2.25. Investment properties Investment propertiesproperties

2.26. Insurance contracts contracts

Premiums

^B ANCO E SPÍRITO SANTO, S.A.