Banco Santander (Brasil) S.A. - Interim / Quarterly Report 2013

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of October , 2013

Commission File Number: 001-34476

BANCO SANTANDER (BRASIL) S.A.

(Exact name of registrant as specified in its charter)

Avenida Presidente Juscelino Kubitschek, 2041 and 2235 Bloco A – Vila Olimpia São Paulo, SP 04543-011 Federative Republic of Brazil

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F X Form 40-F _

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes _ No X_

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes _ No X_

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes _ No X_

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

$$/page=

BANCO SANTANDER (BRASIL) S.A. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS	Page
• Review Report of Independent Registered Public Accounting Firm	1
• Consolidated Balance Sheets	3
• Consolidated Income Statements	5
• Consolidated Statements of Comprehensive Income	6
• Consolidated Statements of Changes in Equity	7
• Consolidated Cash Flow Statements	8
• Notes to the Consolidated Interim Financial Statements
General information, basis of presentation of the consolidated interim financial statements
Note 1 and other information	9
Note 2 Basis of consolidation	14
Note 3 Change in the scope of consolidation	14
Note 4 Financial assets	14
Note 5 Non-current assets held for sale	15
Note 6 Investments in associates and joint ventures	16
Note 7 Tangible assets	17
Note 8 Intangible assets	17
Note 9 Financial liabilities	18
Note 10 Provisions	20
Note 11 Equity	23
Note 12 Breakdown of income accounts	25
Note 13 Share-based compensation	25
Note 14 Business segment reporting	29
Note 15 Related party transactions	31
Note 16 Other disclosures	37
Note 17 Supplementary information – Conciliation of shareholders’ equity and net income	43
Note 18 Subsequent events	45
APPENDIX I SUBSIDIARIES OF BANCO SANTANDER (BRASIL) S.A.	46
APPENDIX II PERFORMANCE REVIEW	48
Executive’s Report of Financial Statements
Executive’s Report of Independent Auditors' Report

BANCO SANTANDER (BRASIL) S.A. CONSOLIDATED BALANCE SHEETS Thousands of Brazilian Reais

ASSETS	Note	9/30/2013	12/31/2012 - adjusted
CASH AND BALANCES WITH THE BRAZILIAN CENTRAL
BANK		64,321,671	55,535,240
FINANCIAL ASSETS HELD FOR TRADING	4-a	32,394,375	31,638,268
Debt instruments		25,860,816	26,646,708
Equity instruments		402,461	428,589
Trading derivatives	16-a	6,131,098	4,562,971
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS	4-a	1,251,008	1,228,318
Loans and amounts due from credit institutions		363	5,065
Debt instruments		115,429	124,187
Equity
instruments		1,135,216	1,099,066
AVAILABLE-FOR-SALE FINANCIAL ASSETS	4-a	37,594,188	44,148,620
Debt instruments		36,076,932	43,044,570
Equity instruments		1,517,256	1,104,050
LOANS AND RECEIVABLES	4-a	240,340,987	226,957,041
Loans and amounts due from credit institutions		33,083,229	29,913,132
Loans and advances to customers	14	207,003,593	196,774,297
Debt instruments		254,165	269,612
HEDGING DERIVATIVES	16-a	162,796	156,164
NON-CURRENT ASSETS HELD FOR SALE	5	163,557	165,710
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES	6	1,017,597	472,093
TANGIBLE ASSETS		6,391,407	5,938,228
INTANGIBLE ASSETS		29,139,090	29,270,711
Goodwill	8-a	27,217,565	27,217,565
Other intangible assets	8-b	1,921,525	2,053,146
TAX ASSETS		22,132,822	21,496,743
Current		3,521,208	3,538,238
Deferred		18,611,614	17,958,505
OTHER ASSETS		5,209,057	5,600,727
TOTAL ASSETS		440,118,555	422,607,863
The accompanying Notes and Appendix I are an integral part
of these financial statements.

LIABILITIES AND STOCKHOLDERS' EQUITY	Note	9/30/2013	12/31/2012 - adjusted
FINANCIAL LIABILITIES HELD FOR TRADING	9-a	5,420,099	5,351,736
Trading
derivatives	16-a	5,148,520	5,111,553
Short
positions		271,579	240,183
FINANCIAL LIABILITIES AT AMORTIZED COST	9-a	324,132,587	306,976,206
Deposits from Brazilian Central Bank and deposits from credit
institutions		35,848,364	35,073,626
Customer
deposits		199,887,523	188,594,930
Marketable
debt securities		60,798,321	54,012,018
Subordinated
debts		8,690,493	11,919,151
Other
financial liabilities		18,907,886	17,376,481
HEDGING
DERIVATIVES	16-a	448,352	281,545
PROVISIONS	10-a	9,838,960	12,774,966
Provisions for pensions funds and similar
obligations		3,079,163	5,260,700
Provisions, judicial and administrative proceedings,
commitments and other provisions		6,759,797	7,514,266
TAX
LIABILITIES		13,966,343	13,784,464
Current		12,132,429	10,219,083
Deferred		1,833,914	3,565,381
OTHER
LIABILITIES		4,693,971	4,302,820
TOTAL
LIABILITIES		358,500,312	343,471,737
STOCKHOLDERS'
EQUITY	11	82,784,711	79,921,205
Capital		62,634,585	62,634,585
Reserves		17,489,737	14,644,576
Treasury
shares		(256,443)	(170,562)
Profit for the period attributable to the Parent		4,316,832	5,482,606
Less:
Dividends and remuneration		(1,400,000)	(2,670,000)
OTHER
COMPREHENSIVE INCOME		(1,414,553)	(1,022,209)
STOCKHOLDERS' EQUITY ATTRIBUTABLE TO THE PARENT		81,370,158	78,898,996
NON-CONTROLLING
INTERESTS		248,085	237,130
TOTAL
STOCKHOLDERS' EQUITY		81,618,243	79,136,126
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		440,118,555	422,607,863
The accompanying Notes and Appendix I are an integral part of
these financial statements.

BANCO SANTANDER (BRASIL) S.A. CONSOLIDATED INCOME STATEMENTS Thousands of Brazilian Reais, except for per share data

	Note	7/01 to 9/30/2013	7/01 to 9/30/2012 - Adjusted	1/01 to 9/30/2013	1/01 to 9/30/2012 - Adjusted
Interest
and similar income		12,971,030	13,166,293	37,504,122	40,364,516
Interest expense and similar charges		(6,075,883)	(5,152,195)	(16,047,575)	(16,403,574)
INTEREST
NET INCOME	14	6,895,147	8,014,098	21,456,547	23,960,942
Income
from equity instruments	14	1,648	5,383	47,215	47,170
Income from companies accounted for by the equity
method	6-b &
14	34,107	22,621	84,107	58,875
Fee and
commission income	14	2,849,413	2,474,563	8,093,840	7,180,181
Fee and
commission expense	14	(878,516)	(505,725)	(2,013,759)	(1,440,141)
Gains (losses) on financial assets and liabilities
(net)	14	185,546	219,152	(631,647)	(210,600)
Financial assets held for trading		(358,452)	(74,163)	(2,007,220)	(1,104,746)
Other financial instruments at fair value through profit or
loss		26,237	47,932	8,999	335,824
Financial instruments not measured at fair value through profit
or loss		513,137	236,825	1,369,885	555,736
Other		4,624	8,558	(3,311)	2,586
Exchange
differences (net)	14	402,571	(8,429)	699,521	176,063
Other
operating income (expense)	14	(154,671)	(141,560)	(338,880)	(484,379)
TOTAL
INCOME		9,335,245	10,080,103	27,396,944	29,288,111
Administrative
expenses	12 &
14	(3,488,470)	(3,506,088)	(10,163,509)	(10,231,252)
Personnel
expenses		(1,758,105)	(1,797,648)	(5,178,481)	(5,275,003)
Other
general expenses		(1,730,365)	(1,708,440)	(4,985,028)	(4,956,249)
Depreciation
and amortization	14	(288,005)	(294,764)	(931,204)	(859,640)
Tangible
assets		(179,290)	(233,157)	(541,533)	(542,835)
Intangible
assets		(108,715)	(61,607)	(389,671)	(316,805)
Provisions
(net)	14	(571,213)	(537,157)	(1,210,166)	(1,605,181)
Impairment losses on financial assets (net)	14	(3,290,720)	(3,780,569)	(10,942,091)	(11,674,930)
Loans and
receivables	4-b.2	(3,290,720)	(3,780,569)	(10,942,091)	(11,674,930)
Impairment losses on other assets (net)	14	35,535	(16,448)	(86,022)	(8,238)
Other
intangible assets		176	(1,677)	(32,617)	-
Other
assets		35,359	(14,771)	(53,405)	(8,238)
Gains (losses) on disposal of assets not classified as
non-current assets held for sale	14	1,250	395	412,728	2,316
Gains (losses) on non-current assets held for sale not
classified as discontinued operations	14	8,311	(3,063)	99,809	9,691
OPERATING
PROFIT BEFORE TAX		1,741,933	1,942,409	4,576,489	4,920,877

| Income
taxes | (391,623) | (468,042) | (170,823) | (247,213) |
| --- | --- | --- | --- | --- |
| PROFIT
FOR THE PERIOD | 1,350,310 | 1,474,367 | 4,405,666 | 4,673,664 |
| Profit attributable to the Parent | 1,332,542 | 1,471,951 | 4,316,832 | 4,663,709 |
| Profit (loss) attributable to non-controlling
interests | 17,768 | 2,416 | 88,834 | 9,955 |
| EARNINGS PER SHARE (Brazilian Reais) | | | | |
| Basic earning per 1,000 share (Brazilian Reais -
R$) | | | | |
| Common
shares | 3.20 | 3.51 | 10.36 | 11.13 |
| Preferred
shares | 3.52 | 3.86 | 11.40 | 12.25 |
| Diluted earning per 1,000 share (Brazilian Reais -
R$) | | | | |
| Common
shares | 3.20 | 3.51 | 10.36 | 11.12 |
| Preferred
shares | 3.52 | 3.86 | 11.39 | 12.24 |
| Net profit attributable to the Parent - basic (Brazilian Reais
- R$) | | | | |
| Common
shares | 678,561 | 745,828 | 2,199,971 | 2,363,760 |
| Preferred
shares | 653,981 | 717,637 | 2,116,861 | 2,274,490 |
| Net profit attributable to the Parent - diluted (Brazilian
Reais - R$) | | | | |
| Common
shares | 678,557 | 745,820 | 2,199,951 | 2,363,728 |
| Preferred
shares | 653,985 | 717,645 | 2,116,881 | 2,274,522 |
| Weighted average shares outstanding (in thousands) -
basic | | | | |
| Common
shares | 211,882,799 | 212,286,598 | 212,268,527 | 212,334,093 |
| Preferred
shares | 185,643,184 | 185,693,293 | 185,681,290 | 185,740,895 |
| Weighted average shares outstanding (in thousands) -
diluted | | | | |
| Common
shares | 211,947,328 | 212,395,405 | 212,369,223 | 212,483,920 |
| Preferred
shares | 185,701,848 | 185,792,208 | 185,772,833 | 185,877,103 |
| The accompanying Notes and Appendix I are an integral part of
these financial statements. | | | | |

BANCO SANTANDER (BRASIL) S.A. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Thousands of Brazilian Reais

	7/01 to 9/30/2013	7/01 to 9/30/2012 - Adjusted	1/01 to 9/30/2013	1/01 to 9/30/2012 - Adjusted
PROFIT FOR THE PERIOD	1,350,310	1,474,367	4,405,666	4,673,664
Other comprehensive income which may be reclassified to net income:	(185,569)	(87,568)	(1,771,215)	410,440
Available-for-sale financial assets	(305,439)	(89,822)	(1,879,863)	659,349
Valuation adjustments	(2,861,854)	88,466	(4,654,111)	1,711,649
Amounts transferred to income statement	2,226,633	(236,825)	1,369,885	(555,736)
Income taxes	329,782	58,537	1,404,363	(496,564)
Cash flow hedges	119,870	2,254	108,648	(248,909)
Valuation adjustments	131,337	(1,001)	70,679	(441,247)
Amounts transferred to income statement	84,127	-	205,191	(163)
Income taxes	(95,594)	3,255	(167,222)	192,501
Net investment hedge	229,643	(21,571)	145,311	(144,160)
Net investment hedge	382,737	(35,952)	242,184	(240,267)
Income taxes	(153,094)	14,381	(96,873)	96,107
Exchange on investments Abroad	(229,643)	21,571	(145,311)	144,160
Exchange on investments Abroad	(382,737)	35,952	(242,184)	240,267
Income taxes	153,094	(14,381)	96,873	(96,107)
Other comprehensive income which may not be reclassified to net income:	-	-	1,378,871	(2,524,324)
Defined Benefits plan	-	-	1,378,871	(2,524,324)
Defined Benefits plan	-	-	2,144,029	(4,133,394)
Income taxes	-	-	(765,158)	1,609,070
TOTAL COMPREHENSIVE INCOME	1,164,741	1,386,799	4,013,322	2,559,780
Attributable to the parent	1,138,477	1,372,253	3,924,488	2,549,823
Attributable to non-controlling interests	26,264	14,546	88,834	9,955
TOTAL	1,164,741	1,386,799	4,013,322	2,559,780
The accompanying Notes and Appendix I are an integral part of these financial statements.

BANCO SANTANDER (BRASIL) S.A. CONSOLIDATED STATEMENTS OF CHANGES IN EQUIT Y Thousands of Brazilian Reais

		Stockholders´ Equity Attributable to the Parent											Non-controlling Interests	Total Stockholders´ Equity
								Other Comprehensive Income
	Note	Share Capital	Reserves	Treasury shares	Profit Attributed to the Parent	Dividends and Remuneration	Total Stockholders´ Equity	Available-for-sale Financial Assets	Defined Benefits plan	Translation adjustments investment abroad	Gains and losses - Cash flow hedge and
Investment	Total
Balances at December 31, 2011		62,634,585	9,950,144	(112,768)	7,747,925	(3,175,000)	77,044,886	960,199	-	-	7,947	78,013,032	18,960	78,031,992
Employee Benefit Plans (Effects - Amendments to the IAS
19)	1-b	-	106,470	-	-	-	106,470	-	(1,222,22 6 )	-	-	(1,115, 7 56)	-	(1,115,75 6 )
Balances
at January 01, 2012		62,634,585	10,056,614	(112,768)	7,747,925	(3,175,000)	77,151,356	960,199	(1,222,22 6 )	-	7,947	76,897,276	18,960	76,916,23 6
Total
comprehensive income		-	-	-	4,663,709	-	4,663,709	659,349	(1,302,099)	144,160	(393,069)	3,772,05 0	(2,175)	3,769,87 5
Appropriation
of net profit		-	7,747,925	-	(7,747,925)	-	-	-	-	-	-	-	-	-
Employee Benefit Plans -Effects Income Statements of 2012	1-b	-	(25,460)	-	-	-	(25,460)	-	-	-	-	(25,460)	-	(25,460)
Dividends and interest on capital		-	(3,175,000)	-	-	1,205,000	(1,970,000)	-	-	-	-	(1,970,000)	-	(1,970,000)
Share
based payment		-	39,508	-	-	-	39,508	-	-	-	-	39,508	-	39,508
Treasury
shares		-	-	(55,378)	-	-	(55,378)	-	-	-	-	(55,378)	-	(55,378)
Results of
treasury shares		-	9	-	-	-	9	-	-	-	-	9	-	9
Other		-	(587)	-	-	-	(587)	-	-	-	-	(587)	(1,643)	(2,230)
Balances
at September 30, 2012 -adjusted		62,634,585	14,643,009	(168,146)	4,663,709	(1,970,000)	79,803,157	1,619,548	(2,524,325)	144,160	(385,122)	78,657,4 18	15,142	78,672,56 0
Balances
at December 31, 2012 -adjusted		62,634,585	14,644,576	(170,562)	5,482,606	(2,670,000)	79,921,205	1,760,671	(2,524,325)	182,046	(440,601)	78,898,996	237,130	79,136,126
Total
comprehensive income		-	-	-	4,316,832	-	4,316,832	(1,879,863)	1,378,871	(145,311)	253,959	3,924,488	88,834	4,013,322
Appropriation
of net profit		-	5,482,606	-	(5,482,606)	-	-	-	-	-	-	-	-	-
Dividends and interest on capital	11-b	-	(2,670,000)	-	-	1,270,000	(1,400,000)	-	-	-	-	(1,400,000)	-	(1,400,000)
Share
based payment	13-a.1	-	33,211	-	-	-	33,211	-	-	-	-	33,211	-	33,211
Treasury
shares	11-c	-	-	(85,881)	-	-	(85,881)	-	-	-	-	(85,881)	-	(85,881)
Results of
treasury shares	11-c	-	(716)	-	-	-	(716)	-	-	-	-	(716)	-	(716)
Other		-	60	-	-	-	60	-	-	-	-	60	(77,879)	(77,819)
Balances
at September 30, 2013		62,634,585	17,489,737	(256,443)	4,316,832	(1,400,000)	82,784,711	(119,192)	(1,145,454)	36,735	(186,642)	81,370,158	248,085	81,618,243
The accompanying Notes and Appendix I are an integral part of
these financial statements.

BANCO SANTANDER (BRASIL) S.A CONSOLIDATED CASH FLOW STATEMENTS Thousands of Brazilian Reais

	Note	1/01 to 9/30/2013	1/01 to 9/30/2012 - Adjusted
1. CASH FLOWS FROM OPERATING
ACTIVITIES
Consolidated income for the period		4,405,666	4,673,664
Adjustments to net income		10,726,024	12,027,725
Depreciation of tangible assets		541,533	542,835
Amortization of intangible assets		389,671	316,805
Impairment losses on other assets
(net)		86,022	8,238
Provisions and Impairment losses on financial assets
(net)		12,152,257	13,280,111
Net Gains (losses) on disposal of tangible assets,
investments and non-current assets held for sale		(512,537)	(12,007)
Share of results of entities accounted for using the
equity method	6-b	(84,107)	(58,875)
Changes in deferred tax assets and
liabilities		(1,908,784)	(2,079,805)
Others		61,969	30,423
Net (increase) decrease in operating
assets		(16,737,651)	(4,249,064)
Balance with the Brazilian Central
Bank		(8,897,401)	3,036,787
Financial assets held for trading		(756,107)	7,761,459
Other financial assets at fair value through profit
or loss		(22,690)	(669,243)
Available-for-sale financial assets		5,619,353	4,832,805
Loans and receivables		(13,131,793)	(17,519,866)
Other assets		450,987	(1,691,006)
Net increase (decrease) in operating
liabilities		18,602,761	3,243,311
Financial liabilities held for trading		68,363	645,250
Financial liabilities at amortized
cost		19,204,573	576,607
Other liabilities		(670,175)	2,021,454
Paid tax		(1,010,116)	(1,736,507)
Total net cash flows from operating activities
(1)		15,986,684	13,959,129
2. CASH
FLOWS FROM INVESTING ACTIVITIES
Investments		(1,541,854)	(2,240,293)
Increase / Acquisition of Investments in
associates		(255,750)	-
Tangible assets	7	(1,019,817)	(883,340)
Intangible assets		(266,287)	(1,356,953)
Disposal		162,710	27,527
Tangible assets		134,230	9,749
Dividends and interest on capital
received		28,480	17,778
Total
net cash flows from investing activities (2)		(1,379,144)	(2,212,766)
3. CASH FLOWS FROM FINANCING
ACTIVITIES
Acquisition of own shares	11-c	(115,295)	(55,378)
Issuance of other long-term
liabilities	9-b.3	34,628,036	22,987,898
Dividends paid and interest on capital		(2,050,667)	(2,493,531)
Payments of subordinated liabilities	9 b.4	(3,823,280)	-
Payments of other long-term
liabilities	9-b.3	(32,204,160)	(15,949,071)
Decrease in non-controlling interests		(77,879)	(478)
Total net cash flows from financing activities
(3)		(3,643,245)	4,489,440
NET INCREASE IN CASH (1+2+3)		10,964,295	16,235,803
Cash and cash equivalents at beginning of
period		19,617,679	9,017,406
Cash and cash equivalents at end of
period		30,581,974	25,253,209
Cash and cash equivalents
components
Cash		4,003,794	3,622,871
Loans
and other		26,578,180	21,630,334
Total of cash and cash equivalents		30,581,974	25,253,205
Non-cash transactions
Foreclosures loans and other assets transferred to
non-current assets held for sale		47,555	10,888
Dividends and interest on capital declared but not
paid	11-b	450,000	501,164
Supplemental information
Interest received		37,159,093	41,493,536
Interest paid		15,423,988	17,318,346
The
accompanying Notes and Appendix I are an integral part of these financial
statements.

BANCO SANTANDER (BRASIL) S.A. NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS Amounts in thousands of Brazilian Reais - R$, unless otherwise stated 1. General information, basis of presentation of the consolidated interim financial statements and other information

a) General information

Banco Santander (Brasil) S.A. (Banco Santander or Bank), indirectly controlled by Banco Santander, S.A., with headquarters in Spain (Banco Santander Spain), is the lead institution of the financial and non-financial group (Conglomerate Santander) with the Central Bank of Brazil (Bacen), established as a corporation, with main office at Avenida Presidente Juscelino Kubitschek, 2041 e 2235 - Bloco A - Vila Olímpia - São Paulo - SP. Banco Santander operates as a multiple bank and through its subsidiaries carries out its operations through three segments (note 14): (i) Commercial Bank, (ii) Global Wholesale Bank, which operates with commercial, investment, credit and financing and exchange, mortgage lending, leasing, credit cards and securities brokerage, and (iii) Asset Management, asset management, insurance brokerage, private pension and capitalization . Its operations are conducted as part of a set of institutions that operate on integrated financial markets and capital.

The consolidated interim financial statements for the period ended on September 30, 2013 were approved by the Board of directors at the meeting held on October 23, 2013.

b) Basis of presentation of the consolidated interim financial statements

These consolidated interim financial statements were prepared and are presented in accordance with IAS 34, Interim Financial Reporting, from International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and the interpretations issued by the IFRS Interpretations Committee (Current name of IFRIC) (IFRS).

In accordance with IAS 34, the interim financial information is intended only to provide an update on the content of the latest consolidated financial statements authorized for issue, focusing on new activities, events and circumstances occurred during the period, rather than duplicating information reported in the consolidated financial statements previously presented. Accordingly, these interim financial statements do not include all the information required for consolidated financial statements prepared under IFRS as adopted by the IASB. To properly understand the information in these interim financial statements, this should be read together with the Bank’s consolidated financial statements for the year ended December 31, 2012.

The accounting policies and methods used in the preparation of these interim consolidated financial statements are the same as those applied in the consolidated financial statements for 2012, with the exception of the application of the new version of IAS 19 Employee Benefits, the effects of the first adoption were recorded as changes accounting practice in accordance with the requirements of IAS 8 -accounting Policies, changes in Accounting Estimates and Errors.

The Bank presents the revenues and expenses in two separate statements: Income Statement for the period and Statements of Comprehensive Income for the period.

On March 31, 2013, the Bank also change the presentation of the balance corresponding to the Customer Relationship, classified up to December 31, 2012 under Other intangible assets, and reclassified to Other Assets line, with retrospective effect on the presentation in the Consolidated Balance Sheets and Consolidated Income Statements.

Adoption of new standards and interpretations

The Bank has adopted all standards and interpretations that became effective on January 1, 2013. The following standards and interpretations that are applicable to the Bank:

• IFRS 10 - Consolidated Financial Statements replaces the consolidation guidance in IAS 27 Consolidated and Separate Financial Statements (2008) and SIC-12 Consolidation — Special Purpose Entities by introducing a single consolidation model for all entities based on control, irrespective of the nature of the investee (so whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities). Under IFRS 10, control is based on whether an investor has: i) power over the investee; ii) exposure, or rights, to variable returns from its involvement with the investee; and iii) the ability to use its power over the investee to affect the amount of the returns.

• IFRS 11 - Joint Arrangements - introduces new accounting requirements for joint arrangements, which replaces IAS 31 - Interests in Joint Ventures. According to IFRS 11, it will be obligatory to use the equity method and not allowed to choose the method of accounting for jointly controlled entity. The fundamental principle of IFRS 11 is that parts of a joint venture agreement must determine the type of joint venture in question, based on the assessment of rights and obligations and, according to the accounting for the type of joint venture. There are two types of joint ventures:

Joint Operations: Rights and obligations on the assets and liabilities related to the agreement. The parties acknowledge their assets, liabilities and related income and expenses.
Joint Venture: Rights to the net assets of the Agreement. The parties acknowledge their investments by the equity method.

• IFRS 12 - Disclosures of Involvement with Other Entities requires enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to allow that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and non-controlling interest holders' involvement in the activities of consolidated entities.

• IAS 27 - Consolidated and Separate Financial Statements (2011) - keeps the requirements relating to separate financial statements. The other portions of IAS 27 (2008) are replaced by IFRS 10.

• IAS 28 - Investments in Associates (2011) - amended IAS 28 Investments in Associates (2008) to conform changes based on the issuance of IFRS 10, IFRS 11 and IFRS 12.

• IFRS 13 - Fair Value Measurement - On May 12, 2011, the IASB also issued IFRS 13, which replaces the guidance on fair value measurement in existing IFRS accounting literature with a single standard. IFRS 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, IFRS 13 does not change the requirements regarding which items should be measured or disclosed at fair value.

The afore mentioned standards did not have any impact on the Consolidated Financial Statements.

• Amendments to IAS 19, Employee Benefits (obligatory for reporting periods beginning on or after January 1, 2013) - These amendments eliminated the "Corridor" method under which entities were able to opt for deffered recognition of a given portion of actuarial gains and losses, establishing that all actuarial gains and losses must be recognized immediately in the Shareholders' Equity. The amendments included significants changes in the presentation of cost components, as a result of which the service cost relating to post-employments benefit obligations (past service cost and plan curtailments and settlements) and net interest cost must be recognized in profit or loss and remeasurement component (comprising basically actuarial gains and losses) must be recognized in Equity - Other Comprehensive Income and may not be reclassified to profit or loss. In accordance with IAS 8, these amendments entail a change of accounting policy and, accordingly, they must be applied retrospectively from January 1, 2013, by adjusting the beggining balances of Equity for the earliest period presented as though the new accounting policy had always been applied. The impact of this accounting policy in Consolidated Balance Sheets as of December 31, 2012 and in Consolidated Income Statements of nine month period ended September, 30, 2012:

						2012
	Provisions for					Income Statements
	pension funds					for the period
	and similar	Stockholders'	Non Controlling		Tax Assets	ended 1/01 a
	obligations	Equity (1)	Interests	Other Assets	Deferred	9/30/2012 (2)
Balances registered originally on
December
31,
2012	1,307,815	-	-	-	-	(141,328)
Effects of
amendments to IAS 19	3,952,885	(2,451,801)	(12,130)	(92,418)	1,615,318	25,460
Balances on
December 31, 2012 - adjusted	5,260,700	(2,451,801)	(12,130)	(92,418)	1,615,318	(115,868)
(1) Recorded under “Statements
of Comprehensive Income” and "Reserves". (2) Recorded under “Interest
expense and similar charges” and "Provisions (net)", net of tax effects.
The adjustment net of tax for the twelve months of 2012 was R$33,946.

Standards and interpretations that will be effective after September 30, 2013

The Bank has not yet adopted the following IFRS or new or revised interpretations, that have been issued, but whose effective date will be after the date of these financial statements:

• IFRS 9 – Financial Instruments: Recognition and Measurement – The main changes of IFRS 9 compared to IAS 39 are: (i) All recognized financial assets that are currently in the scope of IAS 39 will be measured at either amortized cost or fair value; (ii) IFRS 9 does not retain IAS 39’s concept of embedded derivatives for hybrid contracts if the host contract is a financial asset within the scope of IFRS 9; (iii) the guidance included in IFRS 9 retains the classification criteria for financial liabilities currently contained in IAS 39. However, there are two key differences, relating to presentation and measurement, compared to IAS 39: (a) the presentation of the effects of changes in fair value attributable to a liability’s credit risk; and (b) the elimination of the cost exemption for derivative liabilities to be settled by delivery of unquoted equity instruments.

• Amendment to IFRS 7 - Financial Instruments: Disclosures - encourages qualitative disclosures in the context of the quantitative disclosure required to help users in comparing the Financial Statements.

On December 16, 2011, the IASB delayed the mandatory adoption of IFRS 9 and related disclosure items contained in transient changes of IFRS 7 for January 2015. Early adoption for financial institutions in Brazil is subject to the issuance of pronouncements by the IASB, translated into Portuguese by a Brazilian entity accredited by the International Accounting Standards Committee Foundation (IASC Foundation), and approval by the Bacen.

The managers understand the adoption of the above-mentioned standards and interpretations do not have a material effect on the consolidated financial statements taken as a whole, except to IFRS 9, which the Bank is analyzing the impacts from the adoption of this standard.

c) Estimates made

The consolidated results and the determination of consolidated equity are influenced by the accounting policies, assumptions, estimates and measurement bases used by the management of the Bank in preparing the consolidated financial statements. The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities of future periods. All estimates and assumptions required, in conformity with IFRS, are best estimates undertaken in accordance with the applicable standard.

In the consolidated financial statements estimates were made by the management of the Bank and of the consolidated entities in order to quantify certain assets, liabilities, income, expenses and disclosure notes.

The main estimates are further discussed on the December 31, 2012, 2011 and 2010 consolidated financial statements. In the period ended on September 30, 2013 there were no significant changes in the estimates made at 2012 year-end besides those indicated in these interim financial statements.

d) Provisions, Contingent assets and liabilities

Note 2-q to the Bank's consolidated financial statements for the year ended December 31, 2012, 2011 and 2010 includes information on the contingent assets and liabilities. There were no significant changes in the Bank’s contingent assets and liabilities between December 31, 2012 and September 30, 2013 these interim financial statements' reporting date.

e) Comparative information

The information for 2012 contained in these consolidated interim financial statements are presented solely for the purposes of comparison with the information relating to the nine-month period ended September 30, 2013.

f) Seasonality of the Bank’s transactions

Considering the activities conducted by the Bank and its subsidiaries, their transactions are not cyclical or seasonal in nature. Accordingly, no specific disclosures are provided in these explanatory notes to the interim financial statements for the nine-month period ended September 30, 2013.

g) Materiality

In determining the disclosures to be made in relation to the various items in the financial statements or other matters, the Bank, in accordance with IAS 34, took into account their materiality in relation the interim financial statements.

h) Consolidated cash flow statements

In preparing the consolidated cash flow statements, the high liquidity investments with insignificant risk of changes in values and with original maturity lower than ninety days were classified as “cash and cash equivalents”. The Bank classifies as cash and cash equivalents the balances recorded under “Cash and balance with the Brazilian Central Bank” and "Loans and amounts due from credit institutions" in the consolidated balance sheet, except for restricted resources and long term transactions.

The interest paid and received correspond basically to operating activities of Banco Santander.

i) Functional currency and presentation currency

The consolidated interim financial statements of Banco Santander are presented in Brazilian Reais, functional currency and presentation of these statements.

For each subsidiary, entity under joint control and investment in an unconsolidated company, Banco Santander has defined the functional currency. The assets and liabilities of these entities with functional currency other than the Brazilian Real are translated as follows:

Assets and liabilities are translated at the exchange rate at the balance sheet date.
Revenues and expenses are translated at the monthly average exchange rates.
Gain and losses on translation of net investment are recorded in the statement of comprehensive income, in “exchange rate of investees located abroad”.

j) Measurement of financial assets and liabilities and recognition of fair value changes

In general, financial assets and liabilities are initially recognized at fair value which, in the absence of evidence to the contrary, is deemed to be the transaction price. Financial instruments not measured at fair value through profit or loss are, adjusted by the transaction costs. Financial assets and liabilities are subsequently measured at each period-end.

Valuation techniques

Fair value measurements using a fair value hierarchy that reflects the model used in the measurement process.

Level 1: Financial instruments at fair value, determined on the basis of public price quotations in active markets, include government debt securities, private-sector debt securities, securitized assets, shares, short positions and fixed-income securities issued.

Level 2: The information that is not included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 2 generally includes internal models to estimate the price, in this case are used observable inputs in active markets.

Level 3: Records financial assets and liabilities which are not used observable market data to make the measurement.

Trading Financial Assets, Others financial assets at fair value on through profit or loss, Available-for-sale financial assets and Financial liabilities held for trading.

Level 1: The securities with high liquidity observable prices in an active market are classified as level 1. At this level were classified most of the Brazilian Government Securities (mainly LTN, LFT, NTN-B, NTN-C and NTN-F), shares in stocks and other securities traded in an active market.

Level 2: When price quotations can not be observed, the Management, using their own internal models, make their best estimate of the price that would be set by the market. These models use data based on observable market parameters as an important reference. Various techniques are used to make these estimates, including the extrapolation of observable market data and extrapolation techniques. The best evidence of fair value of a financial instrument on initial recognition is the transaction price, unless the fair value of the instrument can be obtained from other market transactions carried out with the same instrument or similar instruments or can be measured using a valuation technique in which the variables used include only data from observable market, especially interest rates. These securities are classified within Level 2 of the fair value hierarchy and are composed mainly by Agricultural Debt Securities (TDA and Debentures) in a market with less liquidity than those classified at level 1.

Level 3: When there is information that is not based on observable market data, Banco Santander used internally developed models, from curves generated according to the internal model. Level 3 comprises mainly unlisted shares that are not generally traded in an active market.

Derivatives

Level 1: Derivatives traded on exchanges are classified in Level 1 of the hierarchy.

Level 2: For derivatives not traded, the valuation of financial instruments requiring dynamic hedging (basically structured options and other structured instruments), is normally used in the Black-Scholes model. Observable market data are used to obtain factors, such as purchase-sale difference, exchange rates, volatility, correlation between indexes and market liquidity.

In the valuation of certain financial instruments exposed to interest rate risk, such as interest rate futures, caps and floors, the present value method (futures) and the Black-Scholes model (plain vanilla options) are used. The main inputs used in these models are basically observable market data, including the related interest rate curves, volatilities, correlations and exchange rates.

In the case of linear instruments (e.g. credit risk and fixed-income derivatives), credit risk is measured using dynamic models similar to those used in the measurement of interest rate risk. In the case of non-linear instruments, if the portfolio is exposed to credit risk (e.g. credit derivatives), the joint probability of default is determined using the Standard Gaussian Copula model. The main inputs used to determine the underlying cost of credit on credit derivatives are quoted credit risk premiums and the correlation between the quoted credit derivatives of various issuers.

Level 3 : Derivatives not traded in stock and do not have an observable data in a active market were classificated as Level 3, and are composed mainly of exotic options and swaps indexed to unobservable inputs.

The following table shows a summary of the fair values of financial assets and liabilities for the period ended September 30, 2013 and December 31, 2012 classified based on several measurement methods adopted by the Bank to determine fair value:

| Thousands of
Reais | Level 1 | Level 2 | Level 3 | 9/30/2013 — Total |
| --- | --- | --- | --- | --- |
| Financial assets
held for trading | 29,873,822 | 2,520,553 | - | 32,394,375 |
| Other financial
assets at fair value through profit or loss | 716,626 | 215,942 | 318,440 | 1,251,008 |
| Available-for-sale financial assets | 25,041,075 | 12,467,515 | 85,598 | 37,594,188 |
| Hedging
derivatives (assets) | 162,132 | 664 | - | 162,796 |
| Financial
liabilities held for trading | 2,962,429 | 2,457,670 | - | 5,420,099 |
| Hedging
derivatives (liabilities) | 420,747 | 27,605 | - | 448,352 |
| | | | | 12/31/2012 |
| Thousands of
Reais | Level 1 | Level 2 | Level 3 | Total |
| Financial assets
held for trading | 29,693,009 | 1,939,296 | 5,963 | 31,638,268 |
| Other financial
assets at fair value through profit or loss | 724,552 | 124,186 | 379,580 | 1,228,318 |
| Available-for-sale financial assets | 33,148,387 | 10,874,055 | 126,178 | 44,148,620 |
| Hedging derivatives
(assets) | 80,257 | 75,907 | - | 156,164 |
| Financial liabilities held for
trading | 3,178,163 | 2,169,437 | 4,136 | 5,351,736 |
| Hedging derivatives
(liabilities) | 158,899 | 122,646 | - | 281,545 |

The following table shows the changes that occurred during the period of December 31, 2012 and the third quarter of 2013 for level 3:

	Fair Value on	Transfers for	Additions/	Fair value on
In thousand of
reais	12/31/2012	Level 3	Charge-offs	9/30/2013
Financial assets held for
trading	5,963	-	(5,963)	-
Other financial assets at fair
value through profit or loss	379,580	-	(61,140)	318,440
Available-for-sale financial
assets	126,178	-	(40,580)	85,598
Financial liabilities held for
trading	4,136	-	(4,136)	-

Recognition of fair value changes

As a general rule, changes in the carrying amount of financial assets and liabilities are recognized in the consolidated income statement, distinguishing between those arising from the accrual of interest and similar items -which are recognized under “Interest and similar income” or “Interest expense and similar charges”, as appropriate- and those arising for other reasons, which are recognized at their net amount under “Gains (losses) on financial assets and liabilities (net)”.

Adjustments due to changes in fair value arising from Available-for-sale financial assets are recognized temporarily in stockholders equity under “Other Comprehensive Income”. Items charged or credited to this account remain in the Bank’s consolidated stockholders equity until the related assets are derecognized, whereupon they are charged to the consolidated income statement.

Hedging transactions

The consolidated entities use financial derivatives for the following purposes: i) to facilitate these instruments to customers who request them in the management of their market and credit risks; ii) to use these derivatives in the management of the risks of the Bank entities' own positions and assets and liabilities (“hedging derivatives”); and iii) to obtain gains from changes in the prices of these derivatives (“financial derivatives”).

Financial derivatives that do not qualify for hedge accounting are treated for accounting purposes as trading derivatives.

A derivative qualifies for hedge accounting if all the following conditions are met:

The derivative hedges one of the following three types of exposure:

a. Changes in the fair value of assets and liabilities due to fluctuations, among others, in the interest rate and/or exchange rate to which the position or balance to be hedged is subject (“fair value hedge”);

b. Changes in the estimated cash flows arising from financial assets and liabilities, commitments and highly probable forecast transactions (“cash flow hedge”);

c. The net investment in a foreign operation (“hedge of a net investment in a foreign operation”).

It is effective in offsetting exposure inherent in the hedged item or position throughout the expected term of the hedge, which means that:

a. At the date of arrangement the hedge is expected, under normal conditions, to be highly effective (“prospective effectiveness”).

b. There is sufficient evidence that the hedge was actually effective during the whole life of the hedged item or position (“retrospective effectiveness”).

There must be adequate documentation evidencing the specific designation of the financial derivative to hedge certain balances or transactions and how this effective hedge was expected to be achieved and measured, provided that this is consistent with the Bank’s management of own risks.

The changes in value of financial instruments qualifying for hedge accounting are recognized as follows:

a. In fair value hedges, the gains or losses arising on both the hedging instruments and the hedged items (attributable to the type of risk being hedged) are recognized directly in the consolidated income statement.

b. In cash flow hedges, the effective portion of the change in value of the hedging instrument is recognized temporarily in stockholders equity under “Other comprehensive Income - Cash flow hedges” until the forecast transactions occur, when it is recognized in the consolidated income statement, unless, if the forecast transactions result in the recognition of non-financial assets or liabilities, it is included in the cost of the non-financial asset or liability. The ineffective portion of the change in value of hedging derivatives is recognized directly in the consolidated income statement.

c. The ineffective portion of the gains and losses on the hedging instruments of cash flow hedges and hedges of a net investment in a foreign operation are recognized directly under “Gains (losses) on financial assets and liabilities (net)” in the consolidated income statement.

If a derivative designated as a hedge instrument no longer meets the requirements described above due to expiration, ineffectiveness or for any other reason, the derivative is classified as a trading derivative.

When fair value hedge accounting is discontinued, the adjustments previously recognized on the hedged item are transferred to profit or loss at the effective interest rate re-calculated at the date of hedge discontinuation. The adjustments must be fully amortized at maturity.

When cash flow hedges are discontinued, any cumulative gain or loss on the hedging instrument recognized in stockholders equity under "Other comprehensive Income” (from the period when the hedge was effective) remains recognized in stockholders equity until the forecast transaction occurs at which time it is recognized in profit or loss, unless the transaction is no longer expected to occur, in which case any cumulative gain or loss is recognized immediately in profit or loss.

2. Basis of consolidation

Appendix I include relevant information on the Bank companies that were consolidated. Similar information regarding companies accounted for under the equity method by the Bank is provided on Note 6.

3. Change in the scope of consolidation

a) Establishment of foreign subsidiary

Banco Santander has an independent subsidiary in Spain, Santander Brasil Establecimiento Financieiro de Credito, S.A. (Santander EFC), in order to complement the foreign trade strategy for corporate clients - large Brazilian companies and their operations abroad - and offer financial products and services through an offshore entity that is not established in a jurisdiction with favorable tax treatment.

The approval process of the establishment of foreign subsidiary before the regulatory bodies (Bacen, Spanish Ministerio de Economia y Hacienda and by Banco de España) was completed on March, 28, 2012. The pay up of share capital of the subsidiary, was carried out, amounting €748 million.

4. Financial assets

a) Breakdown by Category

The breakdown by nature and category for measurement purposes, of the Bank’s financial assets, except for the balances relating to “Cash and Balances with the Brazilian Central Bank” and “Hedging Derivatives”, at September 30, 2013 and December 31, 2012 is as follows:

| | 9/30/2013 — Trading Financial Assets | Other Financial Assets at Fair Value through
Profit or Loss | Available-for-Sale Financial
Assets | Loans and Receivables | Total |
| --- | --- | --- | --- | --- | --- |
| Loans and amounts due from credit institutions | - | 363 | - | 33,083,229 | 33,083,592 |
| Of
which: | | | | | |
| Loans and amounts due from credit institutions,
gross | - | 363 | - | 33,158,431 | 33,158,794 |
| Impairment
losses (note 4-b.2) | - | - | - | (75,202) | (75,202) |
| Loans and advances to customers | - | - | - | 207,003,593 | 207,003,593 |
| Of
which: | | | | | |
| Loans and advances to customers, gross (1) (2) | - | - | - | 221,059,094 | 221,059,094 |
| Impairment
losses (note 4-b.2) | - | - | - | (14,055,501) | (14,055,501) |
| Debt
instruments | 25,860,816 | 115,429 | 36,076,932 | 254,165 | 62,307,342 |
| Equity
instruments | 402,461 | 1,135,216 | 1,517,256 | - | 3,054,933 |
| Trading
derivatives | 6,131,098 | - | - | - | 6,131,098 |
| Total | 32,394,375 | 1,251,008 | 37,594,188 | 240,340,987 | 311,580,558 |
| | 12/31/2012 | | | | |
| | Trading Financial Assets | Other Financial Assets at Fair Value through
Profit or Loss | Available-for-Sale Financial
Assets | Loans and Receivables | Total |
| Loans and amounts due from credit institutions | - | 5,065 | - | 29,913,132 | 29,918,197 |
| Of
which: | | | | | |
| Loans and amounts due from credit institutions,
gross | - | 5,065 | - | 29,988,339 | 29,993,404 |
| Impairment
losses (note 4-b.2) | - | - | - | (75,207) | (75,207) |
| Loans and advances to customers | - | - | - | 196,774,297 | 196,774,297 |
| Of
which: | | | | | |
| Loans and advances to customers, gross (1) | - | - | - | 210,740,669 | 210,740,669 |
| Impairment
losses (note 4-b.2) | - | - | - | (13,966,372) | (13,966,372) |
| Debt
instruments | 26,646,708 | 124,187 | 43,044,570 | 269,612 | 70,085,077 |
| Equity
instruments | 428,589 | 1,099,066 | 1,104,050 | - | 2,631,705 |
| Trading
derivatives | 4,562,971 | - | - | - | 4,562,971 |
| Total | 31,638,268 | 1,228,318 | 44,148,620 | 226,957,041 | 303,972,247 |

$$/page=

(1) In the second quarter of 2012 we acquired, through our wholly-owned subsidiary in Spain, from Banco Santander S.A. (our controlling shareholder, Santander Spain) - New York Branch and London Branch, under commutative conditions, a portfolio of financing contracts to export and import, related to operations contracted with Brazilian clients or their affiliates abroad, totaling US$29 million and US$90 million equivalent toR$60 million and R$121 million (using the exchange rate of the days when there were operations). These transactions were carried out in compliance with our policy on related parties transactions, including after receipt of approval by our board of directors.

(2) In September 30, 2013, the amount recorded on “Loans and advances to customers” related to loan portfolio assigned is R$415,789 (12/31/2012 –R$508,714), and R$403,323 (12/31/2012 – R$495,657) of “Other financial liabilities - Financial Liabilities Associated with Assets Transfer”.

b) Valuation adjustments for impairment of financial assets

b.1) Available-for-sale financial assets

As indicated in Note 2 of the consolidated financial statements of the Bank for the year ended December 31, 2012, changes in the carrying amounts of financial assets and liabilities are recognized in the consolidated income statement. Except in the case of available-for-sale financial assets, whose changes in value are recognized temporarily in consolidated stockholders' equity under “Other Comprehensive Income”.

Charge or credit the “Other Comprehensive Income” as a result of the fair value measurement, remain in the Bank's consolidated stockholders' equity until the related assets are derecognized, whereupon they are accounted to the consolidated income statement. As part of the process of fair value measurement, when there is objective evidence that the financial instruments are impaired, the amounts are no longer recognized in equity under “Other Comprehensive Income” and are reclassified, for the cumulative amount at that date, to the consolidated income statement.

As at September 30, 2013 the Bank analyzed the changes in fair value of the various assets comprising this portfolio and concluded that, at that date, there were no significant differences whose origin could be considered to arise from permanent impairment. Accordingly, the total of the changes in the fair value of these assets are presented under “Other Comprehensive Income”. The changes in the balance of valuation adjustments in the interim period are recognized in the Consolidated Statements of Comprehensive Income.

b.2) Loans and receivables

The changes in the balance of the allowances for impairment losses on the assets included under “Loans and Receivables” in the nine-months periods ended September 30, 2013 and 2012 were as follows:

	9/30/2013	9/30/2012
Balance at
beginning of the period	14,041,579	11,179,836
Impairment losses
charged to income for the period – Loans and receivables	11,224,146	12,747,440
Derecognized of
impaired balances against recorded impairment allowance	(11,135,022)	(10,279,734)
Balance at end
of the period	14,130,703	13,647,542
Recoveries of loans previously
charged off	282,055	1,072,510

Considering these amounts recognized in “Impairment losses charged to income” and the "Recoveries of loans previously charged off", the "Impairment losses on financial assets - Loans and receivables” amounted to R$10,942,091 and R$11,674,930 in the nine-months periods ended September 30, 2013 and 2012, respectively.

c) Impaired assets

Detail of the changes in the balance of the financial assets classified as loans and receivables considered to be impaired due to credit risk in the nine-months periods ended September 30, 2013 and 2012 is as follows:

	9/30/2013	9/30/2012
Balance at
beginning of the period	16,057,135	13,072,693
Net
additions	10,455,231	13,189,234
Derecognized assets	(11,135,022)	(10,279,734)
Balance at end of the
period	15,377,344	15,982,193

5. Non-current assets held for sale

At September 30, 2013 and December 31, 2012, the total amount of non-current assets held for sale includes foreclosed assets and other tangible assets.

6. Investments in associates and Joint Ventures

a) Breakdown

Jointly Controlled by the Banco Santander	Participation % — 9/30/2013	12/31/2012	Investments — 9/30/2013	12/31/2012
Companhia de Crédito, Financiamento e Investimento
RCI Brasil (1)	39.89%	39.89%	470,983	413,047
Norchem Participações e Consultoria S.A. (2)	50.00%	50.00%	23,861	23,369
Cibrasec - Companhia Brasileira de Securitização (2) (3)	13.64%	13.64%	10,302	10,285
Estruturadora Brasileira de Projetos S.A. - EBP (2) (3)	11.11%	11.11%	7,358	2,726
Jointly
Controlled by Santander S.A. Serviços Técnicos, Administrativos e de
Corretagem de Seguros (Santander Serviços)
Webmotors S.A. (5)	70.00%	100.00%	313,817	-
Tecnologia Bancária S.A. - TECBAN (4)	20.82%	-	114,027	-
Significant Influence of Banco Santander
Norchem Holding e Negócios S.A. (2)	21.75%	21.75%	26,758	22,666
BW Guirapá I S.A. (6)	40.57%	-	50,491	-
Total			1,017,597	472,093

| Jointly Controlled by the Banco Santander | Results
of Investments — 7/01 to
9/30/2013 | 7/01 to
9/30/2012 | 1/01 to
9/30/2013 | 1/01 to
9/30/2012 |
| --- | --- | --- | --- | --- |
| Companhia de Crédito, Financiamento e Investimento
RCI Brasil (1) | 29,319 | 21,608 | 69,631 | 43,454 |
| Companhia de Arrendamento Mercantil RCI Brasil (1) | - | - | - | 9,274 |
| Norchem Participações e Consultoria S.A. (2) | 309 | 428 | 833 | 1,276 |
| Cibrasec - Companhia Brasileira de Securitização (2) (3) | 223 | 57 | 537 | 745 |
| Estruturadora Brasileira de Projetos S.A. - EBP (2) (3) | (54) | 165 | 1,803 | 3,032 |
| Jointly Controlled by Santander Serviços | | | | |
| Webmotors S.A. (5) | 3,541 | - | 3,443 | - |
| Tecnologia Bancária S.A. - TECBAN (4) | 4,160 | - | 5,755 | - |
| Significant Influence of Banco Santander | | | | |
| Norchem Holding e Negócios S.A. (2) | 30 | 363 | 5,614 | 1,094 |
| BW Guirapá I S.A. (6) | (3,421) | - | (3,509) | - |
| Total | 34,107 | 22,621 | 84,107 | 58,875 |
| (1) At the Extraordinary
General Meeting held on May 31, 2012 of Companhia de Arrendamento
Mercantil RCI Brasil (Leasing RCI Brasil) and Companhia de Crédito,
Financiamento e Investimento RCI Brasil (Financeira RCI Brasil), their
respective stockholders approved the proposed merger of shares of Leasing
RCI Brasil to the equity of Financeira RCI Brasil on the base date of
March 31, 2012 becoming the Leasing RCI Brasil an indirect participation
of the Bank. (2) Companies delayed by one month for the calculation of
equity. (3) Although the participations was less than 20%, the Bank
exercises control over the entity together with other major stockholders'
through a stockholders' agreement where no business decision can be taken
by a single shareholder. (4) Acquisition by Santander Serviços shares
of the company Tecban held by Santusa as sale and purchase agreement
entered into between the parties on January 21, 2013. The acquisition,
corresponding to 20.82% of the share capital of Tecban, is subject to
authorization by the Bacen pursuant to Resolution 4.062/2012, and
effective on March 27, 2013. (5) Was celebrated on June 21, 2013 an
agreement with the objective of Carsales.com Limited (Carsales)
participation in Webmotors’ capital (Transaction), a company indirectly
controlled by Banco Santander, for R$180 million. The Transaction will be
implemented through the acquisition by the Carsales of new shares of
Webmotors’ capital, representing 30% of all capital. Although the
participation exceeds 50%, in accordance with the stockholders' agreement,
Banco Santander and Carsales now joint control. This transaction generated
a gain in Santander Serviços amounting R$119,961 related to the change in
the percentage shareholding in Webmotors S.A. due to the entry of Carsales
in its capital and R$169,775, related to the recognition of the fair value
of the indirect remaining in Banco Santander of Webmotors’ capital of
42.5% (60.65% for the Bank's investment in the Santander Serviços’ capital
under 70.00% of investment to Santander Serviços for Webmotors S.A.),
under IFRS 10 - Consolidated Financial Statements, these amounts were
recorded in “Gains (losses) on non-current assets held for sale not
classified as discontinued operations”. (6) Equity interest acquired in
May 2013. ()Associates companies and joint ventures do not have their
shares listed on the Stock Exchange. () The Bank does not have
collateral with associates and joint ventures. (**) The Bank does not
have contingent liabilities with significant risk of possible losses
related to investments in affiliates. | | | | |

$$/page=

b) Changes

The changes in the balance of this item in the nine-months periods ended September 30, 2013 and 2012 were as follows:

	9/30/2013	9/30/2012
Balance at
beginning of period	472,093	422,225
Capital
increases	6,830	-
Addition	468,547	-
Income from
companies accounted for by the equity method	84,107	58,875
Dividends
proposed/received	(14,058)	(21,873)
Others	78	40
Balance at end of
period	1,017,597	459,267

c) Impairment losses

No impairment was accounted with respect to investments in associates and joint ventures in the period ended on September 30, 2013 and December 31, 2012.

7. Tangible assets

a) Changes

In the nine-months periods ended September 30, 2013 and 2012 tangible asset items were acquired for R$1,019,818 and R$883,340, respectively. Also, in the nine-months periods ended September 30, 2013 and 2012 tangible asset items were disposed, and the carrying amounts was R$11,239 and R$7,433, respectively, giving rise to net gains on disposal of R$122,991 (1) and R$2,316, respectively.

(1) In 2013, Includes R$ 121,391 related to the income on sale of real estate to the Fundo Imobiliário Santander Agências, recorded on consolidated income statement “Gains (losses) on disposal of assets not classified as non-current assets held for sale”. This fund has administration and management of third parties.

b) Impairment losses

There were no significant impairment losses on tangible assets in the period ended September 30, 2013 and 2012.

c) Tangible asset purchase commitments

On September 30, 2013 the Bank has contractual commitments for the purchase of tangible assets in the amount of R$1,421.

8. Intangible assets

a) Goodwill

The goodwill recorded is subject to impairment test at least annually or in a short period, whenever there are indications of impairment and was allocated according to the operating segments (note 14).

Is used value in use as the base to evaluate goodwill with the impairment test. For this purpose, we estimate cash flow for a period of 10 years. A 10 year period is considered adequate to determine the economic value of a cash-generating unit, assuming continuity in levels of operating activity. We prepare cash flows considering several factors, including: (i) macro-economic projections, such as interest rates, inflation and exchange rates, among others, (ii) the performance and growth estimates of the Brazilian financial system, (iii) increased costs, returns, synergies and investment plans, (iv) the behavior of customers, and (v) the growth rate and long-term adjustments to cash flows. These estimates rely on assumptions regarding the likelihood of future events, and changing certain factors could result in differing outcomes. The estimate of cash flows is based on valuations prepared by independent research company, which is reviewed and approved by the Executive Board.

The impairment test of goodwill was conducted as at December 31, 2012, and for the current period was not identified any evidence of impairment.

	9/30/2013	12/31/2012
Breakdown/Operating
segments:
Banco ABN Amro Real S.A. (Banco
Real)/ Commercial Banking	27,217,565	27,217,565
Total	27,217,565	27,217,565

b) Other intangible assets

The details by asset category of the "other intangible assets" of the consolidated balance sheets are as follow:

| With finite
lives: | Estimated — Useful
Life | 9/30/2013 | 12/31/2012 |
| --- | --- | --- | --- |
| IT
developments | 5 years | 3,701,627 | 3,423,036 |
| Other
assets | Up 5 years | 216,199 | 214,747 |
| Amortization | | (1,964,270) | (1,584,302) |
| Impairment losses (1) | | (32,031) | (335) |
| Total | | 1,921,525 | 2,053,146 |

$$/page=

(1) In 2013, includes impairment loss of assets in the acquisition and development of software in the amount of R$31,929. This loss was recorded due to obsolescence and discontinuity of these systems and this accounted for under “Impairment losses on other assets (net) - Other Intangible Assets.”

9. Financial liabilities

a) Breakdown by category

The breakdown by nature and category for purposes of measurement, of the Bank’s financial liabilities, other than “Hedging Derivatives”, as at September 30, 2013 and December 31, 2012 is as follows:

| | Financial Liabilities Held for
Trading | Financial Liabilities at Amortized
Cost | Total |
| --- | --- | --- | --- |
| Deposits from Brazilian Central Bank and deposits
from credit institutions | - | 35,848,364 | 35,848,364 |
| Customer deposits | - | 199,887,523 | 199,887,523 |
| Marketable debt securities | - | 60,798,321 | 60,798,321 |
| Trading derivatives | 5,148,520 | - | 5,148,520 |
| Subordinated liabilities | - | 8,690,493 | 8,690,493 |
| Short positions | 271,579 | - | 271,579 |
| Other financial liabilities | - | 18,907,886 | 18,907,886 |
| Total | 5,420,099 | 324,132,587 | 329,552,686 |
| 12/31/2012 | | | |
| | Financial Liabilities Held for
Trading | Financial Liabilities at Amortized
Cost | Total |
| Deposits from Brazilian Central Bank and deposits from credit
institutions | - | 35,073,626 | 35,073,626 |
| Customer
deposits | - | 188,594,930 | 188,594,930 |
| Marketable
debt securities | - | 54,012,018 | 54,012,018 |
| Trading
derivatives | 5,111,553 | - | 5,111,553 |
| Subordinated
liabilities | - | 11,919,151 | 11,919,151 |
| Short
positions | 240,183 | - | 240,183 |
| Other
financial liabilities | - | 17,376,481 | 17,376,481 |
| Total | 5,351,736 | 306,976,206 | 312,327,942 |

b) Composition and details

b.1) Deposits from the Brazilian Central Bank and Deposits from credit institutions

	9/30/2013	12/31/2012
Demand deposits (1)	301,909	47,763
Time deposits (2)	28,663,445	26,077,164
Repurchase agreements	6,883,010	8,948,699
Total	35,848,364	35,073,626

(1) Non-interest bearing accounts. (2) It includes the operation with credit institution arising from export and import financing lines, BNDES and Finame on-lendings, locally and abroad, and other foreign credit.

b.2) Customer deposits

	9/30/2013	12/31/2012
Demand
deposits
Current accounts (1)	14,323,880	13,585,488
Savings
accounts	31,259,234	26,856,910
Time
deposits	83,327,115	84,586,047
Repurchase
agreements	70,977,294	63,566,485
Total	199,887,523	188,594,930
(1)
Non-interest bearing accounts.

b.3) Marketable debt securities

	9/30/2013	12/31/2012
Real estate
credit notes - LCI (1)	14,541,586	11,236,843
Bonds and other
securities	15,602,340	13,049,920
Treasury Bills (2)	26,839,421	25,320,186
Securitization
notes (MT100) (3)	2,126,749	2,236,089
Debentures (4)	200,267	160,508
Agribusiness
credit notes - LCA (5)	1,487,958	2,008,472
Total	60,798,321	54,012,018
(1) LCI´s are fixed income
securities underlied to mortgage loans and collateralized by mortgage or
chatell mortgage on property. On September 30, 2013, there are maturities
between 2013 and 2020. (2) The main features of the financial letters are the
minimum period of two years, minimum notional of R$300 and permission for
early redemption of only 5%of the issued amount. On September 30, 2013,
have a maturity between 2013 to 2018. (3)
Issuance of bonds tied to the right to receive of future flow of payment
orders receivable from foreign correspondent banks. (4) Debentures issued by the subsidiary MS Participações
in three series (November 2011 – R$82,122, March 2012 – R$47,592 and May
2012 – R$33,732) with remuneration indexed to CDI + 1.77% p.a., maturing
on December 21, 2013 and Debentures issued by the Santos Energia
Participações S.A. in April 2013, with remuneration indexed to CDI + 1.60%
pa, maturing on April 12, 2014. . (5)
Agribusiness credit notes are fixed income securities which resources are
allocated to the promotion of agribusiness, indexed at 85.0% to 100.0% of
CDI and September 30, 2013, have maturities between 2013 to
2014.

The changes in the balance of Marketable debt instruments in the nine-months periods ended September 30, 2013 and 2012 were as follows:

	9/30/2013	12/31/2012
Balance at
beginning of the period	54,012,018	38,590,423
Issues	34,628,036	22,987,898
Payments	(32,204,160)	(15,949,071)
Interest	3,096,543	2,815,833
Exchange differences and
Others	1,265,884	938,787
Balance at end
of the period	60,798,321	49,383,870

The Composition of "Eurobonds and other securities" is as follows:

| | Issuance | Maturity | Currency | Interest — Rate
(p.a.) | 9/30/2013 — Total | 12/31/2012 — Total |
| --- | --- | --- | --- | --- | --- | --- |
| Eurobonds | mar -
11 | mar -
14 | US$ | Libor +
2,1% | 2,677,987 | 2,452,473 |
| Eurobonds | apr and
nov - 10 | apr -
15 | US$ | 4.5% | 1,906,282 | 1,740,005 |
| Eurobonds | jan and
jun - 11 | jan -
16 | US$ | 4.3% | 1,886,846 | 1,741,878 |
| Eurobonds | feb and
sep - 12 | feb -
17 | US$ | 4.6% | 3,022,026 | 2,806,547 |
| Eurobonds (2) | mar and
may - 13 | mar -
16 | R$ | 8.0% | 1,259,152 | - |
| Eurobonds | jun -
11 | dec -
14 | CHF | 3.1% | 379,480 | 335,749 |
| Eurobonds (2) | apr -
12 | apr -
16 | CHF | 3.3% | 376,084 | 343,275 |
| Eurobonds (2) | mar -
13 | apr -
18 | US$ | 4,5% a 8,4% (1) | 764,404 | - |
| Eurobonds (2) | jun -
13 | jun -
15 | CHF | 1.1% | 310,502 | - |
| Eurobonds | nov -
05 | nov -
13 | R$ | 17.7% | 185,053 | 333,182 |
| Others | | | | | 2,834,524 | 3,296,811 |
| Total | | | | | 15,602,340 | 13,049,920 |
| (1) The
operation has flow compound interest: up to 4/17/2013 = 4.5% p.a. in the
period 4/18/2013 to 10/17/2017 = 8.4% p.a. and 10/18/2017 to 04/17/2018 =
7.0% p.a. (2) Includes R$2,340,854 (12/31/2012 – R$820,077) in cash
flow hedge operations, R$1,259,152 indexed in Reais, R$928,402 indexed on
foreign currency -Swiss Franc (12/31/2012 – R$679,025), R$98,036 in
Chilean Peso (12/31/2012 – R$91,767) and R$55,265 in Iuan (12/31/2012 - R$
49,285) and R$310,502 for market risk hedge operations indexed to foreign
currency - Swiss Franc. | | | | | | |

On September 30, 2013 no issues were convertible into Bank shares, nor had any privileges or rights been granted that may, in certain circumstances, make them convertible into shares.

The Composition of "Securitization notes - MT100" is as follows:

| | Issuance | Maturity | Currency | Interest
rate (p.a.) | 9/30/2013 | 12/31/2012 |
| --- | --- | --- | --- | --- | --- | --- |
| 2008-1 Series (1) | may - 08 | mar - 15 | US$ | 6.2% | 141,189 | 212,565 |
| 2008-2 Series (2) | aug - 08 | sep - 17 | US$ | Libor (6 months)
+0.8% | 892,290 | 820,758 |
| 2009-1 Series | aug - 09 | sep - 14 | US$ | Libor (6 months) +
2.1% | 38,396 | 69,730 |
| 2009-2 Series | aug - 09 | sep - 19 | US$ | 6.3% | 98,527 | 103,967 |
| 2010-1 Series | dec - 10 | mar - 16 | US$ | Libor (6 months) +
1.5% | 398,421 | 513,993 |
| 2011-1 Series (3) | may - 11 | mar - 18 | US$ | 4.2% | 223,261 | 206,758 |
| 2011-2 Series (4) | may - 11 | mar - 16 | US$ | Libor (6 months) +
1.4% | 334,665 | 308,318 |
| Total | | | | | 2,126,749 | 2,236,089 |
| (1) Charges payable
semiannually. (2) Principal is payable in 6 semiannual installments
from March 2015 (the period of this series was extended by three years in
August 2011). (3) Notional will be paid in 9 semiannual installments
from March 2014. (4)Notional will be paid in 5 semiannual installments
from March 2014. | | | | | | |

b.4) Subordinated liabilities

The Composition of "Subordinated Deposit Certificates" is as follows:

					9/30/2013	12/31/2012
			Issuance	Interest
Rate
	Issuance	Maturity (1)	Value	(p.a.)	Total	Total
Subordinated
Deposit Certificates	jun - 06	jul - 16	R$1.500 million	105.0% CDI	3,228,626	3,048,617
Subordinated
Deposit Certificates	Oct - 06	sep - 16	R$850 million	104.5% CDI	1,746,222	1,649,313
Subordinated
Deposit Certificates	jul - 07	jul - 14	R$885 million	104.5% CDI	1,644,818	1,553,537
				100.0% CDI
+
Subordinated
Deposit Certificates	apr - 08	apr - 13	R$600 million	1.3%	-	1,010,620
				100.0% CDI
+
Subordinated
Deposit Certificates	apr - 08	apr - 13	R$555 million	1.0%	-	929,321
	jul - 06 to
Oct -
Subordinated
Deposit Certificates	06	jul - 16 to jul - 18	R$447 million	104.5% CDI	947,920	895,314
Subordinated
Deposit Certificates	jan - 07	jan - 13	R$300 million	104.0% CDI	-	561,379
				100.0% CDI
+
Subordinated
Deposit Certificates	aug - 07	aug - 13	R$300 million	0.4%	-	524,743
Subordinated
Deposit Certificates	jan - 07	jan - 14	R$250 million	104.5% CDI	496,670	469,107
	may - 08 to
jun	may - 13 to
may
Subordinated
Deposit Certificates	- 08	18	R$283 million	CDI (2)	99,080	461,792
	may - 08 to
jun	may - 13 to
jun -
Subordinated Deposit
Certificates	- 08	18	R$268 million	IPCA (3)	355,092	494,490
Subordinated Deposit
Certificates	nov - 08	nov - 14	R$100 million	120.5% CDI	172,065	161,101
Subordinated Deposit
Certificates	feb - 08	feb - 13	R$85 million	IPCA +7.9%	-	159,817
Total					8,690,493	11,919,151
(1) Subordinated Deposit
Certificates issued by Banco Santander with yield paid at the end of the
term together with the principal. (2) Indexed to 100% and
112% of the CDI. (3) Indexed to the
extended consumer price index plus interest of 8,3% p.a. to 8,4%
p.a.

Changes in the balance of "Subordinated liabilities" in nine-months period ended September 30, 2013 and 2012 were as follows:

	9/30/2013	9/30/2012
Balance at beginning of the
period	11,919,151	10,908,344
Payments	(3,823,280)	-
Interest	594,622	787,593
Balance at end of the
period	8,690,493	11,695,937

10. Provisions

a) Breakdown

The breakdown of the balance of “Provisions” is as follows:

	9/30/2013	12/31/2012
Provisions for pension funds and
similar obligations (note 11.d)	3,079,163	5,260,700
Provisions for judicial and
administrative proceedings, commitments and other provisions	6,759,797	7,514,266
Judicial and
administrative proceedings under the responsibility of former controlling
stockholders	1,015,710	991,394
Judicial and
administrative proceedings	5,330,621	5,797,782
Of which:
Civil	1,643,666	1,480,320
Labor	1,850,954	2,611,852
Tax and Social
Security	1,836,001	1,705,610
Others provisions (1)	413,466	725,090
Total	9,838,960	12,774,966

$$/page=

(1) Includes mainly provisions for taxes and other legal, civil and labor contingencies.

b) Provisions for civil, labor, tax and social security contingencies

Banco Santander and its subsidiaries are parties to judicial and administrative proceedings involving civil, labor, tax and social security matters arising in the normal course of their business.

Provisions were recognized based on the nature, complexity and history of the lawsuits, and on the opinion of the in-house and outside legal counsel. Banco Santander's policy is to accrue the full amount of the potential risk of loss whose valuation is classified as probable. The statutory tax and social security were fully recognized in the financial statements.

Management understands that the recognized provisions are sufficient to cover probable losses with respect to judicial and administrative proceedings as follows:

b.1) Tax and Social Security Proceedings

The main lawsuits related to tax legal obligations, recorded in the line "Tax Liabilities - Current", fully registered as obligation, are described below:

• PIS and Cofins - R$10,016,279 (12/31/2012 - R$8,735,925): The Bank and its subsidiaries filed lawsuits seeking to invalidate the provisions of Law 9,718/98, pursuant to which PIS and COFINS taxes must be levied on all revenues of legal entities. Prior to the enactment of such provisions, which have been overruled by recent Supreme Court decisions for nonfinancial institutions, PIS and COFINS were levied only on revenues from services and sale of goods.

• Increase in CSLL tax rate - R$1,218,213 (12/31/2012 - R$1,103,018) – The Bank and its subsidiaries filed lawsuits for an injunction to avoid the increase in the CSLL tax rate established by Executive Act 413/2008, subsequently codified into Law 11,727/2008. Financial institutions were formerly subject to a CSLL tax rate of 9%; however, new law established a 15% CSLL tax rate as from April 2008. Judicial proceedings are pending judgment.

Banco Santander and its subsidiaries are parties to judicial and administrative proceedings related to tax and social security matters, which are classified based on the opinion of legal counsel as probable loss risk.

The main topics discussed in these lawsuits are:

• CSLL - equal tax treatment - R$52,134 (12/31/2012 - R$51,271) - The Bank and its subsidiaries filed a lawsuit challenging the application of an increased CSLL rate of 18% for financial companies, applicable until 1998, compared to the CSLL rate of 8% for non-financial companies on the basis of the constitutional principle of equal tax treatment.

• Tax on Services for Financial Institutions (ISS) - R$514,251 (12/31/2012 - R$445.497): The Bank and its subsidiaries filed lawsuits, in administrative and judicial proceedings, some municipalities collection of ISS on certain revenues derived from transactions not usually classified as the rendering of services.

• Social Security Contribution (INSS) - R$382,914 (12/31/2012 - R$349,855): The Bank and its subsidiaries are involved in administrative and judicial proceedings regarding the collection of income tax on social security and education allowance contributions over several funds that, according to the evaluation of legal advisors, have no nature of salary.

b.2) Labor judicial and administrative proceedings

These are lawsuits brought by labor Unions, Associations, Public Prosecutors and former employees claiming labor rights they understand are due, especially payment for overtime and other labor rights, including retirement benefit lawsuits.

For claims considered to be similar and usual for the business, provisions are recognized based on the history of payments made. Claims that do not fit into the previous criterion are assessed individually, based on the status of each lawsuit, law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and the risk assessment made by the legal counsel, and the provisions are recognized based on such assessment of losses by the legal counsel.

b.3) Civil judicial and administrative proceedings

These contingencies are generally caused by: (1) lawsuits with a request for revision of contractual terms and conditions or requests for monetary adjustments, including alleged effects of implementing various economic plans of the government, (2) actions arising from loan agreements, (3) enforcement actions, and (4) actions for compensation for damages. For civil lawsuits considered common and similar in nature, the provisions are recorded based on previous payments statistical average, and evaluating successful second legal evaluation. Lawsuits for other processes are determined individually according to the analysis applicable to the circumstances of each case.

The main lawsuits classified as probable loss are described below:

Lawsuits for indemnity - seek indemnity for property damage and/or moral, relating to the consumer relationship on matters related to credit cards, consumer credit, bank accounts, collection and loans and other operations. In the civil lawsuits considered to be similar and usual for the business, provisions are recognized based on the history of payments made. Civil lawsuits that do not fit into the previous criterion are accrued according to the individual assessment made, and provisions are recognized based on the status of each lawsuit, law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and the risk assessment made by the legal counsel.

Economic Plans - efforts to recover collective assessment, the deficient inflation adjustments in savings accounts arising from the Economic Plans (Bresser, Verão, Collor I and II). These refer to the lawsuits filed by savings accountholders disputing the interest credited by the Banco Santander under such plans as they considered that such legal amendments infringed on the rights acquired with regard to the application of the inflation indexes. Provisions are set aside for such lawsuits based on the average payments made historically. Civil lawsuits that do not fit into the previous criterion are accrued according to the individual assessment made, and provisions are recognized based on the status of each lawsuit, law and previous court decisions according to the assessment of the likelihood of a favorable outcome, and classification of the legal counsel. The Banco Santander is also a party in public class action suits on the same issue filed by consumer rights organizations, Public Prosecutor’s Offices and Public Defender’s Offices. In these cases, the provision is made only after the final unappealable decision is handed down on the lawsuits, based on the individual execution orders. The Superior Court of Justice (STJ) decided against the bank’s. The Supreme Court is still analyzing the subject and has already ordered the suspension of all the procedures except those that were not already decided in trial courts and those who have a final decision. There are decisions favorable to banks at the Supreme Court with regard to the economic phenomenon similar to that of savings accounts, as in the case of monetary restatement of time deposits (Bank Deposit Certificates - CDB) and agreements (present value table). Moreover, there are precedents at the Supreme Court regarding the constitutionality of the norms that changed Brazil’s monetary standard. In April 14, 2010, in the STJ was recently decided that the deadline for the filing of civil lawsuits that argue the government's purge of five years but this decision not handed down on the lawsuits yet. Thus, with this decision, a majority stake, as was proposed after the period of 5 years are likely to be rejected, reducing the values involved. Still, in October 2011 the Supreme Court decided that the deadline for individual savers to qualify in the public civil litigations, also is five years, counted from the final judgment of their sentence, that not handed down on the lawsuits yet. Banco Santander believes in the success of the arguments defended in these courts based on their content and the sound legal basis.

b.4) Civil, labor, tax and social security contingencies classified as possible loss risk

Refer to judicial and administrative proceedings involving civil, labor, tax and social security matters assessed by the legal counsels as possible loss risk, which were not accrued as a provision.

Tax lawsuits classified as possible loss risk, totaled R$10.5 billion, including the following main lawsuits:

• Provisional Contribution on Financial Transactions (CPMF) on Customer Operations - In May 2003, the Federal Revenue Service of Brazil issued a tax assessment against Santander Distribuidora de Títulos e Valores Mobiliários Ltda. (“Santander DTVM”) and another tax assessment against the former Banco Santander Brasil S.A. The tax assessments refer to the collection of “CPMF” tax on transactions conducted by Santander DTVM in the management of its customers’ funds and clearance services provided by Banco Santander to Santander DTVM in 2000, 2001 and the first two months of 2002. Based on the evaluation of legal counsel, the tax treatment was adequate. Santander DTVM succeeded in the second instance in its proceeding before the Board of Tax Appeals (Conselho Administrativo de Recursos Fiscais – CARF). However this decision was reversed and a new appeal was introduced, which is subject to assessment. The Banco Santander Brasil S.A. was found liable for the tax assessment. Both decisions were appealed by the respective losing parties and the proceedings are pending final judgment of the respective appeals in a non-appealable proceeding before CARF. As of September 30, 2013 amounts related to these claims are approximately R$598 million each.

• IRPJ and CSLL on Reimbursement Arising from Contractual Guarantees - The Federal Revenue Service of Brazil issued infraction notices against Banco Santander with respect to the collection of IRPJ and CSLL taxes for tax years 2002 to 2006 on amounts reimbursed by the previous controlling shareholder of successful banking institutions by Banco Santander as reimbursement obligations for payments made by the Bank and its controlled entities with liabilities arising from the activities carried out by these institutions when the previous controlling shareholder still maintained control of such group. The Federal Revenue Service deemed the amounts to be “taxable income” rather than reimbursements. In November 2011, the CARF dismissed the administrative proceeding in respect to the base period of 2002, fully canceling the record of infraction and was terminated in February 2012 during the term of the appeal. Proceedings related to tax years 2003 to 2006 are ongoing and as of September 30, 2013 amounts related to this period are approximately R$140 million.

• Credit Losses - The Bank and its subsidiaries challenged the tax assessments issued by the Federal Revenue Services of Brazil claiming improper deduction of losses on loans on Income Tax of Legal Entities (IRPJ) and CSLL bases for allegedly failing to meet the relevant requirements under applicable law. As of September 30, 2013 the amount related to this challenge is approximately R$583 million.

• CSLL - equal tax treatment - Lawsuit regarding the difference from social contribution tax rate applied to financial institutions and equivalent entities in the first half of 1996, as such tax rate was higher than the rates applied to other legal entities, which is contrary to the precedence and non-retroactivity constitutional principle. On July 2012 the lawsuit was a final favorable decision.

• INSS on Profit Sharing Payments (“PLR”) – The Bank and the subsidiaries are involved in several administrative and legal proceedings against the tax authorities in connection with the taxation for social security purposes of certain items which are not considered to be employee remuneration. As of September 30, 2013 amounts related to these proceedings totaled approximately R$1,041 million.

• IRPJ and CSLL - Capital Gain - The Brazilian Federal Revenue Service issued a tax assessment against Zurich Santander Brasil Seguros e Previdência S.A. (legal successor of ABN AMRO Brasil Dois Participações S.A. (AAB Dois Par)) charging income tax and social contribution related to the 2005 tax year, claiming that the capital gain on the sale of Real Seguros S.A. and Real Vida e Previdência S.A. by AAB Dois Par should be paid at a 34% tax rate instead of 15%. The assessment was appealed at the administrative level based on understanding that the tax treatment adopted in the transaction was in compliance with the current tax law and the capital gain was properly taxed. Banco Santander is responsible for any adverse outcome in this process as a former controlling shareholder of Zurich Santander Brasil Seguros e Previdência S.A. As of September 30, 2013 the amount related to this proceeding is approximately R$230 million.

The labor lawsuits classified as possible loss risk totaled R$0.1 billion, excluding the lawsuit below:

• Semiannual Bonus or Profit Sharing - a labor lawsuit relating to the payment of a semiannual bonus or, alternatively, profit sharing, to retired employees of the former Banco do Estado de São Paulo S.A. - Banespa, that had been hired by May 22, 1975, filed by Banespa’s Retirees Association. This lawsuit against the Bank was dismissed by the Superior Labor Court. The Supreme Court rejected the extraordinary appeal of the Bank by a monocratic decision maintaining the earlier condemnation. Santander brought Regimental Appeal which awaits decision by the Supreme Court. The Regimental Appeal is an internal appeal filed with the Supreme Court itself, in order to refer the monocratic decision to a group of five ministers. The amount related to this claim is not disclosed due to the current stage of the lawsuit and the possible impact such disclosure may have on the progress of the claim.

The liabilities related to civil lawsuits with possible loss risk totaled R$0.5 billion.

b.5) Judicial and administrative proceedings under the responsibility of former controlling stockholders

Refer to tax, labor and civil lawsuits in the amounts of R$1,008,891, R$3,835 and R$2,984 (12/31/2012 - R$978,083, R$10,078 and R$3,233), with responsibility of the former controlling stockholders of the banks and acquired entities. Based on the agreements signed these lawsuits have guarantees of full reimbursement by the former controlling stockholders, and amounts reimbursable were recorded under other assets.

11. Stockholders Equity

a) Capital

The capital, fully subscribed and paid, is divided into registered shares in dematerialized form, no par value.

	Thousand shares
	9/30/2013			12/31/2012
	Common	Preferred	Total	Common	Preferred	Total
Brazilian
Residents	19,030,307	18,705,661	37,735,968	18,079,891	17,841,646	35,921,537
Foreign
Residents	193,811,425	167,496,724	361,308,149	194,761,841	168,360,739	363,122,580
Total	212,841,732	186,202,385	399,044,117	212,841,732	186,202,385	399,044,117
(-)
Treasury shares	(912,695)	(829,723)	(1,742,418)	(568,882)	(517,166)	(1,086,048)
Total
outstanding	211,929,037	185,372,662	397,301,699	212,272,850	185,685,219	397,958,069

b) Dividends and interest on capital

In accordance with the Bank’s bylaws, stockholders are entitled to a minimum dividend equivalent to 25% of net income for the year, adjusted according to legislation. Preferred shares are nonvoting and nonconvertible, but have the same rights and advantages granted to common shares, in addition to priority in the payment of dividends 10% higher than those paid on common shares, and in the capital reimbursement, without premium, in the event of liquidation of the Bank.

Dividend payments have been prepared and will continue to be prepared in accordance with Brazilian Corporate Law.

Before the annual stockholders' meeting, the Board of Directors may establish the amount of dividends out of earnings based on (i) balance sheets or earning reserves from the last balance sheet; or (ii) balance sheets issued in the period shorter than six months, in which case the payment of dividends shall not exceed the amount of capital reserves. These payments are fully input into the mandatory dividend.

	9/30/2013
		Reais per Thousand Shares /
Units
		Common	Preferred	Units
Interest on capital (1) (4)	300,000	0.7200	0.7921	79.2055
Interim Dividends (2) (5)	650,000	1.5603	1.7163	171.6337
Interim Dividends (3) (6)	450,000	1.0821	1.1904	119.0365
Total	1,400,000
(1) Established by the Board of Directors in March 2013, common
shares - R$0,6120, preferred shares - R$0,6732 and Units R$67,3247 net of
taxes. (2) Established
by the Board of Directors in June 2013. (3) Established
by the Board of Directors in September 2013. (4) The amount
of interest on capital will be allocated to the mandatory dividend for the
year 2013 and both were paid on August 29, 2013, without monetary
compensation. (5) The amount
of interim dividends will be allocated to the additional dividends, for
the year 2013 and were paid on August 29, 2013, without any compensation
to monetary. (6) The amount of interim dividends, R$144,473 will be imputed
to the mandatory dividend for the year of 2013 and R$305,527 will be
allocated to the additional dividends for the year 2013 and both will be
paid as of February 26, 2014, without monetary
compensation.
Interest on capital (1) (4)	400,000	0.9600	1.0560	105.6001
Interim Dividends (2) (5)	490,000	1.1763	1.2939	129.3968
Intercalary Dividends (2)
(4)	410,000	0.9842	1.0827	108.2708
Interest on capital (3) (4)	170,000	0.4081	0.4489	44.8927
Interim Dividends (6) (10)	350,000	0.8402	0.9243	92.4273
Intercalary Dividends (6)
(9)	150,000	0.3601	0.3961	39.6117
Interest on capital (8) (9)	450,000	1.0804	1.1884	118.8399
Intercalary Dividends (7)
(9)	250,000	0.6002	0.6602	66.0221
Total	2,670,000
(1) Established by the Board of Directors in March, 2012,
Common Shares - R$0.8160, Preferred Shares - R$0.8976 and Units -
R$89.7600, net of taxes. (2) Established
by the Board of Directors in June, 2012. (3) Established
by the Board of Directors in June, 2012, Common Shares - R$0.3469,
Preferred Shares - R$0.3816 and Units - R$38.1589, net of
taxes. (4) The amount of interest on capital and intercalary dividends
will be allocated entirely to the mandatory distribution of income for the
year 2012 and was paid in August 29, 2012, without any monetary
compensation. (5) The amount
of interim dividends will be allocated entirely to the supplementary
dividends for the year 2012 and was paid in August 29, 2012, without any
monetary compensation. (6) Established
by the Board of Directors in September, 2012. (7) Established
by the Board of Directors in December, 2012. (8) Established
by the Board of Directors in December, 2012, Common Shares - R$0.9183,
Preferred Shares - R$1.0101 and Units - R$101.0139, net of
taxes. (9) The amount
of the intercalary dividend and interest on capital will be fully imputed
to the mandatory dividend for the year of 2012 and were paid from February
26, 2013, without any monetary compensation. (10) The amount of interim dividends, R$348,950 will be imputed
to the mandatory dividend for the year of 2012 and R$1,050 will be
alocated to the supplementary dividend for the year 2012 and both will be
paid as of February 26, 2013, without any monetary
compensation.

c) Treasury Shares

At the meeting held on July 29, 2013 the Board of Directors approved the extension, for one more year, the buyback program certificate of deposit of shares ("Units") which will begin on August 24, 2013, ending on August 24, 2014.

The current Buyback Program aims to: (1) maximize value creations for shareholders through efficient management of capital structure; (2) facilitate the payment of management, managerial employees and other employees of the Bank and companies under its control, in line with the Resolution of the CMN 3921, of November 25, 2010, pursuant to the Plan of Long-Term Incentive and (3) facilitate the management of risk arising the services rendered, by the Bank, of market maker in Brazil of certain index funds, where the Units are included in the theoretical portfolio of reference such funds in accordance with applicable rules. Part of the Units repurchased will be used by the Bank to hedge against price fluctuation of securities that make up the benchmark, and should be bought and sold in accordance with the risk management policy of the Bank.

The Buyback Program will cover the procurement of over to 76.008.403 Units, representing 4.180.462.165 common shares and 3.800.420.150 preferred shares, or ADRs (American Depositary Receipts) by the Bank, or by its Cayman branch, equals approximately 2% of the total share capital of the Bank.

In 2013, 4,381,400 Units were acquired, 2,012,419 Units paid as Bonus and Long-Term Incentive Plan – Local and 5,600 treasury shares were sold. The balance accumulated of treasury shares on September 30, 2013, amounting to 10,973,799 Units (12/31/2012 – 8,610,418) equivalent to R$164,150 (12/31/2012 – R$134,371). The minimum, weighted average and maximum cost per Unit of the total number of treasury shares is, respectively, R$13.36, R$14.95 and R$18.52. In 2013 was acquired 3,887,755 ADRs. The balance accumulated of ADRs acquired and held in treasury amounting 5,620,655 ADRs, in the current amount of R$92,293 (12/31/2012 - R$36,191). The minimum, weighted average and maximum cost per ADR of the total number of treasury shares is, respectively, US$5.86, US$7.35 e US$10.21. The market value of these shares on September 30, 2013 was R$14.94 per Unit and US$6.90 per ADR.

Additionally, during the period of nine-months ended in September 30, 2013, treasury shares were traded, refer to the services of a market maker that resulted in a loss of R$716 (12/31/2012 - loss of R$41) recorded directly in equity in capital reserves.

d) Other comprehensive income – Defined benefit plan

The changes of R$1,378,869 between September 2013 and December 2012, was due to the increase in the discount rate applied to the update of the benefit plans and the plans' assets most significant and sponsored by Banco Santander (Banesprev II, V, Pré-75 e Cabesp).

12. Breakdown of income accounts

a) Personnel expenses

	7/01 to 9/30/2013	7/01 to 9/30/2012	1/01 to 9/30/2013	1/01 to 9/30/2012
Wages and
salaries	1,114,632	1,119,639	3,269,011	3,288,306
Social
security costs	275,469	291,355	845,478	854,662
Benefits	262,994	247,574	776,269	724,714
Defined
benefit pension plans	9,233	10,665	37,124	32,019
Contributions to defined contribution pension
funds	16,214	17,633	47,918	46,528
Share-based
payment costs	15,272	21,839	25,309	44,729
Training	32,904	35,784	81,066	90,050
Other
personnel expenses	31,387	53,159	96,306	193,995
Total	1,758,105	1,797,648	5,178,481	5,275,003
b) Other general
administrative expenses
	7/01 to 9/30/2013	7/01 to 9/30/2012 - adjusted	1/01 to 9/30/2013	1/01 to 9/30/2012 - adjusted
Property,
fixtures and supplies	319,244	286,550	937,032	865,866
Technology
and systems	282,802	257,318	800,462	796,566
Advertising	106,593	131,407	292,765	339,208
Communications	141,728	144,180	436,325	424,888
Per diems and travel expenses	40,368	45,805	123,846	122,646
Taxes other than income tax	17,140	13,187	47,917	49,874
Surveillance and cash courier services	156,077	146,037	428,779	422,994
Insurance
premiums	3,928	3,154	10,724	8,748
Specialized
and technical services	554,486	437,758	1,486,969	1,274,837
Technical
reports	111,066	98,912	308,144	279,823
Other specialized and technical services	443,420	338,846	1,178,825	995,014
Other
administrative expenses	107,999	243,044	420,209	650,622
Total	1,730,365	1,708,440	4,985,028	4,956,249

13. Share-based compensation

Banco Santander has long-term compensation plans linked to the market price of the shares . The members of the Executive Board of Banco Santander are eligible for these plans, besides the members selected by the Board of Directors and informed to the Human Resources, which selection may fall according to the seniority of the group. For the Board of Directors members in order to be eligible, it is necessary to exercise Executive Board functions.

a) Local program

The Extraordinary stockholders’ Meeting of Banco Santander held on February 3, 2010 approved the Share-Based Compensation Program - Units of Banco Santander (Local Plan), consisting of two independent plans: Stock Option Plan for Share Deposit Certificates - Units (SOP) and Long-Term Incentive Plan - Investment in Share Deposit Certificates - Units (PSP).

On 25 October 2011, Banco Santander held an Extraordinary General Meeting, which approved the grant of the Incentive Plan Long Term (SOP 2014) - Investment in Certificates of Deposit Shares ("Units") to certain directors and Managerial level employees of the Bank and companies under its control.

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On 29 April, 2013, Banco Santander held an Extraordinary General Meeting, which approved the grant of the Banco Santander’s share-based compensation program - Stock Option Plan for Share Deposit Certificates – Units (SOP 2013) and the Long-Term Incentive Plan -Investment in Share Deposit Certificates (PSP 2013).

The characteristic of each plan are:

SOP Plan: It is a 3 year Stock Option Plan by which new shares of the Banco Santander are issued, as a manner of retaining the officers’ commitment to long-term results. The period for exercising the options starts on June 30, 2012 and is two years longer than the vesting period. The volume equivalent to 1/3 of the Units resulting from the exercise of options cannot be sold by the participant during a period of one year from the exercise date of each unit.

Long-Term Incentive Plan - SOP 2014: It is a 3 year Stock Option Plan. The period for exercise comprises between June 30, 2014 and June 30, 2016. The number of Units exercisable by the participants will be determined according to the result of the determination of a performance parameter of the Company: total Shareholder Return (TSR) and may be reduced if failure to achieve the goals of reducing the Return on Risk Adjusted Capital (RORAC), comparison made between realized and budgeted in each year, as determined by the Board of Directors. Additionally, it is necessary that the participant remains in the Bank during the term of the Plan to acquire a position to exercise the corresponding Units.

Long-Term Incentive Plan – SOP 2013: It is a stock option plan with 3 years of duration. The period for the exercise comprises between June 30, 2016 and June 30, 2018. The number of Units exercisable by the participants will be determined according to the result of measurement of a performance parameter of the Bank: Total Shareholder Return (TSR) and can be reduced, if not achieved the goals of reducing weighted Return on Assets by Risk (RoRWA), comparison between realized and budgeted in each year, as determined by the Board of Directors. Additionally, it is necessary that the participant remains in the Bank during the term of the Plan to acquire a position to exercise the corresponding Units.

PSP Plan: Compensation Plan based on shares settled in cash, with cycles of 3 years, promoting a commitment of executives with the long-term results. The Plan has as its object the payment of bonus by the Company to Participants under the Variable Compensation and (i) 50% (fifty percent) consist of the delivery "Units", where which can not be sold during the term of 01 (one) year from the date of exercise and (ii) 50% (fifty percent) will be paid in cash, which may be used freely by the Participants ("fifty percent"), after deductions of all taxes, charges and withholdings.

Long-Term Incentive Plan – PSP 2013: Compensation Plan based on shares with cycles of 3 years, promoting a commitment of executives with the long-term results. The Plan has as its object the payment of bonus by the Company to Participants under the Variable Compensation 100% (one hundred percent) consist of the delivery Units.

a.1) Fair Value and Plans Performance Parameters

For accounting of the Local Program plans, an independent consultant promoted simulations based on Monte Carlo methodology's, as presented the performance parameters used to calculate the shares to be granted. Such parameters are associated with their respective probabilities of occurrence, which are updated at the close of each period.

		SOP,
		PI12 -
PSP,
	PSP
2013/	PI13 -
PSP and
	SOP
2013	PI14 -
PSP (1)	SOP 2014 (2)
Total
Shareholder Return (TSR) rank		% of
Exercisable Shares
1st	100%	50%	100%
2nd	75%	35%	75%
3th	50%	25%	50%
4th	-	-	25%
(1) Associated with the TSR, the remaining 50% of the
shares subject to exercise refer to the realization of net income vs.
budgeted profit. (2) The percentage of shares determined at the position of
TSR is subject to a penalty according to the implementation of the Return
on Risk Adjusted Capital (RORAC).

For measurement of the fair value the following premises was used:

	PSP 2013	PI14 - PSP	PI13 - PSP	PI12 - PSP
Method of Assessment	Binomial	Binomial	Binomial	Binomial
Volatility	40.00%	57.37%	57.37%	57.37%
Probability of
Occurrence	60.27%	37.59%	26.97%	43.11%
Risk-Free Rate	11.80%	10.50%	10.50%	11.18%

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	SOP 2013	SOP 2014	SOP plan
Method of Assessment	Black&Scholes	Black&Scholes	Binomial
Volatility	40.00%	40.00%	57.37%
Rate of Dividends	3.00%	3.00%	5.43%
Vesting
Period	2 anos	2 Anos	2.72 Anos
Average Exercise
Time	5 anos	5 Anos	3.72 Anos
Risk-Free
Rate	11.80%	10.50%	11.18%
Probability of
Occurrence	60.27%	71.26%	43.11%
Fair Value of the
Option Shares	R$5,96	R$6,45	R$7,19

The average value of shares SANB11 in the period ended on September 30, 2013 is R$15.06 (12/31/2012 - R$14.93).

On the third quarter of 2013, daily pro-rata expenses amounting R$33.496 (9/30/2012 - R$34.815), relating to the SOP plan and R$2,563 (9/30/2012 - R$11,042) relating to the PSP plan. Also recorded in the period a loss with the movement of the market value of the share of the PSP Plan in the amount of R$876 as "Gains (losses) on financial assets and liabilities (net) - Others".

| | Number of
Shares | Exercise
Price in Reais | Year
Granted | Employees | Date of Commencement of Exercise Period | Expiration Date of Exercise Period |
| --- | --- | --- | --- | --- | --- | --- |
| Final
Balance on December 31, 2011 | 29,666,500 | | | | | |
| Cancelled
(PI12 - PSP) options | (698,103) | | 2010 | Managers | 02/03/2010 | 06/30/2012 |
| Exercised
(PI12 - PSP) options | (486,852) | | 2010 | Managers | 02/03/2010 | 06/30/2012 |
| Cancelled
(PI12 - SOP) options | (7,759,571) | 23.50 | 2010 | Managers | 02/03/2010 | 06/30/2014 |
| Cancelled
(PI13 - PSP) options | (72,209) | | 2011 | Managers | 02/03/2010 | 06/30/2013 |
| Granted
(PI14 - PSP) options | 1,910,000 | | 2012 | Managers | 05/29/2012 | 06/30/2014 |
| Cancelled
(PI14 - PSP) options | (106,226) | | 2012 | Managers | 05/29/2012 | 06/30/2014 |
| Cancelled
(SOP - 2014) options | (2,393,163) | 14.31 | 2011 | Managers | 10/26/2011 | 12/31/2013 |
| Granted
(SOP - 2014) options | 5,855,000 | 14.31 | 2011 | Managers | 10/26/2011 | 12/31/2013 |
| Final
Balance on December 31, 2012 | 25,915,376 | | | | | |
| Cancelled
(PI 13 - PSP) options | (971,238) | | 2011 | Managers | 02/03/2010 | 06/30/2013 |
| Exercised
(PI 13 - PSP) options | (324,760) | | 2011 | Managers | 02/03/2010 | 06/30/2013 |
| Cancelled
(PI 14 - PSP) options | (81,660) | | 2012 | Managers | 05/29/2012 | 06/30/2014 |
| Cancelled
(SOP - 2014) options | (1,714,253) | 14.31 | 2011 | Managers | 10/26/2011 | 12/31/2013 |
| Granted
(SOP - 2013) options | 12,240,000 | 14.43 | 2013 | Managers | 05/02/2013 | 12/31/2015 |
| Granted
(PSP - 2013) options | 2,456,000 | | 2013 | Managers | 08/13/2013 | 06/30/2016 |
| Cancelled
(SOP - 2013) options | (797,255) | 14.43 | 2013 | Managers | 05/02/2013 | 06/30/2018 |
| Cancelled
(PSP - 2013) options | (6,800) | | 2013 | Managers | 08/13/2013 | 06/30/201 6 |
| Final
Balance on September 30, 2013 | 36,715,410 | | | | | |
| SOP | 4,903,767 | 23.50 | 2010 | Managers | 02/03/2010 | 06/30/2014 |
| PI14 - PSP | 1,722,114 | | 2012 | Managers | 05/29/2012 | 06/30/2014 |
| SOP - 2014 | 16,197,584 | 14.31 | 2011 | Managers | 10/26/2011 | 12/31/2013 |
| SOP - 2013 | 11,442,745 | 14.43 | 2013 | Managers | 05/02/2013 | 12/31/2015 |
| PSP - 2013 | 2,449,200 | | 2013 | Managers | 08/13/2013 | 06/30/2016 |
| Total | 36,715,410 | | | | | |

a.2) Global Program

Long-Term Incentive Policy

The Board of Directors’ of Banco Santander Spain approved in a meeting held on March 26, 2008, the long-term incentive policy intended for the executives of Banco Santander Spain and the Santander Group companies (except Banco Español de Crédito, S.A. - Banesto). This policy provides for compensation tied to the performance of the stock of Banco Santander Spain, as established in the Annual Stockholders’ Meeting.

Among the plans of Banco Santander Spain, Conglomerate Santander's executives in Brazil already participate in the Stock Plan Tied to Goals: multiyear plan paid in shares of Banco Santander Spain. This plan’s beneficiaries are the Executive Officers and other members of Top Management, as well as any other group of executives identified by the Executive Board or the Executive Committee.

This plan involves three-years cycles for the delivery of shares to the grantees. The first two cycles started in July 2007, with the first cycle lasting two years (Plan I09) and the other cycles lasting three years, on average (Plan I10/Plan I11/Plan I12/Plan I13 and Plan l14). Therefore since 2009 a new cycle beginnings and the closure of a previous cycle. The purpose is to establish an appropriate sequence between the end of the incentive program, tied to the previous plan, I-06, and the successive cycles of this plan.

For each cycle is set a maximum number of shares for each grantee who continued working at Grupo Santander Spain during the plan. The objectives whose fulfillment determine the number of shares distributed are defined by comparing the performance of Grupo Santander Spain in relation to a Reference Group (financial institutions) and are related to two parameters: RTA and growth in Earnings / Benefit for Action (BPA).

Each of these parameters has a weight of 50% in the determination of the percentage of shares to be granted. The number of shares to be granted is determined in each cycle by the goal attainment level on the third anniversary of the start of each cycle (except the first cycle, for which the second anniversary will be considered).

From the plan Pl12 the purpose determines the number of actions thats relate to just one performance condition, which has 100% weight in the percentage of shares to be distributed: the TSR Group.

Global Plan Fair Value

It was assumed that the grantee will not leave the Bank’s employment during the term of each plan. The fair value of the 50% linked to the Bank’s relative TSR position was calculated, on the grant date, on the basis of the report provided by external valuators whose assessment was carried out using a Monte Carlo valuation model, performing 10 thousand simulations to determine the TSR of each of the companies in the Benchmark Group, taking into account the variables set forth below. The results (each of which represents the delivery of a number of shares) are classified in decreasing order by calculating the weighted average and discounting the amount at the risk-free interest rate.

	PI10	PI11	PI12	PI13	PI14
Expected volatility (*)	15.67%	19.31%	42.36%	49.64%	51.35%
Annual dividend
yield based on last five years	3.24%	3.47%	4.88%	6.33%	6.06%
Risk-free interest rate (Treasury Bond yield –zero coupon)
over the
period of the
plan	4.50%	4.84%	2.04%	3.33%	4.07%
(*)
calculated on the basis of historical volatility over the corresponding
period (two or three years).

In view of the high correlation between TSR and EPS, it was considered feasible to extrapolate that (in a high percentage of cases) the TSR value is also valid for EPS. Therefore, it was initially determined that the fair value of the portion of the plans linked to the Bank’s relative EPS position, i.e. of the remaining 50% of the options granted, was the same as that of the 50% corresponding to the TSR. Since this valuation refers to a non-market condition, it is reviewed and adjusted on a yearly basis.

| | | | | Data
of | |
| --- | --- | --- | --- | --- | --- |
| | | | | Commencement | |
| | Number of | | | of Exercise | Data of Expiry of |
| | Shares | Granted Year | Employees | Period | Exercise Period |
| Final Balance on December 31,
2011 | 1,670,701 | | | | |
| Exercised Options (PI12) | (137,299) | 2009 | Managers | 06/19/09 | 07/31/12 |
| Cancelled Options (PI12) | (403,907) | 2009 | Managers | 06/19/09 | 07/31/12 |
| Cancelled Options (PI14) | (59,373) | 2011 | Managers | 07/01/11 | 07/31/14 |
| Final Balance on December 31,
2012 | 1,070,122 | | | | |
| Cancelled Options (PI13) | (14,209) | 2010 | Managers | 07/01/10 | 07/31/13 |
| Cancelled Options (PI14) | (676,228) | 2011 | Managers | 07/01/11 | 07/31/14 |
| Final Balance on September 30,
2013 | 379,685 | | | | |
| Plan
I14 | 379,685 | 2011 | Managers | 07/01/11 | 07/31/14 |
| Total | 379,685 | | | | |

On the third quarter of 2013, pro rata expenses were recognized in the amount of R$2,800 (9/30/2012 - R$4,124), related to the costs of the cycles mentioned above, regarding the total amount of the Global Program Plans. Expenses related to these plans are recognized in "Other liabilities - Provision for share-based payment" because they are settled in cash.

Plans do not result in dilution of the share capital of the Bank, because they are paid in shares of Banco Santander Spain.

b) Share-Based Bonus

The Annual stockholders’ Meeting of Banco Santander Spain, held on June 11, 2010, approved the new policy for executive compensation through a share-based bonus plan effective for all the companies of the Group, including Banco Santander. This new policy, subject to adjustments applicable to Banco Santander, were approved by Appointment and Compensation Committee and Board of Directors at the meeting held on February 2, 2011.

The plan's objectives are: (i) to align the compensation program with the principles of the “Financial Stability Board” (FSB) agreed upon at the G20; (ii) to align Banco Santander’s interests with those of the plan’s participants (to achieve the sustainable and recurring growth and profitability of Banco Santander’s businesses and to recognize the participants’ contributions); (iii) to allow the retention of participants; and (iv) to improve Banco Santander’s performance and defend the interests of stockholders' via a long-term commitment.

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The purpose of the plan is the cash or shares payment of part of the variable compensation owed by Banco Santander to the plan’s participants pursuant to the Bank’s compensation policy, based on the future performance of the bank’s shares.

The payment of share-based bonus is within the limits of the overall management compensation approved by Banco Santander's Annual Stockholders' Meeting.

The total number of shares on which the compensation plan is based will be settled in three installments and equally allocated to each of the three fiscal years following the reference year.

On December 21, 2011, the Board of Directors approved the proposed new incentive plan (deferred) for payment of the variable remuneration of directors and certain employees, which was the subject to resolution of the ordinary general meeting February 7, 2012.

On December 19, 2012, the Board of Directors approved the proposed new incentive plan (deferred) for payment of the variable remuneration of directors and certain employees, which will be subject to resolution of the ordinary general meeting on February 15, 2013.

This proposal includes certain requirements for deferred payment of part of the future variable compensation due to its managers and other employees, given the financial basis for sustainable long-term adjustments in future payments due to the risks assumed and fluctuations in cost of capital.

The plan is divided into 3 programs:

a) Supervised Collective - Participants of the Executive Committee and other executives who take significant risks in the Bank and are responsible for the control areas. The deferral will be half in cash, indexed to 100% of CDI and half in shares. On the year ended on September 30, 2013, credits amounting to R$17,589 (2012 was recorded credits amounting - R$3,709).

b) Collective unsupervised - Statutory Directors - not part of the Statutory Directors' Collective Supervised ", the amount deferred will be paid 100% in Units" SANB11". On September 30, 2013, we recorded expenses "pro rata" in the amount of R$5,117 (2012, was recorded credits amounting R$2,058), regarding the provision of the plan and recorded gain with the oscillation of the share market value of the plan in the amount of R$978 as personal expenses.

c) Unsupervised Collective - Employees - managerial employees and other employees of the organization that will be benefited from the deferral plan. The deferred amount will be paid 100% cash, indexed to 110% to 120% of CDI. On the period on September 30, 2013, there were credits of R$1,078 (2012, was recorded expense amounting - R$515).

14. Business segment reporting

In accordance with IFRS 8, an operating segment is a component of an entity:

(a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),

(b) 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

Based on these guidelines the Bank has identified, the following reportable operating segments:

• Commercial Banking

• Global Wholesale Banking

• Asset Management and Insurance

The Bank operates in Brazil and abroad, through the Cayman branch and its subsidiary in Spain, with Brazilian clients and therefore has no geographical segments.

The Commercial Banking segment encompasses the entire commercial banking business (except for the Corporate Banking business managed globally using the Global Relationship Model). The Asset Management and Insurance segment includes the contribution to the Bank arising from the design and management of the investment fund, pension and insurance businesses of the various units. The Global Wholesale Banking segment reflects the returns on the Global Corporate Banking business, those on Investment Banking and Markets worldwide, including all treasury departments and the equities business.

| The
income statements and other significant data are as follows: | | | | |
| --- | --- | --- | --- | --- |
| | 7/01 to
9/30/2013 | | | |
| (Condensed) Income Statement | Commercial Banking | Global
Wholesale Banking | Asset
Management and Insurance | Total |
| NET
INTEREST INCOME | 6,425,294 | 446,164 | 23,689 | 6,895,147 |
| Income
from equity instruments | 1,648 | - | - | 1,648 |
| Share
of results of entities accounted for using the equity method | 34,107 | - | - | 34,107 |
| Net fee
and commission income | 1,678,448 | 202,939 | 89,510 | 1,970,897 |
| Gains
(losses) on financial assets and liabilities and exchange differences (1) | 175,373 | 412,856 | (112) | 588,117 |
| Other
operating income/(expenses) | (149,292) | (5,449) | 70 | (154,671) |
| TOTAL
INCOME | 8,165,578 | 1,056,510 | 113,157 | 9,335,245 |
| Personnel expenses | (1,593,225) | (145,649) | (19,231) | (1,758,105) |
| Other
administrative expenses | (1,651,818) | (70,937) | (7,610) | (1,730,365) |
| Depreciation and amortization | (251,913) | (29,269) | (6,823) | (288,005) |
| Provisions (net) | (567,884) | (26) | (3,303) | (571,213) |
| Net
impairment losses on financial assets | (3,274,138) | (16,582) | - | (3,290,720) |
| Net
impairment losses on non-financial assets | 35,946 | (397) | (14) | 35,535 |
| Other
financial gains/(losses) | 9,561 | - | - | 9,561 |
| PROFIT/LOSS BEFORE TAX (1) | 872,107 | 793,650 | 76,176 | 1,741,933 |
| (1)
Includes in the Commercial Bank, the economic hedge of investment in
dollar (a strategy to mitigate the effects of fiscal and exchange rate
variation of offshore investments on net income), the result of which is
recorded in "Gains (losses) on financial assets and liabilities" fully
offset in taxes line. Adjusted for losses amounting to R$227,585 due to
the effects of the devaluation of the Real against the Dollar on September
30, 2013, the Profit before Tax for the Commercial Bank segment was
R$1,099,692. | | | | |
| (Condensed) Income Statement | Commercial Banking | Global
Wholesale Banking | Asset
Management and Insurance | Total |
| NET
INTEREST INCOME | 19,912,135 | 1,484,327 | 60,085 | 21,456,547 |
| Income
from equity instruments | 47,215 | - | - | 47,215 |
| Share
of results of entities accounted for using the equity method | 84,107 | - | - | 84,107 |
| Net fee
and commission income | 5,177,826 | 645,768 | 256,487 | 6,080,081 |
| Gains
(losses) on financial assets and liabilities and exchange differences (1) | (544,381) | 608,645 | 3,610 | 67,874 |
| Other
operating income/(expenses) | (322,108) | (16,078) | (694) | (338,880) |
| TOTAL
INCOME | 24,354,794 | 2,722,662 | 319,488 | 27,396,944 |
| Personnel expenses | (4,695,292) | (427,761) | (55,428) | (5,178,481) |
| Other
administrative expenses | (4,775,169) | (187,026) | (22,833) | (4,985,028) |
| Depreciation and amortization | (822,557) | (88,443) | (20,204) | (931,204) |
| Provisions (net) | (1,201,197) | 250 | (9,219) | (1,210,166) |
| Net
impairment losses on financial assets | (10,798,926) | (143,165) | - | (10,942,091) |
| Net
impairment losses on non-financial assets | (85,130) | (873) | (19) | (86,022) |
| Other
financial gains/(losses) | 512,537 | - | - | 512,537 |
| PROFIT
BEFORE TAX (1) | 2,489,060 | 1,875,644 | 211,785 | 4,576,489 |
| (1)
Includes in the Commercial Bank, the economic hedge of investment in
dollar (a strategy to mitigate the effects of fiscal and exchange rate
variation of offshore investments on net income), the result of which is
recorded in "Gains (losses) on financial assets and liabilities" fully
offset in taxes line. Adjusted for losses amounting to R$1,642,429 due to
the effects of the devaluation of the Real against the Dollar on September
30, 2013, the Profit before Tax for the Commercial Bank segment was
R$4,131,489. | | | | |
| (Condensed) Income Statement | Commercial Banking | Global
Wholesale Banking | Asset
Management and Insurance (2) | Total |
| NET
INTEREST INCOME | 7,426,397 | 564,015 | 23,686 | 8,014,098 |
| Income
from equity instruments | 5,383 | - | - | 5,383 |
| Share
of results of entities accounted for using the equity method | 22,621 | - | - | 22,621 |
| Net fee
and commission income | 1,716,273 | 167,443 | 85,122 | 1,968,838 |
| Gains
(losses) on financial assets and liabilities and exchange differences (1) | 119,350 | 91,770 | (397) | 210,723 |
| Other
operating income/(expenses) | (133,926) | (4,191) | (3,443) | (141,560) |
| TOTAL
INCOME | 9,156,098 | 819,037 | 104,968 | 10,080,103 |
| Personnel expenses | (1,642,424) | (134,351) | (20,873) | (1,797,648) |
| Other
administrative expenses | (1,647,376) | (55,849) | (5,215) | (1,708,440) |
| Depreciation and amortization | (260,036) | (28,431) | (6,297) | (294,764) |
| Provisions (net) | (538,726) | 237 | 1,332 | (537,157) |
| Net
impairment losses on financial assets | (3,777,046) | (3,523) | - | (3,780,569) |
| Net
impairment losses on non-financial assets | (16,431) | - | (17) | (16,448) |
| Other
financial gains/(losses) | (2,668) | - | - | (2,668) |
| PROFIT
BEFORE TAX (1) | 1,271,391 | 597,120 | 73,898 | 1,942,409 |

(1) Includes in the Commercial Bank, the fiscal hedge of investment on Cayman branch (a strategy to mitigate the effects of fiscal and exchange rate changes on investments offshore over the net income), which result is recorded in “Gains/losses on financial assets and liabilities (net)” fully offset the tax line. Adjusted to the losses amounting R$67,117 due to the effects of the exchange devaluation of the Real against the Dollar on the three-months ended September 30, 2012 the profit before tax for the commercial banking was R$1,338,508 .

| (Condensed)
Income Statement | 1/01 to
9/30/2012 — Commercial
Banking | Global
Wholesale Banking | Asset Management and Insurance (2) | Total |
| --- | --- | --- | --- | --- |
| NET
INTEREST INCOME | 22,198,984 | 1,687,170 | 74,788 | 23,960,942 |
| Income
from equity instruments | 47,170 | - | - | 47,170 |
| Share of results of entities accounted for using the equity
method | 58,875 | - | - | 58,875 |
| Net fee and commission income | 4,974,988 | 513,904 | 251,148 | 5,740,040 |
| Gains (losses) on financial assets and
liabilities and exchange differences (1) | (515,011) | 475,858 | 4,616 | (34,537) |
| Other
operating income/(expenses) | (502,954) | (17,526) | 36,101 | (484,379) |
| TOTAL
INCOME | 26,262,052 | 2,659,406 | 366,653 | 29,288,111 |
| Personnel
expenses | (4,819,887) | (396,984) | (58,132) | (5,275,003) |
| Other
administrative expenses | (4,776,749) | (163,440) | (16,060) | (4,956,249) |
| Depreciation
and amortization | (762,931) | (79,069) | (17,640) | (859,640) |
| Provisions
(net) | (1,598,994) | 4,963 | (11,150) | (1,605,181) |
| Net impairment losses on financial assets | (11,645,096) | (29,834) | - | (11,674,930) |
| Net impairment losses on non-financial assets | (8,220) | - | (18) | (8,238) |
| Other
financial gains/(losses) | 12,007 | - | - | 12,007 |
| PROFIT BEFORE TAX (1) | 2,662,182 | 1,995,042 | 263,653 | 4,920,877 |
| (1) Includes in the Commercial Bank, the fiscal hedge of
investment on Cayman branch (a strategy to mitigate the effects of fiscal
and exchange rate changes on investments offshore over the net income),
which result is recorded in “Gains/losses on financial assets and
liabilities (net)” fully offset the tax line. Adjusted to the losses
amounting R$1,117,166 due to the effects of the exchange devaluation of
the Real against the Dollar on the nine-months ended September 30, 2012
the profit before tax for the commercial banking was
R$3,779,348. | | | | |
| Other
aggregates: | Commercial
Banking | Global
Wholesale Banking | Asset
Management and Insurance | Total |
| Total
assets | 379,288,460 | 57,603,273 | 3,226,822 | 440,118,555 |
| Loans and advances to customers | 164,103,731 | 42,869,252 | 30,610 | 207,003,593 |
| Customer
deposits | 180,353,917 | 17,910,746 | 1,622,860 | 199,887,523 |
| | 12/31/2012 | | | |
| Other
aggregates: | Commercial
Banking | Global
Wholesale Banking | Asset Management and Insurance (1) | Total |
| Total
assets | 366,827,060 | 52,783,404 | 2,997,399 | 422,607,863 |
| Loans and advances to customers | 161,025,613 | 35,726,189 | 22,495 | 196,774,297 |
| Customer
deposits | 168,315,452 | 18,720,305 | 1,559,173 | 188,594,930 |

(1) On December, 31, 2012, includes incomes from insurance brokerage and capitalization.

15. Related party transactions

The parties related to the Bank are deemed to include, in addition to its subsidiaries, associates and jointly controlled entities, the Bank’s key management personnel and the entities over which the key management personnel may exercise significant influence or control.

Following is a detail of the ordinary business transactions performed by the Bank with its related parties for nine-months ended September 30, 2013 and 2012:

a) Key-person management compensation

The Board of Directors' meeting held on February 27, 2013, was approved in accordance with the Compensation and Appointment Committee the global compensation proposal of directors (Board of Directors and Executive Officers) for the year 2013, amounting to R$300,000, covering fixed remuneration, variable and equity-based and other benefits. The proposal was approved by the extraordinary stockholders' meeting held on April 29, 2013.

a.1) Long-term benefits

The Santander Brazil as well as Banco Santander Spain, as other subsidiaries of Santander Group, have long-term compensation programs tied to their share's performance, based on the achievement of goals.

a.2) Short-term benefits

The following table shows the Board of Directors’ and Executive Board’s:

	9/30/2013	9/30/2012
Fixed
compensation	34,920	34,647
Variable
compensation	81,707	88,501
Other	10,534	9,073
Total
Short-term benefits	127,161	132,221
Share-based payment (1)	22,739	27,951
Total
Long-term benefits	22,739	27,951
Total (2)	149,900	160,172
(1) On May 02, 2013, was the granting of a new
Share-based Compensation Plan for the executives (SOP 2013) (note
13). (2) Refers to the amount paid by Banco Santander to
their Managers for positions they hold at Banco Santander and other
companies in the Conglomerate Santander. In the third quarter of 2013 the
amount of R$3,238 (2012 - R$3,010) was paid to the Directors of Santander
Asset Brazil excluding charges.

Additionally, in the period of nine-months ended September 30, 2013, charges were collected on key-person management compensation amounting R$32,842 (9/30/2012 R$25,355).

a.3) Contract termination

The termination of the employment relationship for non-fulfillment of obligations or voluntarily does not entitle executives to any financial compensation.

b) Lending operations

Under current law, it is not granted loans or advances involving:

I - officers, members of board of directors and audit committee as well as their spouses and relatives up to the second degree;

II - individuals or legal entities of Banco Santander, which hold more than 10% of the share capital;

III - Legal entities which hold more than 10% of the share capital, Banco Santander and its subsidiaries;

IV - legal entities which hold more than 10% of the share capital, any of the directors or members of the Board of Directors and Audit Committee or management's own financial institution, as well as their spouses or relatives up to the second degree.

c) Ownership Interest

The table below shows the direct ownership interests (common shares and preferred shares):

	9/30/2013 — Common		Preferred		Total
	Shares	Common	Shares	Preferred	Shares	Total
Stockholders'	(thousands)	Shares
(%)	(thousands)	Shares
(%)	(thousands)	Shares
(%)
Grupo
Empresarial Santander, S.L.	61,350,950	28. 8 %	51,153,553	27. 5 %	112,504,503	28. 2 %
Sterrebeeck
B.V.	99,527,083	4 6 .8%	86,492,330	46. 5 %	186,019,413	46. 6 %
Santander Insurance Holding, S.L.	206,664	0.1%	-	0.0%	206,664	0.1%
Employees	172,318	0.1%	157,780	0.1%	330,098	0.1%
Members of the Board of Directors	(*)	(*)	(*)	(*)	(*)	(*)
Members of the Executive Board	(*)	(*)	(*)	(*)	(*)	(*)
Others	50,672,022	23. 8 %	47,568,999	25. 5 %	98,241,021	24. 6 %
Total	211,929,037		185,372,662		397,301,699
Treasury shares	912,695	0.4%	829,723	0.4%	1,742,418	0.4%
Total	212,841,732	100.0%	186,202,385	100.0%	399,044,117	100.0%
(*) None of the members of the Board of Directors and the
Executive Board holds 1.0% or more of any class of shares.

c.1) Strategic Partner of Santander Conglomerate in Brazil and Latin America

On October 28, 2010 Banco Santander Spain and Qatar Holding Luxembourg S.à rl II (QHL) signed a contract in terms of the Acquisition of convertible bonds, regarding the subscription and payment by QHL the amount of US$2,718.8 million in bonds issued by Banco Santander Spain. These securities are mandatorily exchangeable for shares of Banco Santander and amount to 5.00024% of its capital. These shares are paid an interest rate of 6.75% p.a. in dollars and mature by October 29, 2013.

This investment reflects the inclusion of QHL as a strategic partner of Group Santander Spain in Brazil and in the remainder of Latin America. This transaction allows Banco Santander to advance in its commitment of 25% of capital free float . On September 30, 2013, except for convertible bonds, the QHL does not own, directly or indirectly, any shares, warrants, subscription rights or options over the share capital of Banco Santander.

c.2) Bank Santander Spain’s ADRs Sales and Free Float Increase

On March 22, 2012 Banco Santander Spain informed to Banco Santander that, in fulfillment of Exchange Comission (CVM) Instruction No. 358/2002, and in accordance to the commitment of reaching the free-float of 25% of the capital stock of Banco Santander, it reduced its interest in the capital stock of Banco Santander by 5.76%, which resulted in the increase of the free-float of the Banco Santander to 24.12% at the moment. Such reduction of 5.76% (5.66% of common shares and 5.88% of preferred shares) was a result of the following transactions: (i) the transfer of 4.41% of Banco Santander’s capital stock carried out in January 2012, (ii) the sale of 0.58% of the capital stock of Banco Santander carried out until March 22, 2012, and (iii) the transfer of 0.77% of Banco Santander´s capital stock carried out on March 22, 2012 to a third party, which shall deliver such interest to the investors of the exchangeable bonds issued by Santander Spain in October, 2010, on maturity and as provided in such bonds.

c.3) Extension of time to reach the minimum percentage of outstanding shares (free float) of 25% and decreased of free float.

On October 10 and 11, 2013 were published Notices to the Market in order to inform to the shareholders that on October 08, 2013 the BM&FBovespa granted the claim by Banco Santander and its majority shareholders to (i) prorogate the period for reaching the minimum free float, until October 7, 2014; and (ii) to reduce the actual free float, of 24.6%, down to 22.5%, exclusively in the context of: (a)the Buyback Program of depositary share certificates (“Units”) or American Depositary Receipts (“ADRs”); and (b)acquisitions abroad, by Banco Santander, S.A., or an affiliated entity of the economic group, of ADRs issued by the Company. Such authorization does not interfere in the obligation undertook by Banco Santander to reach a free float of 25% until October 7, 2014, as set forth in the Agreement for Adoption of Corporate Governance Level 2 Practices.

d) Related-Party Transactions

The transactions and compensation for services among Banco Santander companies are carried out under usual market value, rates and terms, and under commutativity condition.

Santander has the Policy on Related Party Transactions approved by the Board of Directors, which aim to ensure that all transactions are made on the policy typified in view the interests of Banco Santander and its stockholders'. The policy defines powers to approve certain transactions by the Board of Directors. The rules laid down are also applied to all employees and directors of Banco Santander and its subsidiaries.

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The principal transactions and balances are as follows:

	9/30/2013 — Parent (1)	Joint-controlled companies	Other Related-Party (2)
Assets	9,128,527	688,628	175,370
Trading
derivatives, net	12,005	-	(294,037)
Banco
Santander Spain	12,005	-	-
Santander
Benelux, S.A., N.V.	-	-	(116,517)
Abbey National Treasury Services Plc	-	-	(34,040)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(143,480)
Loans and amounts due from credit institutions - Cash and
overnight operations in foreign currency
	9,115,173	-	101,657
Banco Santander, S.A. – Spain (3)	9,115,173	-	-
Banco
Santander Totta, S.A.	-	-	1,842
Santander Benelux, S.A., N.V.	-	-	99,815
Loans and other values with customers	-	-	367,750
Zurich
Santander Brasil Seguros S.A.	-	-	75,796
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	290,631
Santander Brasil Gestão de Recursos Ltda	-	-	1,323
Loans and other values with credit
institutions (1)	335	687,772	-
Banco
Santander, S.A. – Spain	335	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	687,454	-
Companhia
de Arrendamento Mercantil RCI Brasil	-	318	-
Other
Assets	1,014	856	-
Banco
Santander Espanha	1,014	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	856	-
Liabilities	(445,688)	(180,508)	(1,135,103)
Deposits
from credit institutions	(97,938)	(62,211)	(11,760)
Banco Santander Espanha (4)	(97,938)	-	-
Companhia
de Arrendamento Mercantil RCI Brasil	-	(11,016)	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	(51,195)	-
Others	-	-	(11,760)
Liabilities for bonds and securities	(6,881)	-	-
Banco
Santander Espanha (4)	(6,881)	-	-
Customer
deposits	-	(118,297)	(499,119)
Webmotors S.A.	-	( 97 , 830 )	-
Webcasas S.A.	-	( 20 , 467 )	-
ISBAN
Brasil S.A.	-	-	(53,619)
Produban
Serviços de Informática S.A.	-	-	(44,099)
Universia
Brasil S.A.	-	-	(433)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(252,736)
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	(74,519)
Zurich
Santander Brasil Seguros S.A.	-	-	(5,055)
Santander
Brasil Gestão de Recursos Ltda	-	-	(13,287)
Central
Eólica Santo Antonio de Padua Ltda	-	-	(7,672)
Central
Eólica São Cristovão Ltda	-	-	(14,045)
Central
Eólica São Jorge Ltda	-	-	(12,864)
Eol Wind
Energias Renováveis S. A.	-	-	(5,082)
Eol Vento
Energias Renováveis S. A.	-	-	(4,923)
Others	-	-	(10,785)
Other Liabilities - Dividends and Interest on Capital
Payable	(337,943)	-	(337)
Grupo Empresarial Santander, S.L. (1)	(127,282)	-	-
Santander Insurance Holding, S.L.	-	-	(224)
Sterrebeeck B.V. (1)	(210,661)	-	-
Banco
Madesant - Sociedade Unipessoal, S.A. (Zona Franca da
Madeira)	-	-	(113)
Other
Payables	(2,926)	-	(623,887)
Banco
Santander Espanha	(2,926)	-	-
Universia
Brasil S.A.	-	-	(342)
ISBAN
Brasil S.A.	-	-	(31,391)
Santander
Brasil Gestão de Recursos Ltda	-	-	(587,512)
Produban
Serviços de Informática S.A.	-	-	(235)
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	(4,025)
Others	-	-	(382)

	12/31/2012 — Parent (1)	Joint-controlled companies	Other Related-Party (2)
Assets	9,487,641	1,087,901	(163,065)
Trading
derivatives, net	(135,291)	-	(742,972)
Banco
Santander, S.A. – Spain	(135,291)	-	-
Santander
Benelux, S.A., N.V.	-	-	(399,110)
Abbey National Treasury Services Plc	-	-	(68,552)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(275,310)
Loans and other values with credit institutions - Cash and
overnight operations in foreign currency	9,615,489	-	318,423
Banco Santander, S.A. – Spain (3)	9,615,489	-	-
Banco
Santander Totta, S.A.	-	-	1,139
Santander Benelux, S.A., N.V.	-	-	317,233
Banco
Santander, S.A. – México	-	-	51
Loans and other values with customers -
others	-	-	227,398
Zurich
Santander Brasil Seguros S.A.	-	-	75,445
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	151,953
Loans and other values with credit institutions -
Others	7,284	1,087,129	34,024
Banco
Santander – Spain	7,284	-	-
Abbey National Treasury Services Plc	-	-	34,024
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	1,086,756	-
Companhia de Arrendamento Mercantil RCI Brasil	-	373	-
Other
Assets	159	772	62
Banco
Santander – Spain	159	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	772	-
Others	-	-	62
Liabilities	(939,913)	(16,280)	(447,091)
Deposits
from credit institutions	(170,845)	(16,280)	(5,635)
Banco Santander, S.A. – Spain (4)	(170,845)	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	(12,762)	-
Companhia
de Arrendamento Mercantil RCI Brasil	-	(3,518)	-
Others	-	-	(5,635)
Customer
deposits	-	-	(415,888)
ISBAN
Brasil S.A.	-	-	(98,324)
Produban
Serviços de Informática S.A.	-	-	(43,528)
Universia
Brasil S.A.	-	-	(80)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(239,067)
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	(29,190)
Others	-	-	(5,699)
Other Liabilities - Dividends and interest on capital
Payable	(765,524)	-	(562)
Grupo Empresarial Santander, S.L. (1)	(236,246)	-	-
Santander Insurance Holding, S.L.	-	-	(562)
Sterrebeeck B.V. (1)	(529,278)	-	-
Other
Payables	(3,544)	-	(25,006)
Banco
Santander – Spain	(3,544)	-	-
Produban Serviços de Informática S.A.	-	-	(55)
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	(24,079)
Others	-	-	(872)
(*) All loans and amounts to related parties were made in our
ordinary course of business and on sustainable basis, including interest
rates and collateral and did not involve more than the normal risk of
collectability or present other unfavorable features. (1) Banco Santander (Brasil) S.A.
is indirectly controlled by Banco Santander Spain (note 1-a), through its
subsidiary Grupo Empresarial Santander, S.L. and Sterrebeeck
B.V. (2) Refers to the Company's subsidiaries (Banco Santander
Spain). (3) Refers, mainly, to cash of
R$255,101 (12/31/2012 - R$187,189) and overnight investments amounting
R$8,766,136 (12/31/2012 - R$9,445,842) maturing on October, 2013 and
interest rates between 0.06% and 0.17% p.a. (4) Refers to raising funds through onlending operations abroad
totaling R$104,819, maturing up to January 2015 and interest rates between
0.45% and 5.82% p.a. (12/31/2012 - R$170,845, with interest rates between
0.39% and 5.82% p.a.).

$$/page=

	9/30/2013 — Parent (1)	Joint-controlled companies	Other Related-Party (2)
Income	(219,232)	55,002	65,788
Interest and similar income - Loans and amounts due from credit
institutions	10,590	39,992	181
Banco Santander Spain (1)	10,590	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	39,992	-
Abbey National Treasury Services Plc	-	-	23
Santander
Benelux, S.A., N.V.	-	-	158
Interest expense and similar charges - Customer
deposits	-	(4,240)	(28,018)
Webmotors S.A.	-	(3,377)	-
Web casa s
S.A.	-	(863)	-
ISBAN
Brasil S.A.	-	-	(2,873)
Produban
Serviços de Informática S.A.	-	-	(1,920)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(22,316)
Others	-	-	(909)
Interest expense and similar charges - Deposits from credit
institutions	(16,489)	(804)	-
Banco Santander Spain (1)	(16,489)	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	(804)	-
Interest expense and similar charges -
Securities	(713)	-	-
Banco Santander Spain (1)	(713)	-	-
Fee and commission income (expense)	(46,490)	20,054	101,653
Banco Santander Spain (1)	(46,490)	-	-
Companhia
de Arrendamento Mercantil RCI Brasil	-	3,020	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	9,489	-
Zurich
Santander Brasil Seguros S.A.	-	-	23,025
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	77,677
Webmotors S.A.	-	7,545	-
Others	-	-	951
Gains (losses) on financial assets and liabilities and exchange
differences (net)	(166,024)	-	363,348
Banco Santander Spain (1)	(166,024)	-	-
Santander
Benelux, S.A., N.V.	-	-	371,515
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(49,239)
Abbey National Treasury Services Plc	-	-	36,474
Others	-	-	4,598
Administrative
expenses and amortization	(106)	-	(348,094)
Banco Santander Spain (1)	(106)	-	-
ISBAN
Brasil S.A.	-	-	(76,686)
Produban
Serviços de Informática S.A.	-	-	(115,333)
Produban
Servicios Informáticos Generales, S.L.	-	-	(20,089)
ISBAN
Chile S.A.	-	-	(2,402)
Ingeniería
de Software Bancario, S.L.	-	-	(41,685)
Tecnologia
Bancária S.A. - Tecban	-	-	(82,423)
Konecta
Brazil Outsourcing Ltda	-	-	(4,847)
Others	-	-	(4,629)
Others
Administrative expenses - Donation	-	-	(23,282)
Santander
Cultural	-	-	(6,272)
Fundação
Santander	-	-	(2,734)
Instituto
Escola Brasil	-	-	(2,276)
Fundação
Sudameris	-	-	(12,000)
(1) Banco Santander (Brasil) S.A. is indirectly controlled by
Banco Santander Spain (note 1-a), through its subsidiary Grupo Empresarial
Santander, S.L. and Sterrebeeck B.V. (2) Refers to the Company's subsidiaries (Banco Santander
Spain).

$$/page=

	09/30/2012 — Parent (1)	Joint-controlled companies	Other Related-Party (2)
Income	79,446	61,119	(442,028)
Interest and similar income - Loans and amounts due from credit
institutions	6,780	46,819	312
Banco Santander Spain (1)	6,780	-	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	46,819	-
Abbey National Treasury Services Plc	-	-	22
Santander
Benelux, S.A., N.V.	-	-	290
Interest expense and similar charges - Customer
deposits	-	-	(18,958)
ISBAN
Brasil S.A.	-	-	(4,400)
Produban
Serviços de Informática S.A.	-	-	(2,338)
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(11,457)
Others	-	-	(763)
Interest expense and similar charges - Deposits from credit
institutions	(31,337)	-	-
Banco Santander Spain (1)	(31,337)	-	-
Interest expense and similar charges -
Securities	(1,482)	-	-
Banco Santander Spain (1)	(1,482)	-	-
Fee and commission income (expense)	(40,928)	14,300	99,014
Banco Santander Spain (1)	(40,928)	-	-
Companhia
de Arrendamento Mercantil RCI Brasil	-	3,460	-
Companhia
de Crédito, Financiamento e Investimento RCI Brasil	-	10,840	-
Zurich
Santander Brasil Seguros e Previdência S.A.	-	-	78,678
Zurich
Santander Brasil Seguros S.A.	-	-	19,878
Others	-	-	458
Gains (losses) on financial assets and liabilities and exchange
differences (net)	146,413	-	(266,289)
Banco
Santander Spain	146,413	-	-
Santander
Benelux, S.A., N.V.	-	-	146,781
Real
Fundo de Investimento Multimercado Santillana Credito
Privado	-	-	(369,684)
Abbey National Treasury Services Plc	-	-	(40,469)
Others	-	-	(2,917)
Administrative
expenses and amortization	-	-	(238,459)
ISBAN
Brasil S.A.	-	-	(67,568)
Produban
Serviços de Informática S.A.	-	-	(105,713)
ISBAN
Chile S.A.	-	-	(2,983)
Aquanima
Brasil Ltda.	-	-	(16,125)
Ingeniería
de Software Bancario, S.L.	-	-	(23,402)
Produban
Servicios Informaticos Generales, S.L.	-	-	(18,223)
Others	-	-	(4,445)
Others
Administrative expenses - Donation	-	-	(17,648)
Santander
Cultural	-	-	(3,421)
Fundacao
Santander	-	-	(3,008)
Instituto
Escola Brasil	-	-	(1,219)
Fundação
Sudameris	-	-	(10,000)
(1) Banco Santander (Brasil) S.A. is indirectly controlled by
Banco Santander Spain, through its subsidiary Grupo Empresarial Santander,
S.L. and Sterrebeeck B.V. (2) Refers to the Company's subsidiaries (Banco Santander
Spain).

16. Other disclosures

a) Derivative Financial Instruments

a.1) Derivatives Recorded in Memorandum and Balance Sheets

Portfolio Summary of Trading Derivative and Used as Hedge

Assets	9/30/2013	12/31/2012
Swap
Differentials Receivable	4,834.207	4,092,378
Option
Premiums to Exercise	398,439	297,124
Forward
Contracts and Others	1,061,248	329,633
Total	6,293,894	4,719,135
Liabilities
Swap
Differentials Payable	4,131,226	4,327,209
Option
Premiums Launched	561,248	456,172
Forward
Contracts and Others	904,398	609,717
Total	5,596,872	5,393 , 098

Summary by Category — Trading	9/30/2013			12/31/2012
	Notional	Cost	Market	Notional	Cost	Fair Value
"Swap"		16,449	988,537		(116,636)	(109,449)
Asset	147,282,661	19,175,450	20,583,391	112,138,690	15,982,326	16,792,479
CDI (Interbank Deposit Rates)	40,705,353	9,075,926	10,388,378	34,842,507	4,335,903	4,981,610
Fixed Interest Rate - Real (1)	16,893,595	10,099,524	10,195,013	16,341,376	11,646,423	11,810,869
Indexed to Price and Interest Rates	15,647,910	-	-	14,386,596	-	-
Indexed to Foreign Currency	73,978,839	-	-	46,477,772	-	-
Others	56,964	-	-	90,439	-	-
Liabilities	147,266,212	(19,159,001)	(19,594,854)	112,255,326	(16,098,962)	(16,901,928)
CDI (Interbank Deposit Rates)	31,629,427	-	-	30,506,604	-	-
Fixed Interest Rate - Real	6,794,071	-	-	4,694,953	-	-
Indexed to Price and Interest Rates	16,287,254	(639,344)	(1,043,003)	19,509,496	(5,122,900)	(5,512,171)
Indexed to Foreign Currency (1)	92,433,586	(18,454,747)	(18,487,227)	57,406,818	(10,929,046)	(11,355,697)
Others	121,874	(64,910)	(64,624)	137,455	(47,016)	(34,060)
Options	177,502,171	(121,481)	(162,809)	266,060,940	(94,067)	(159,048)
Purchased Position	79,129,349	348,639	398,439	107,224,381	228,378	297,124
Call Option - US Dollar	3,392,086	91,933	122,378	1,792,837	44,838	31,993
Put Option - US Dollar	1,758,447	37,244	49,727	1,748,915	24,039	24,087
Call Option - Other (2)	27,604,166	136,706	173,189	46,244,224	86,370	45,920
Interbank Market	25,371,990	59,132	115,382	45,411,468	51,667	2,289
Others (2)	2,232,176	77,574	57,807	832,756	34,703	43,631
Put Option - Other (2)	46,374,650	82,756	53,145	57,438,405	73,131	195,124
Interbank Market	44,927,951	37,159	6,182	56,963,540	57,121	185,813
Others (2)	1,446,699	45,597	46,963	474,865	16,010	9,311
Sold Position	98,372,822	(470,120)	(561,248)	158,836,559	(322,445)	(456,172)
Call Option - US Dollar	3,310,608	(170,019)	(213,370)	1,453,215	(36,653)	(28,003)
Put Option - US Dollar	1,130,067	(26,806)	(35,487)	1,385,098	(14,684)	(6,036)
Call Option - Other (2)	51,944,448	(173,696)	(239,224)	83,389,536	(152,818)	(103,294)
Interbank Market	49,819,514	(88,659)	(182,075)	81,602,615	(68,927)	(4,241)
Others (2)	2,124,934	(85,037)	(57,149)	1,786,921	(83,891)	(99,053)
Put Option - Other (2)	41,987,699	(99,599)	(73,167)	72,608,710	(118,290)	(318,839)
Interbank Market	40,811,343	(36,883)	(8,301)	71,156,608	(64,771)	(272,536)
Others (2)	1,176,356	(62,716)	(64,866)	1,452,102	(53,519)	(46,303)
Futures Contracts	79,912,858	-	-	61,247,088	-	-
Purchased Position	21,238,008	-	-	40,376,893	-	-
Exchange Coupon (DDI)	6,556,105	-	-	2,916,996	-	-
Interest Rates (DI1 and DIA)	12,106,710	-	-	30,144,684	-	-
Foreign Currency	2,107,565	-	-	6,576,093	-	-
Indexes (3)	252,240	-	-	133,917	-	-
Treasury Bonds/Notes	208,570	-	-	605,203	-	-
Others	6,818	-	-	-	-	-
Sold Position	58,674,850	-	-	20,870,195	-	-
Exchange Coupon (DDI)	17,750,945	-	-	14,091,511	-	-
Interest Rates (DI1 and DIA)	24,419,838	-	-	6,556,673	-	-
Foreign Currency	16,124,849	-	-	12,414	-	-
Indexes (3)	65,438	-	-	17,926	-	-
Treasury Bonds/Notes	264,940	-	-	191,671	-	-
Others	48,840	-	-	-	-	-
Forward Contracts and Others	26,373,410	36,060	156,850	21,766,014	166,807	(280,085)
Purchased Commitment	12,578,880	6,788	(98,108)	11,046,667	(593,458)	197,859
Currencies	12,216,036	6,788	(98,108)	11,046,667	(593,458)	197,859
Others	362,844	-	-	-	-	-
Sell Commitment	13,794,530	29,272	254,958	10,719,347	760,265	(477,944)
Currencies	13,383,903	83,837	310,101	10,797,139	745,350	(185,614)
Others	410,627	(54,565)	(55,143)	(77,792)	14,915	(292,330)
(1) Includes credit derivatives.
(2) Includes stock options, indices and
commodities.
(3) Includes Bovespa index and
S&P.

a.2) Derivatives Financial Instruments by Counterparty

Notional				9/30/2013	12/31/2012
		Related	Financial
	Customers	Parties	Institutions (1)	Total	Total
"Swap"	35,452,891	67,184,552	44,645,218	147,282,661	112,138,690
Options	3,128,483	334,500	174,039,188	177,502,171	266,060,940
Futures Contracts	-	-	79,912,858	79,912,858	61,247,088
Forward Contracts and Others	12,865,992	11,194,242	2,313,176	26,373,410	21,766,014
(1) Includes trades with the BM&FBovespa and
other securities and commodities exchanges.
a.3)
Derivatives Financial Instruments by Maturity
Notional				9/30/2013	12/31/2012
	Up to	From 3 to	Over
	3 Months	12 Months	12 Months	Total	Total
"Swap"	14,816,829	58,939,538	73,526,294	147,282,661	112,138,690
Options	15,794,526	153,113,907	8,593,738	177,502,171	266,060,940
Futures
Contracts	30,542,505	13,960,186	35,410,167	79,912,858	61,247,088
Forward
Contracts and Others	12,283,058	6,418,724	7,671,628	26,373,410	21,766,014
a.4)
Derivatives by Market Trading
Notional				9/30/2013	12/31/2012
	Stock Exchange (1)	Cetip (2)	Over the Counter	Total	Total
"Swap"	38,246,937	48,696,345	60,339,379	147,282,661	112,138,690
Options	173,601,060	3,501,111	400,000	177,502,171	266,060,940
Futures
Contracts	79,912,858	-	-	79,912,858	61,247,088
Forward
Contracts and Others	-	14,037,436	12,335,974	26,373,410	21,766,014
(1) Includes trades with the BM&FBovespa and other
securities and commodities exchanges. (2) Includes amount traded on other
clearinghouses.

a.5) Credit Derivatives

Transactions involving credit derivatives are carried out in order to reduce or eliminate exposure to specific risks arising from the purchase or sale of assets within the concept of credit portfolio management.

The volume of credit derivatives with total return rate – credit risk received corresponds to R$445,547 of cost (12/31/2012 - R$607,119) and R$493,368 of fair value (12/31/2012 - R$669,507). During the period there were no credit events related to events provided for in the contracts.

Required base capital used amounted to R$2,641 (12/31/2012, R$3,585).

a.6) Derivatives Used as Hedge Instruments

Derivatives used as hedge by index are as follows:

	9/30/2013			12/31/2012
		Adjustment			Adjustment
	Cost	to
Market	Fair
Value	Cost	to
Market	Fair
Value
Hedge
Instruments
Swap
Contracts	35,090	(67,627)	(32,537)	59,148	(147,817)	(88,669)
Asset	2,275,297	(605,613)	1,669,684	1,581,458	105,351	1,686,809
CDI (Interbank Deposit Rates) (1)
(2)	1,126,956	(745,296)	381,660	1,039,229	5,241	1,044,470
Indexed to Foreign Currency - Libor - US
Dollar (2) (3) (4) (6)	464,643	30,433	495,076	255,056	24,302	279,358
Indexed to Foreign Currency - Swiss Franc (5)	309,121	5,040	314,161	-	-	-
Indexed to Foreign Currency - Euro (1)	374,577	104,210	478,787	287,173	75,808	362,981
Liabilities	(2,240,207)	537,986	(1,702,221)	(1,522,310)	(253,168)	(1,775,478)
Indexed to Foreign Currency - US Dollar (1)	(1,125,186)	(170,281)	(1,295,467)	(1,070,666)	(185,072)	(1,255,738)
Indexed to Price Indexes and Interest (2)	(430,635)	726,067	295,432	(245,530)	(50,678)	(296,208)
Indexed to Foreign Currency - Fixed
Interest US Dollar (3)	(33,781)	(1,959)	(35,740)	(35,076)	(3,062)	(38,138)
CDI (Interbank Deposit Rates) (4)	(135,044)	(7,411)	(142,455)	(171,038)	(14,356)	(185,394)
Indexed to Foreign Currency - Libor - US
Dollar (5)	(291,237)	(6,587)	(297,824)	-	-	-
Fixed Interest Rate - Real (6)	(224,324)	(1,843)	(226,167)	-	-	-
Object of
"Hedge"
Assets	1,575,967	94,328	1,670,295	1,593,371	119,818	1,713,189
Lending
Operation	1,133,596	50,875	1,184,471	1,229,701	83,785	1,313,486
Indexed to Foreign Currency - US Dollar	739,609	70,999	810,608	1,021,123	93,162	1,114,285
Indexed to Foreign Currency - Fixed Interest US
Dollar	34,541	(269)	34,272	35,094	676	35,770
CDI
(Interbank Deposit Rates)	135,044	(7,868)	127,176	173,484	(10,053)	163,431
Fixed
Interest Rate - Real	224,402	(11,987)	212,415	-	-	-
Securities	442,371	43,453	485,824	363,670	36,033	399,703
Securities Available for Sale - Debentures	442,371	43,453	485,824	363,670	36,033	399,703
Obligations
for Securities Abroad	(310,502)	(3,653)	(314,155)	-	-	-
Eurobonds	(310,502)	(3,653)	(314,155)	-	-	-
(1) Instruments whose hedge objects are loans indexed to
foreign currency - dollar with a fair value of R$1,268,972 (12/31/2012 –
R$1,114,285) and the securities represented by debentures with a fair
value R$129,209 (12/31/2012 - R$133,273) . (2) Instruments whose hedge objects are securities represented
by debentures with a fair value R$356,615 (12/31/2012 -
R$266,430). (3) Instruments whose hedge objects are loans indexed to
foreign currency pre- dollar with a fair value of R$R$34,272 (12/31/2012 -
R$35,770). (4) Instruments whose hedge objects are loans indexed to CDI
with a fair value of R$127,176 (12/31/2012 - R$163,431). (5) Instruments whose hedge objects are obligations for
securities abroad – Eurobonds with fair value
R$314,155. (6) Instruments whose hedge objects are lending operations
indexed pre fixed interest - Reais with a fair value of
R$212,415.
			Value	Cost	to Fair Value	Fair Value
Hedge
Instruments
Swap
Contracts				(141,055)	(111,964)	(253,019)
Asset			2,724,756	2,724,756	45,124	2,769,880
Indexed to Foreign Currency - Swiss
Franc (1)			927,610	927,610	42,909	970,519
Indexed to Pre Interest Rate - Chilean
Peso (2)			98,037	98,037	6,031	104,068
Indexed to Foreign Currency - Iuan (3)			55,265	55,265	607	55,872
Indexed to Real (4)			1,253,333	1,253,333	(42,917)	1,210,416
Indexed to Foreign Currency - Pre Dollar (5)			227,619	227,619	29,600	257,219
Indexed to Foreign Currency - Euro (6)			162,892	162,892	8,894	171,786
Liabilities			(2,865,811)	(2,865,811)	(157,088)	(3,022,899)
Indexed to Foreign Currency - Pre Dollar			(2,500,705)	(2,500,705)	(117,519)	(2,618,224)
CDI
(Interbank Deposit Rates)			(208,303)	(208,303)	(30,601)	(238,904)
Indexed to Foreign Currency - Pre Dollar (6)			(156,803)	(156,803)	(8,968)	(165,771)
Future
Contracts			10,830,058	-	-	-
DI1 Rate (3)			10,830,058	-	-	-

$$/page=

	12/31/2012 — Reference		Adjustment
	Value	Cost	to Fair Value	Fair Value
Hedge
Instruments
Swap
Contracts		(18,866)	(17,846)	(36,713)
Asset	818,997	818,997	60,173	879,170
Indexed to Foreign Currency - Swiss Franc (1)	678,335	678,335	53,619	731,954
Indexed to Pre Interest Rate - Real (2)	91,379	91,379	6,584	97,963
Indexed to Foreign Currency - Iuan (3)	49,283	49,283	(30)	49,253
Liabilities	(837,864)	(837,863)	(78,019)	(915,883)
Indexed to Foreign Currency - Pre Dollar (1) (2) (3)	(837,864)	(837,863)	(78,019)	(915,883)
Future
Contracts	34,567,439	-	-	-
DI1 Rate (8)	18,962,863	-	-	-
Foreign Currency - Dollar (7)	15,604,576	-	-	-
			9/30/2013	12/31/2012
Hedge
Object - Cost
Assets			6,850,652	15,538,109
Lending Operations - Financing and Export Credit and
Imports			6,485,544	15,538,109
Promissory
Notes			208,303	-
Operações de Crédito			156,805	-
Liabilities			2,340,854	19,607,312
Eurobonds			2,340,854	820,077
Time
Deposits			-	18,787,235
(1) Operation with maturing on December 1, 2014, March 4, 2015
and April 12, 2016 whose object of hedge are Eurobonds
operations. (2) Operation with maturing on April 13, 2016, whose hedge
object are Eurobonds transactions. (3) Operation with maturing on December 24, 2014, whose hedge
object are Eurobonds transactions. (4) Operation with maturing on March 18, 2016, whose hedge
object are Eurobonds transactions. (5) Operation maturing on April 10,
2018, , which hedge objects its securities operation represented by
promissory classified in "available-for-sale securities"
category. (6) Operations maturing on April 3,
2018 and July 15, 2015, whose hedge objects are contracts from lending
operations with credit insitutions. (7) Operations maturing on October
31, 2013 and January 2, 2014 (12/31/2012 - operation with maturity January
31, 2013) and the updated value of the instruments of R$6,486,427
(12/31/2012 – R$15,531,390), whose object of "hedge" are the lending
operations - loan agreements and credit export and
import. (8) In the third quarter of 2013, due to the business strategy,
the structures of "hedge" cash flow that had as object "hedge" Bank
Deposit Certificates (CDB) have been discontinued. The effect of marking
to market of futures contracts outstanding net of tax in equity
corresponds to a debt in the amount of R$49,175 and will be amortized by
January 2014, the remaining term of the hedging
instruments.

The effect of marking to market the swaps and future contracts amounts a debit of R$100,732 (12/31/2012 - R$258,555), and is recorded in stockholders' equity, net of tax effects.

There was not identified any ineffective portion to be recorded in income for the accounting period.

Investment Hedge

On September 30, 2013, the Bank has recorded a transaction of investment hedge on its stake in Santander EFC, with notional value of R$2,163,839, maturing between August 2013 to January 2014 and the effect of R$327,357 (12/31/2012 -R$182,046), of exchange recorded in equity, net of tax effects. The effectiveness obtained for this portfolio of “hedge” is in accordance with the current regulations and was not identified any ineffective portion to be recorded in income over the period.

a.7) Derivatives Pledged as Guarantee

The guarantee margin transactions traded on the BM&FBovespa derivative financial instruments themselves and others are composed of government securities.

	9/30/2013	12/31/2012
Financial Treasury Bill -
LFT	766,218	1,421,634
National Treasury Bill -
LTN	2,325,129	3,699,901
National Treasury Notes -
NTN	2,633,593	3,024,811
Total	5,724,940	8,146,346

$$/page=

b) Financial instruments - Sensitivity analysis

The risk management is focused on portfolios and riskfactors pursuant to the requirements of regulators and good international practices.

Financial instruments are segregated into trading and banking portfolios, as in the management of market risk exposure, according to the best market practices and the transaction classification and capital management criteria of the Basileia II New Standardized Approach of regulators. The trading portfolio consists of all transactions with financial instruments and products, including derivatives, held for trading, and the banking portfolio consists of core business transactions arising from the different Banco Santander business lines and their possible hedges. Accordingly, based on the nature of Banco Santander’s activities, the sensitivity analysis was presented for trading and banking portfolios.

Banco Santander performs the sensitivity analysis of the financial instruments in accordance with requirements of regulatory bodies and international best practices, considering the market information and scenarios that would adversely affect the positions of the Bank.

The table below summarizes the stress amounts generated by Banco Santander’s corporate systems, related to the banking and trading portfolio, for each one of the portfolio scenarios as at September 30, 2013.

| Trading
Portfolio — Risk Factor | Description | Scenario
1 | Scenario
2 | Scenario
3 |
| --- | --- | --- | --- | --- |
| Interest Rate - Reais | Exposures subject to changes in fixed interest
rate | (4,163) | (84,148) | (168,296) |
| Coupon Interest Rate | Exposures subject to changes in coupon rate of interest
rate | (6,518) | (86,183) | (172,366) |
| Coupon - US Dollar | Exposures subject to changes in
coupon US Dollar rate | (2,899) | (4,258) | (8,515) |
| Coupon - Other Currencies | Exposures subject to changes in coupon foreign currency
rate | (20) | (20) | (41) |
| Foreign currency | Exposures subject to foreign exchange | (1,780) | (44,494) | (88,988) |
| | Exposures subject to changes in
interest rate negotiated roles in | | | |
| Eurobond/Treasury/Global | international market | (345) | (140) | (279) |
| Inflation | Exposures subject to change in coupon rates of price
indexes | (50) | (2,609) | (5,218) |
| Shares and Indexes | Exposures subject to change in shares price | (1,954) | (48,862) | (97,723) |
| Other | Exposures not meeting the previous settings | (1,083) | (69) | (138) |
| Total (1) | | (18,812) | (270,783) | (541,564) |
| (1) Amounts net of
taxes. | | | | |

Scenario 1: a shock of 10 base points on the interest curves and 1% to price changes (currency and stocks);

Scenario 2 : a shock of +25% and -25% in all risk factors, are considered the greatest losses per risk factor;

Scenario 3: a shock of +50% and -50% in all risk factors, are considered the greatest losses per risk factor.

| Portfolio
Banking — Risk Factor | Description | Scenario
1 | Scenario
2 | Scenario
3 |
| --- | --- | --- | --- | --- |
| Interest Rate - Reais | Exposures subject to changes in fixed interest
rate | (16,566) | (423,914) | (790,647) |
| TR and Long-Term | | | | |
| Interest Rate - (TJLP) | Exposures subject to changes in tax of TR na
TJLP | (17,898) | (433,131) | (810,109) |
| Inflation | Exposures subject to change in coupon rates of price
indexes | (1,733) | (22,111) | (43,244) |
| Coupon - US
Dollar | Exposures subject to changes in coupon US Dollar
rate | (45,000) | (219,065) | (456,830) |
| Coupon - Other | | | | |
| Currencies | Exposures subject to changes in coupon foreign currency
rate | (10,889) | (58,257) | (126,557) |
| Interest Rate Markets | Exposures subject to changes in
interest rate negotiated roles in | | | |
| International | international market | (43,106) | (250,468) | (475,595) |
| Foreign currency | Exposures subject to foreign exchange | (310) | (7,757) | (15,514) |
| Total (1) | | (135,502) | (1,414,703) | (2,718,496) |
| (1) Amounts net of taxes. | | | | |

Scenario 1: a shock of 10 base points in interest rate curves and 1% price variance (currency);

Scenario 2 : a shock of +25% and -25% in all risk factors, are considered the greatest losses per risk factor;

Scenario 3: a shock of +50% and -50% in all risk factors, are considered the greatest losses per risk factor.

c) Off-balance-sheet funds under management

The detail of off-balance-sheet funds managed by the Bank is as follows:

	9/30/2013	12/31/2012
Investment
funds	112,002,334	104,461,015
Assets under management	9,505,489	9,393,269
Total	121,507,823	113,854,284

d) Third-party securities held in custody

As of September 30, 2013 and December 31, 2012, the Bank held in custody marketable debt securities and equity instruments totaling R$69,261,064 and R$79,719,901, respectively entrusted to it by third parties.

e) Statements of value added

The following Statements of value added is not required under IFRS but being presented as supplementary information as required by Brazilian Corporate Law for publicly-held companies, and has been derived from the Bank´s consolidated financial statements prepared in accordance with IFRS.

Interest and similar income	9/30/2013 — 37,504,122		9/30/2012 - Adjusted — 40,364,516
Fee and commission income (net)	6,080,081		5,740,040
Impairment losses on financial assets
(net)	(10,942,091)		(11,674,930)
Other
income and expense	( 1,515,353 )		( 310,573 )
Interest expense and similar charges	(16,047,575)		(16,403,574)
Third-party input	(4,484,709)		( 4,460 , 106 )
Materials, energy and others	(398,608)		(411,359)
Third-party services	(3,445,299)		(3,258,493)
Impairment of assets	(86,022)		(8,238)
Other	(554,780)		( 782,016 )
Gross
added value	13,625, 1 81		1 3 ,876, 519
Retention
Depreciation and amortization	(931,204)		(859,640)
Added
value produced	12,693, 977		13,016,879
Added value received from transfer
Investments in affiliates and
subsidiaries	84,107		58,875
Added
value to distribute	1 2 ,778,084		13,075,754
Added
value distribution
Employee	4,546,170	35.6%	4,641,285	35.6%
Compensation	3,291,519		3,328,911
Benefits	864,111		807,385
Government severance indemnity funds for employees -
FGTS	200,176		245,876
Other	190,364		259,113
Taxes	3,287,824	27.7%	3,306,298	25.3%
Federal	3,245,571		3,266,863
State	547		588
Municipal	41,706		38,847
Compensation of third-party capital -
rental	538,424	4.2%	454,507	3.5%
Remuneration of interest on capital	4,405,666	34 .5 %	4,6 73 , 664	35.7%
Dividends and interest on capital	300,000		1,480,000
Profit
Reinvestment	4,016,832		3,1 83 ,709
Profit (loss) attributable to non-controlling
interests	88,834		9,955
Total	1 2,778,084	100.0%	13, 075 ,754	100.0%
17. Supplementary information – Conciliation of
stockholders' equity and net income
The table below presents a conciliation of
stockholders' equity and net income attributed to the parent between
standards adopted in Brazil (BRGAAP) and IFRS, with the conceptual
description of the main adjustments:
	Note	9/30/2013	9/30/2012- Adjusted	12/31/2012- Adjusted
Stockholders' equity attributed to the parent under
Brazilian GAAP		63,739,68 4	63,976,957	63,451,508
IFRS adjustments, net of taxes, when
applicable:
Reclassification of financial instruments at fair
value through profit or loss	a	1,675	7,802	7,032
Reclassification of financial instruments to
available-for-sale	b	35,879	543,710	460,340
Impairment on loans and receivables	c	80,976	1,118,860	80,413
Deferral of financial fees, commissions and inherent
costs under effective interest rate method
	d	333,472	429,208	394,823
Reversal of goodwill amortization	e	16,150,910	12,513,929	13,423,171
Realization on purchase price
adjustments	f	1,016,811	666,014	1,068,715
Others		10,7 51	5,403	12,994
Stockholders' equity attributed to the parent under
IFRS		81,370,158	79,261,883	78,898,996
Non-controlling interest under IFRS		248,085	18,174	237,130
Stockholders' equity (including non-controlling
interest) under IFRS		81,618,243	79,280,057	79,136,126

		7/01 to 9/30/2013	7/01 to 9/30/2012 adjusted	1/01 to 9/30/2013	1/01 to 9/30/2012 adjusted
Net income attributed to the parent under Brazilian
GAAP		497,358	599,98 2	1,607,385	2,028,480
IFRS adjustments, net of taxes, when applicable:
Reclassification of financial instruments at fair value through
profit or loss	a	6,429	(15,499)	(10,596)	(15,797)
Reclassification of financial instruments to available-for-sale	b	231	(518)	102,381	1,096
Impairment on loans and receivables	c	2,184	14,184	563	(9,246)
Deferral of financial fees, commissions and inherent costs
under effective interest rate method
	d	(15,858)	(36,186)	(61,351)	(116,555)
Reversal
of goodwill amortization	e	909,247	909,234	2,727,739	2,727,702
Realization on purchase price adjustments	f	(17,301)	(16,518)	(51,904)	(42,519)
Others		(49,748)	17,272	2,615	90,548
Net income attributed to the parent under
IFRS		1,332,542	1,471,951	4,316,832	4,663,709
Non-controlling interest under IFRS		17,768	2,416	88,834	9,955
Net income (including non-controlling interest) under
IFRS		1,350,310	1,474,367	4,405,666	4,673,664

a) Reclassification of financial instruments at fair value through profit or loss:

Under BRGAAP, all loans and receivables and deposits are accounted for at amortized cost. Under IFRS, in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” the financial assets can be measured at fair value and included in the category as “other financial assets at fair value through profit or loss” to eliminate or significantly reduce the accounting mismatch the recognition or measurement derived from measuring assets or liabilities or recognizing gains or losses on them on different bases, which are managed and their performance evaluated on the basis of fair value. Thus, the Bank classified loans, financing and deposits that meet these parameters, as the "other financial assets at fair value through profit or loss", as well as certain debt instruments classified as “available for sale” under BRGAAP. The Bank has selected such classification basis as it eliminates an accounting mismatch in the recognition of income and expenses.

b) Reclassification of financial instruments to available-for-sale:

Under BRGAAP, the Bank accounts some investments, for example, in debt securities at amortized cost and equity securities at cost. At the time of preparing this balance sheet, management revised its strategy for managing their investments and in accordance with the premises of the Central Bank Circular 3.068, were reclassified debt securities category for "negotiation" with record in fair value through profit or loss. Under IFRS, the Bank has classified these investments as available for sale, measuring them at fair value with changes recognized in the "Consolidated statements of comprehensive income", within the scope of IAS 39 "Financial Instruments: Recognition and Measurement", which does not allow reclassification of any financial instrument for the fair value through profit or loss category after initial recognition.

c) Impairment on loans and receivables:

On the income refers to the adjust based on estimated losses on loans and receivables portfolio, which was established with based on historical loss of impairment and other circumstances known at the time of evaluation, according to the guidance provided by IAS 39 "Financial Instruments: Recognition and Measurement. These criteria differ in certain aspects of the criteria adopted under BRGAAP, which uses certain regulatory limits set by the Central Bank. Additionally, the equity accumulated adjustments of the allocation of purchase price when the acquisition of Banco Real, according to the requirements of IFRS 3 "Business Combinations".

d) Deferral of financial fees, commissions and inherent costs under effective interest rate method:

Under IFRS, in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”, financial fees, commissions and other costs that are integral part of effective interest rate of financial instruments measured at amortized cost are recognized in profit or loss over the term of the corresponding contracts. Under BRGAAP these fees and expenses are recognized directly as income when received or paid.

e) Reversal of goodwill amortization:

Under BRGAAP, goodwill is amortized systematically over a period upto 10 years and additionally, the goodwill recorded is measured annually or whenever there is any indication that the asset may be impaired. Under IFRS, in accordance with IAS 38 “Intangible Assets”, goodwill is not amortized, but instead, is tested for impairment, at least annually, and whenever there is an indication that the goodwill may be impaired; comparing its recoverable amount with its carrying value. The tax amortization of goodwill of Banco ABN Amro Real SA represents a difference between book and tax basis of a permanent nature and definitive as the possibility of future use of resources to settle a tax liability is considered remote by management, supported by the opinion of expert external advisors. The tax amortization of goodwill is permanent and definitive, and therefore does not apply to the recognition of a deferred tax liability in accordance with IAS 12, on temporary differences.

f) Realization on purchase price adjustments:

As part of the allocation of the purchase price related to the acquisition of Banco Real, following the requirements of IFRS 3, the Bank has recognized the assets and liabilities of the acquiree to fair value, including identifiable intangible assets with finite lives. Under BRGAAP, in a business combination, the assets and liabilities are kept at their book value. This purchase price adjustment relates substantially to the following items:

• The appropriation related to the value of assets in the loan portfolio. The initial recognition of value of the loans at fair value, adjustment to the yield curve of the loan portfolio in comparison to its nominal value, which is appropriated by its average realization period.

• The amortization of the identified intangible assets with finite lives over their estimated useful lives.

18. Subsequent Events

Plan to Optimize the Capital Structure

On September 26, 2013, the Company disclosed a Material Fact announcing that, in order to optimize its capital structure and in accordance with the new prudent capital requirements for financial institutions (also known as “Basel III”), the Board of Directors will submit a proposal to optimize the composition of Banco Santander’s regulatory capital to the shareholders for their approval, maintaining its current volume and diversifying it in terms of currency and composition.

The aim is to establish a more efficient capital structure, consistent with the new prudent capital rules and aligned with Banco Santander’s business plan and asset growth. The following was therefore approved: (i) the distribution of equity to the shareholders of Santander Brasil in the total amount of six billion Reais R$6,000,000, with no reduction in the number of shares, to be submitted for approval to the Company’s Shareholders’ Meeting on November 1, 2013; (ii) the issuance abroad of capital instruments to compose Tier I and Tier II of Santander Brasil’s regulatory capital, in a proportion to be determined, which will be submitted for approval to the Board of Directors and will only be issued if said distribution of equity takes place; and (iii) a bonus share program and an adjustment in the composition of the Units, followed by a reverse share split (inplit), with the purpose of eliminating trading in centavos.

The proposals for the bonus share program, adjustment of the composition of the Units and share inplit are expected to be submitted for the approval of a Shareholders’ Meeting in the first quarter of 2014, after implementation of the proposal for the Distribution of Equity and the issue of capital instruments to compose Tier I and Tier II of Santander Brasil’s regulatory capital.

On September 30, 2013, Banco Santander published the Call Notice for an Extraordinary Shareholders Meeting to be held on November 1, 2013, to resolve on the following agenda: (i) a proposal to reduce the Bank’s capital by R$6,000,000, from R$62,828,201 (1) to R$56,828,201, with no reduction in the number of shares and no alteration in the percentage holdings of the Bank’s shareholders, with the subsequent amendment of the head paragraph of Article 5 of the Bylaws; (ii) a proposal to amend item XIII of article 17 of the Bank’s Bylaws, in order to give the Board of Directors authority to resolve on the issuance, within the limit of authorized capital, of debt securities and other share-convertible instruments, pursuant to Law 12838 of July 9, 2013 and National Monetary Council Resolution 4192 of March 1, 2013; and (iii) approval of (a) the appointment of Celso Clemente Giacometti as Chairman of the Company’s Board of Directors; (b) the appointment of Jesús Maria Zabalza Lotina as Vice-Chairman of the Board of Directors and (c) confirmation of the composition of the Board of Directors.

(1) The current Capital on Consolidated Statements in IFRS is R$62,634,585 (net of issuances costs of R$ 193,616, of the Global Share Offering), after the conclusion of the plan to optimize the capital structure, the Capital will be R$56,634,585, net of issuances costs.

APPENDIX I – SUBSIDIARIES OF BANCO SANTANDER (BRASIL) S.A.

| Directly and Indirectly controlled by Banco
Santander (Brasil) S.A. | | Participation % | | Adjusted — Stockholders' | |
| --- | --- | --- | --- | --- | --- |
| | Activity | Direct | Indirect | Equity | Net Income |
| Santander Brasil Asset (1) | Asset Manager | 99.99% | 100.00% | 218,647 | 46,204 |
| Banco Bandepe S.A. (1) | Bank | 100.00% | 100.00% | 3,029,224 | 188,375 |
| Santander Leasing S.A. Arrendamento
Mercantil (1) | Leasing | 78.57% | 99.99% | 5,001,183 | 176,811 |
| Aymoré Crédito, Financiamento e
Investimento S.A. (1) | Financial | 100.00% | 100.00% | 1,112,837 | (5,121) |
| Santander Brasil Administradora de
Consórcio Ltda. (1) (5) | Buying club | 100.00% | 100.00% | 125,363 | 17,327 |
| Santander Microcrédito Assessoria
Financeira S.A. (3) | Microcredit | 100.00% | 100.00% | 20,226 | 1,161 |
| Santander Brasil Advisory Services S.A. (3) | Other Activities | 96.52% | 96.52% | 13,193 | 455 |
| CRV Distribuidora de Títulos e Valores
Mobiliários S.A. (1) | Dealer | 100.00% | 100.00% | 27,959 | 3,518 |
| Santander Corretora de Câmbio e
Valores Mobiliários S.A. (1) | Broker | 99.99% | 100.00% | 249,100 | 52,496 |
| Santander Participações S.A. (3) | Holding | 100.00% | 100.00% | 1,226,720 | 19,792 |
| Santander Getnet (3)
(4) | Other Activities | 50.00% | 50.00% | 72,810 | 57,791 |
| Sancap Investimentos e Participações
S.A. (3) | Holding | 100.00% | 100.00% | 359,382 | 69,898 |
| Mantiq Investimentos Ltda. (3) | Other Activities | 100.00% | 100.00% | 7,486 | 983 |
| Santos Energia Participações S.A. (3) | Holding | 100.00% | 100.00% | 23,436 | (3,063) |
| MS Participações Societárias S.A. (3) | Holding | 99.99% | 99.99% | 135,916 | (3,538) |
| Santander Brasil EFC (1) | Financial | 100.00% | 100.00% | 2,268,223 | 10,682 |
| Santander S.A. Serviços Técnicos,
Administrativos e de Corretagem de Seguros (3) | Insurance Broker | 60.65% | 60.65% | 535,788 | 164,548 |
| Controlled by Santander Serviços | | | | | |
| Webcasas S.A. (3) | Other Activities | - | 100.00% | 24,435 | (65) |
| Controlled by Sancap | | | | | |
| Santander Capitalização S.A. (2) | Savings and annuities | - | 100.00% | 204,354 | 65,404 |

| Brazil Foreign Diversified Payment Rights Finance
Company (a) | Securitization | - | (a) | - | - |
| --- | --- | --- | --- | --- | --- |
| Santander FIC FI Contract I Referenciado DI (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Unix Multimercado
Crédito Privado (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Diamantina
Multimercado Crédito Privado de Investimento no Exterior (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Amazonas
Multimercado Crédito Privado de Investimento no Exterior (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento SBAC Referenciado DI
Crédito Privado (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Guarujá Multimercado
Crédito Privado de Investimento no Exterior (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Financial Curto
Prazo (a) | Investment Fund | - | (a) | - | - |
| Santander Fundo de Investimento Capitalization Renda
Fixa (a) | Investment Fund | - | (a) | - | - |
| Santander Paraty QIF PLC (a) | Investment Fund | - | (a) | - | - |
| (a) Company over which effective control is
exercised, according with IFRS 10 - Consolidated Financial Statements, and
there is no ownership interest. (1) The adjusted stockholders' equity and the net
income are in accordance with accounting practices established by
Brazilian Corporate Law and standards established by the CMN, the Bacen
and document template provided in the Accounting National Financial System
Institutions (Cosif) and the CVM, that does not conflict with the rules of
Bacen. (2) The adjusted stockholders' equity and the net
income are in accordance with the pronouncements and interpretations
issued by the Accounting Pronouncements Committee (CPC) and countersigned
by the National Council of Private Insurance (CNSP) and the
Susep. (3) The adjusted stockholders' equity and the net
income are in accordance with accounting practices established by
Brazilian Corporate Law, in conjunction to technical pronouncement of the
CPC, correlated to the International Financial Reporting Standards -
IFRS. (4) Banco Santander has authority to make decisions
related to business strategy. Additionally, Banco Santander allows Getnet
the use of its branch network and brand for the sale of products, which
among other factors determines the Bank's control of
Getnet. (5) At meetings held on July 25, 2012, the Board of
Directors of Santander Consórcios and Santander Brasil Consórcios agreed
and decided to submit for approval from their respective partners, the
incorporation propose of Santander Consórcios (Incorporated) by Santander
Brasil Consórcio (Incorporator) (Incorporation) which was approved at
meeting of the Partners Incorporated and Incorporator on July 31, 2012.
The merger will give through the transfer of the net book value of
incorporated for the stockholders’ equity of the incorporator, based on
the audited balance sheet at June 30, 2012. The equity variations occurred
between the base date of that balance sheet and the effectiveness of the
incorporation (the date of the Contract Amendment) were recognized and
recorded directly on the incorporator. On November 30, 2012 this process
of incorporation was approved by the Bacen. *** | | | | | |

●
(Amounts in thousands of Brazilian Reais - R$,
unless otherwise stated)
Dear Stockholders:
We presented the Performance Review to consolidated
interim financial statements of Banco Santander (Brasil) S.A. for the
period ended on September 30, 2013, were prepared in accordance with IAS
34 - Interim Financial Statements from the International Financial
Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and the interpretations issued by the IFRS
Interpretation Committee (Current name of IFRIC) (IFRS).
• Macroeconomic Environment
Economic activity remained moderate, albeit better
than in 2012. Second-quarter GDP, according to the latest figures released
in August, surprised on the upside growing 3.3% over the same period in
2012, above the 1.9% YoY recorded in the previous quarter. Investments
rose 9.0% YoY, driven mainly by a buildup in inventories and favored by
the depressed basis of comparison in 2012. Household consumption expanded
by 2.3% in the same period. On the supply side, agriculture presented the
best performance, at 13.0% YoY. Industry did better in the second quarter,
growing 2.8% YoY.
Consumer prices, measured by the IPCA index,
increased by 5.9% in the 12 months through September, 6.7% down on June
2013 and 5.8% up on the end of 2012. Service prices continued to pressure
inflation, driven by increasing labor costs, although this was partially
offset by regulated prices. In this context, the Central Bank’s Monetary
Policy Committee (Copom) maintained the monetary squeeze begun in April
this year and pushed up the basic interest rate (Selic), to 9.5% p.a. at
its meeting on October 9. This is already impacting bank lending rates. In
August, the average non-earmarked rate for loans to individuals stood at
36.5% p.a. versus 34.9% p.a. in August 2012. Outstanding credit grew 16.1%
YoY in the 12 months through August, reaching R$2.6 trillion, or 55.5% of
GDP, still driven by mortgage lending, which grew by 35.1% YoY in the same
period, well above the other credit lines.
The fragile global scenario is still jeopardizing
Brazilian exports, which dropped by 4.5% YoY in the 12 months ending in
August, while imports rose 4.0% YoY, giving a period trade surplus of
US$2.5 billion, well below the US$23.0 billion recorded in the same period
last year. Also in the 12 months through August, the current account
deficit amounted to US$80.6 billion while foreign direct investments (FDI)
totaled US$61.1 billion. The exchange rate closed September at
R$2.2/US$, despite suffering from a sharp increase in volatility due
to the signals concerning the handling of U.S. monetary policy. Central
Bank action was instrumental in the exchange rate back to the same level
as in june 2013 throught the announcement of the action program exchange.
Regarding government accounts, sluggish activity coupled with the tax
breaks led to a reduction in tax revenues in real terms. Consequently, the
primary surplus came to 1.8% of GDP in the 12 months through August. In
the same period, public sector borrowing requirements reached 3.1% of GDP,
slightly worse than the 2.83% recorded in June 2013. The net public sector
debt closed August at 33.8% of GDP, 0.7 percentage points down on June.
Gross public debt reached 59.1% of GDP in the same period of
comparison.
1. Net Income
Consolidated Income Statements	09.30.2013	09.30.2012	Annual Change %	3rd Quarter of 2013	2nd Quarter of 2013	Quarterly Change %
R$ Million
INTEREST NET INCOME	21,457	23,961	-10%	6,895	7,227	-5%
Income from equity instruments	47	47	0%	2	43	-
Income from companies accounted for by the equity
method	84	59	42%	34	29	17%
Fee and commission net	6,080	5,740	6%	1,970	2,085	-6%
Gains (losses) on financial assets and liabilities
(net) + Exchange differences (net)	68	(35)	-294%	589	(1,485)	-140%
Other operating income (expense)	(339)	(484)	-30%	(155)	(89)	74%
TOTAL INCOME	27,397	29,288	-6%	9,335	7,810	20%
Administrative expenses	(10,163)	(10,231)	-1%	(3,488)	(3,348)	4%
Personnel expenses	(5,178)	(5,275)	-2%	(1,758)	(1,695)	4%
Other general expenses	(4,985)	(4,956)	1%	(1,730)	(1,653)	5%
Depreciation and amortization	(931)	(860)	8%	(288)	(329)	-12%
Provisions (net)	(1,210)	(1,605)	-25%	(571)	(326)	75%
Impairment losses on financial assets
(net)	(10,942)	(11,675)	-6%	(3,291)	(3,755)	-12%
Impairment losses on other assets
(net)	(86)	(8)	-	36	(97)	-137%
Gains (losses) on disposal of assets not classified
as non-current assets held for sale	413	2	-	1	411	-
Gains (losses) on disposal and expenses of
non-current assets held for sale not classified as discontinued
operations	99	10	-	8	15	-47%
OPERATING PROFIT BEFORE TAX	4,577	4,921	-7%	1,742	381	357%
Income taxes	(171)	(247)	-31%	(392)	1,097	-136%
PROFIT FOR THE PERIOD	4,406	4,674	-6%	1,350	1,478	-9%

| Net
Interest Margin | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| On September 30, 2013, the net interest income
reached R$21,457 million decreased of 10% compared with the previously
year. On the quarter decreased of 5%. | | | | | | |
| Expenses (Administrative +
Personnel) | | | | | | |
| The expenses (administrative + personnel) totaled
R$10,163 million on September 30, 2013, decrase of 1% compared with the
previously year. On the second quarter of 2013, the general expenses
increased 4%. Other administrative expenses totaled R$4,985 million, a
increase of 1% compared with the previously year and 5% on the
quarter. | | | | | | |
| Personnel expenses totaled R$5,178 million on
September 30, 2013, a decreased of 2% in twelve months and increased of 4%
in three months. | | | | | | |
| As a result the efficiency ratio, calculated by
division the general expenses by total revenue, reached
37.1%. | | | | | | |
| Provision for impairment of loans and
advances | | | | | | |
| The expenses for impairment losses, including the
total revenue recovery, totaled R$10,942 million and R$11,675 million on
the nine months ended on September 30, 2013 and 2012, respectively,
decreasing 6.3%. | | | | | | |
| Income
Taxes | | | | | | |
| The total taxes includes income tax, social
contribution, PIS and Cofins. On September 30, 2013, the tax income
reached to an expense of R$171 million, considering the Cayman fiscal
hedge effect the income tax is an expense of R$1,813
million. | | | | | | |
| 2. Assets/Liabilities | | | | | | |
| The total assets on September 30, 2013 totaled
R$440,118 million. | | | | | | |
| Consolidated Balance Sheets | 09.30.2013 | 09.30.2012 | Annual Change % | 06.30.2013 | Quarterly Change % | 12.31.2012 |
| R$ Million | | | | | | |
| Assets | | | | | | |
| Cash and Balances with the Brazilian Central
Bank | 64,322 | 63,053 | 2% | 62,381 | 3% | 55,535 |
| Financial Assets held for Trading | 32, 394 | 22,140 | 46% | 32,907 | -2% | 31,638 |
| Other Financial Assets at Fair Value Through Profit
or Loss | 1,250 | 1,335 | -6% | 1,230 | 2% | 1,228 |
| Loans and amounts due from credit
institutions | - | 10 | -100% | 1 | -100% | 5 |
| Debt instruments | 115 | 134 | -14% | 110 | 5% | 124 |
| Equity instruments | 1,135 | 1,191 | -5% | 1,119 | 1% | 1,099 |
| Available-for-Sale Financial Assets | 37,594 | 40,941 | -8% | 43,062 | -13% | 44,149 |
| Loans and Receivables | 240,341 | 224,686 | 7% | 232,187 | 4% | 226,957 |
| Loans and amounts due from credit
institutions | 33,083 | 31,332 | 6% | 30,163 | 10% | 29,913 |
| Loans and advances to customers | 221,060 | 206,735 | 7% | 216,297 | 2% | 210,740 |
| Impairment Losses | (14,056) | (13,648) | 3% | (14,521) | -3% | (13,966) |
| Debt instruments | 254 | 267 | -5% | 248 | 2% | 270 |
| Hedging Derivatives | 1 63 | 79 | 106 % | 130 | 25% | 156 |
| Non-Current Assets Held For Sale | 164 | 134 | 22% | 139 | 18% | 166 |
| Investments in Associates and Joint
Ventures | 1,018 | 459 | 122% | 979 | 4% | 472 |
| Tangible Assets | 6,391 | 5,609 | 14% | 6,122 | 4% | 5,938 |
| Intangible Assets | 29,139 | 31,901 | -9% | 29,136 | 0% | 29,271 |
| Goodwill | 27,218 | 27,218 | 0% | 27,218 | 0% | 27,218 |
| Other intangible assets | 1,922 | 4,683 | -59% | 1,918 | 0% | 2,053 |
| Tax Assets | 22,133 | 21,312 | 4% | 22,332 | -1% | 21,497 |
| Other Assets | 5,209 | 2,661 | 96% | 5,197 | 0% | 5,601 |
| Total Assets | 440,118 | 414,310 | 6% | 435,802 | 1% | 422,608 |

Consolidated Balance Sheets	09.30.2013	09.30.2012	Annual Change %	06.30.2013	Quarterly Change %	12.31.2012
R$ Million
Liabilities
Financial Liabilities Held For Trading	5,420	5,693	-5%	5,834	-7%	5,352
Financial Liabilities at Amortized
Cost	324,133	298,545	9%	320,605	1%	306,976
Deposits from Central Bank of Brazil and deposits
from credit institutions	35,848	38,022	-6%	31,589	13%	35,074
Customer deposits	199,888	182,242	10%	199,687	0%	188,595
Marketable debt securities	60,798	49,384	23%	62,017	-2%	54,012
Subordinated liabilities	8,690	11,696	-26%	9,046	-4%	11,919
Other financial liabilities	18,908	17,201	10%	18,266	4%	17,376
Hedge Derivatives	448	182	146%	483	-7%	282
Provisions	9,839	13,222	-26%	9,839	0%	12,775
Tax Liabilities	13,966	14,109	-1%	13,536	3%	13,784
Other
Liabilities	4,694	3,886	21%	4,467	5%	4,303
Total
Liabilities	358,500	335,637	7%	354,764	1%	343,472
Total
Equity	81,618	78,673	4%	81,038	1%	79,136
Total Liabilities and Equity	440,118	414,310	6%	435,802	1%	422,608
Loan Portfolio
As a result, the total portfolio reached R$221,060
million, increasing in twelve months 7% and increasing in the quarter of
2%.
Funding
Total funding (deposits from credit institutions,
deposits from clients, marketable debt securities and subordinated
liabilities) reached R$305,224 million in 2013, increased 8.5% compared to
September 2012.
3. Stockholders’ Equity
Banco Santander consolidated stockholders’ equity
amounted to R$81,618 million on September 30, 2013, compared to R$78,673
million on September 2012 and R$79,136 million in December
2012.
The evolution of stockholders’ equity compared with
December 2012 is due, mainly, to income of R$4,406 and the movements of
other comprehensive income amounting to R$392 million, partially reduced
by dividends and interest on capital of R$1,400 million, approved by the
Board of Directors.
The International Accounting Standards IAS 19, were
covered on Other Comprehensive Income for defined benefit plans, the IAS
19 established fundamental changes in the accounting and disclosure of
employee post-employment benefits as removing the mechanism of the
corridor in the record of the obligation of the plans, as well as changes
in the criteria for recognition of conventional interest of plan assets
(valuation based on the discount rate actuarial liability), the effect of
this change was a record in stockholders' equity in December 31, 2012
(retrospective) of R$2,417 million and on September 30, 2013 was R$1,378
million, the reduction in the period was due to the increase in the
discount rate applied in update of benefit plans and plan assets most
significant and sponsored by Banco Santander (Banesprev II, V, Pre-75 and
Cabesp).
In 2013, they were acquired 4,381,400 Units,
2,012,419 Units paid by way of Long Term Incentive Bonus Plan - Local and
5,600 treasury shares were sold. The accumulated balance of treasury
shares on September 30, 2013 is 10,973,799 Units (12.31.2012 - 8,610,418),
amounting to R$164 million (12/31/2012 - R$134 million). The minimum,
weighted average and maximum cost per Unit is, respectively, R$13.36,
R$14.95 and R$18.52 In 2013 was acquired 3,887,755 ADRs. The accumulated
balance of ADRs acquired and hold in treasury is 5,620,655 ADRs, amounts
R$92 million (12.31.2012 - R$36 million). The minimum cost, weighted
average and maximum price per ADR is, respectively, US$5.86, US$7.35,
US$10.21. The market value of these shares on September 30, 2013 was
R$14.94 per Unit and US$6.90 per ADR.
Dividends and Interest on Capital
In September 30, 2013, were posted dividends based
on reserve for dividend equalization amounting R$450 million that will be
paid on February 26, 2014. In June 2013, were posted dividends based on
reserve for dividend equalization amounting R$650 million and in march
were posted interest on capital of R$300 million, that both were paid on
August 29, 2013.

| Basel
Index | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Banco Santander regulatory capital is measured based
on the Basel II Standardized Approach, as established by Bacen, and
considers: (a) Credit Risks – capital requirement portion for exposed
assets and credit commitments, both weighted by a risk factor, considering
the risk of mitigation through the use of guarantees; (b) Market risks –
capital requirement portions for exposures related to the fluctuations in
foreign currency interest rates, price indices, and interest rates; the
prices of commodities and shares classified in the trading portfolio; and
interest rates not classified in the trading portfolio; and (c)
Operational risks – requirement of a specific capital
portion. | | | | | | |
| The Basel II ratio, which is calculated in a
consolidated manner and reached 20.7%, and, disregarding the effect of
goodwill, as determined by the international rule, the index is 18.2%. | | | | | | |
| Banco Santander, according to Bacen Letter
3.477/2009, quarterly disclose information relating to risk management and
Regulatory Capital (PRE). A report with further details of the structure
and methodology will be disclosed in the legal deadline, at the website www.santander.com.br/ri . | | | | | | |
| In March 2013, the Bacen issued the standards
related to the definition of capital and regulatory capital requirements
in order to implement the recommendations of the Basel Committee on
Banking Supervision (Basel III). The main objectives are: (i) improve the
ability of financial institutions to absorb shocks from the financial
system or the other sectors of the economy, (ii) reduce the risk of
contagion in the financial sector on the real sector of the economy, (iii)
assist the maintaining financial stability, and (iv) promoting sustainable
economic growth. The implementation of the new Basel III rules starts from
1st October 2013. | | | | | | |
| Analysis of Income by Segment | | | | | | |
| Banco Santander operates three business segments:
Commercial Bank, Global Wholesale Bank and Asset Management and Insurance.
The Commercial Banking segment encompasses the entire commercial banking
business (except for the Corporate Banking business managed globally using
the Global Relationship Model). The Asset Management and Insurance segment
includes the contribution to the Bank arising from the design and
management of the investment fund, pension and insurance businesses of the
various units. The Global Wholesale Banking segment reflects the returns
on the Global Corporate Banking business, those on Investment Banking and
Markets worldwide, including all treasury departments and the equities
business. | | | | | | |
| On September 30, 2013, the Commercial Bank reached
for 54% of profit before tax. The Global Wholesale Bank reached 41% and
Asset Management and Insurance, reached 5%. | | | | | | |
| The profit before tax for the Commercial Banking
reached R$2,490 million, the Global Wholesale Bank recorded a profit
before tax of R$1,876 milhões and the segment of Asset Management and
Insurance had a profit before tax of R$212 million on September 30,
2013. | | | | | | |
| Results by Segment | 09.30.2013 | 09.30.2012 | Annual Change % | 3rd Quarter of 2013 | 2nd Quarter of 2013 | Quarterly Change % |
| R$ Million | | | | | | |
| Commercial Bank * | 2,490 | 2,662 | -6% | 872 | (174) | -601% |
| Global Wholesale Banking | 1,876 | 1,995 | -6% | 794 | 487 | 63% |
| Asset Management and Insurance | 212 | 264 | -20% | 76 | 68 | 13% |
| Profit Before Tax | 4,577 | 4,921 | -7% | 1,742 | 381 | 358% |
| (1) Includes in the Commercial Bank, the economic
hedge of investment in dollar (a strategy to mitigate the effects of
fiscal and exchange rate variation of offshore investments on net income),
the result of which is recorded in "Gains (losses) on financial assets and
liabilities" fully offset in taxes line. Adjusted for losses amounting to
R$1,642 million due to the effects of the devaluation of the Real against
the Dollar on September 30, 2013, the gain before Tax for the Commercial
Bank segment was R$ 4,131 million. | | | | | | |
| • Recent Events | | | | | | |
| Change
of Chairman | | | | | | |
| On August 28, 2013, the Bank published a Notice to
the Market announcing that Marcial Angel Portela Alvarez had tendered his
resignation from the position of Chairman of the Board of Directors at a
Board meeting held on the same date. As provided for in the Bylaws, Celso
Clemente Giacometti, the current Vice-Chairman of the Board of Directors,
assumed the chairmanship. The new Chairman of the Board will be elected by
an Extraordinary Shareholders Meeting to be held on November 1,
2013. | | | | | | |

| Plan to optimize the capital
structure |
| --- |
| On September 26, 2013, the Company disclosed a
Material Fact announcing that, in order to optimize its capital structure
and in accordance with the new prudent capital requirements for financial
institutions (also known as “Basel III”), the Board of Directors will
submit a proposal to optimize the composition of Banco Santander’s
regulatory capital to the shareholders for their approval, maintaining its
current volume and diversifying it in terms of currency and composition.
The aim is to establish a more efficient capital structure, consistent
with the new prudent capital rules and aligned with Banco Santander
business plan and asset growth. The following was therefore approved: (i)
the distribution of equity to the shareholders of Banco Santander in the
total amount of R$6 billion, with no reduction in the number of shares, to
be submitted for approval to the Bank's Shareholders’ Meeting on November
1, 2013; (ii) the issuance abroad of capital instruments to compose Tier I
and Tier II of Banco Santander’s regulatory capital, in a proportion to be
determined, which will be submitted for approval to the Board of Directors
and will only be issued if said distribution of equity takes place; and
(iii) a bonus share program and an adjustment in the composition of the
Units, followed by a reverse share split (inplit), with the purpose of
eliminating trading in centavos. The proposals for the bonus share
program, adjustment of the composition of the Units and share inplit are
expected to be submitted for the approval of a Shareholders’ Meeting in
the first quarter of 2014, after implementation of the proposal for the
Distribution of Equity and the issue of capital instruments to compose
Tier I and Tier II of Banco Santander’s regulatory
capital. |
| Extraordinary Shareholders
Meeting |
| On September 30, 2013, Banco Santander published the
Call Notice for an Extraordinary Shareholders Meeting to be held on
November 1, 2013, to resolve on the following agenda: (i) a proposal to
reduce the Bank's capital by R$6 billion, from R$62,828,201 to
R$56,828,201 (1) , with no reduction in the number of shares and
no alteration in the percentage holdings of the Bank's shareholders, with
the subsequent amendment of the head paragraph of Article 5 of the Bylaws;
(ii) a proposal to amend item XIII of article 17 of the Bank's Bylaws, in
order to give the Board of Directors authority to resolve on the issuance,
within the limit of authorized capital, of debt securities and other
share-convertible instruments, pursuant to Law 12838 of July 9, 2013 and
National Monetary Council Resolution 4192 of March 1, 2013; and (iii)
approval of (a) the appointment of Celso Clemente Giacometti as Chairman
of the Company’s Board of Directors; (b) the appointment of Jesús Maria
Zabalza Lotina as Vice-Chairman of the Board of Directors and (c)
confirmation of the composition of the Board of
Directors. |
| (1) The current Capital on Consolidated Statements in IFRS is R$62,634,585
(net of issuances costs of R$ 193,616, of the Global Share Offering),
after the conclusion of the plan to optimize the capital structure, the
Capital will be R$56,634,585, net of issuances costs. |
| • Subsequent Events |
| Extension of the period for reaching the minimum
Free Float |
| On October 10 and 11, 2013 were published Notices to
the Market in order to inform to the shareholders that on October 08, 2013
the BM&FBovespa granted the claim by Banco Santander and its majority
shareholders to (i) prorogate the period for reaching the minimum free
float, until October 7, 2014; and (ii) to reduce the actual free float, of
24.6%, down to 22.5%, exclusively in the context of: (a)the Buyback
Program of depositary share certificates (“Units”) or American Depositary
Receipts (“ADRs”); and (b)acquisitions abroad, by Banco Santander, S.A.,
or an affiliated entity of the economic group, of ADRs issued by the
Company. Such authorization does not interfere in the obligation undertook
by Santander Brasil to reach a free float of 25% until October 7, 2014, as
set forth in the Agreement for Adoption of Corporate Governance Level 2
Practices. |
| • Strategy |
| Banco Santander’s mission is to be the customer’s
choice as a simple, secure efficient and profitable bank which constantly
seeks to improve its service quality, with a team that enjoys working
together to gain the recognition and trust of all. As a result, the Bank’s
strategy is based on the following objectives: |
| • To be the best bank in terms of service quality,
being sustained by the operational efficiency of the technological
platform; |
| • To improve customer service through quality
services and infrastructure; |
| • To intensify relations with and provide the best
value to all client segments in order to become our customers’ bank of
choice; |
| • To expand the bank’s main businesses, such as
SMEs, personal banking, debit and credit cards, the acquiring business,
mortgage lending, vehicle financing and insurance; |
| • To continue building and strengthening the
Santander brand in Brazil until it becomes one of the top three financial
brands; and |
| • To maintain sustainable and efficient risk and
cost management; |
| In order to better meet client needs, this year
Santander Brasil launched the “Conta Santander Combinada”, which offers
current account, credit card, a service package, overdraft facilities and
other differentiated benefits. The idea behind the new proposal is to
offer product and service options that meet customers’ needs at different
moments in their lives, as well as to increase linkage. It was
developed in four modalities: |
| • Conta
Combinada Free; |

| • Conta
Combinada Flex; |
| --- |
| • Conta
Combinada Light; and |
| • Conta
Combinada Universitária FIT; |
| The Bank also created a new segment, “Santander
Select”, which is a new category of financial services designed to provide
high-income clients with a unique and specialized
service. |
| In additions, Santander Brasil announced a new
agreement to acquire the operations of GetNet and entered into a
partnership with iZettle, marking an important step forward in its
strategy of increasing its local participation in the acquiring business
as well reinforcing its commitment to investing in the country. It also
continues to increase its commercial activities through partnerships and
commercial agreements, as in the card segment with the agreements with
Vivo, Sodexo and Embratec, and in the vehicle financing segment with the
agreements with Hyundai, Renault and Nissan. |
| On the sustainability front, Santander Brasil’s
strategy continues to be based on three fundamental pillars: |
| •
Social and Financial Inclusion; |
| •
Education and Management; |
| •
Social and Environmental Businesses; |
| In 2013, it was elected the most sustainable bank in
the Americas by the Financial Times in association with the
IFC. |
| Another important aspect of our strategy is the
maintenance of comfortable liquidity and coverage ratios, as well as
funding and capital independence. At the end of September, Santander
announced a plan to optimize its capital structure in order to increase
efficiency. After completion of this process, it should maintain its
position as the most capitalized of Brazil’s major retail banks, well
ahead of its direct competitors, while remaining fully aligned with
current legal requirements, as well as those determined by Basel
III. |
| • Main Subsidiaries |
| As of September 30, 2013, Santander Leasing S.A.
Arrendamento Mercantil reported total assets of R$44,603 million, a lease
and other credits portfolio of R$3,091 million and stockholders' equity of
R$5,001 million. Net income for the period ended on September 30, 2013 was
R$177 million. |
| As of September 30, 2013, Aymoré Crédito,
Financiamento e Investimento S.A. reported R$30,270 million in total
assets, R$27,439 million in lending operations and others credits, and
R$1,113 million of stockholder´s equity. The loss for the period ended on
September 30, 2013 was R$5 million. |
| As of September 30, 2013, Santander Corretora de
Câmbio e Valores Mobiliários S.A. reported total assets of R$726 million
and stockholders' equity of R$249 million. Net income for the period ended
on September 30, 2013 was R$52 million. |
| As of September 30, 2013, Santander Brasil Asset
Management Distribuidora de Títulos e Valores Mobiliários S.A. reported
total assets of R$329 million. The stockholders' equity of R$219 million,
and net income for the period of 2013 was R$46 million. The
stockholders’ equity of investment funds reached R$81,759
million. |
| As of September 30, 2013, Santander Brasil,
Establecimiento Financiero de Credito, S.A. reported total assets of
R$2,328 million, R$679 million of loan portfolio and stockholders' equity
of R$2,268 million. The net income of the period ended on September 30,
2013 was R$11 million. |
| Balances reported above are in accordance with
accounting practices established by Brazilian Corporate Law and standards
established by the CMN, the Bacen and document template provided in the
Accounting National Financial System Institutions (Cosif) and the CVM,
that does not conflict with the rules of
Bacen. |

Rating Agencies
Santander is rated by international ratings agencies
and the ratings assigned, reflect many factors including management
quality, operating performance and financial strength, as well as other
factors related to the financial sector and economic environment in which
the Bank is inserted. The table below presents the ratings given by
the main rating agencies.
Rating Agency	Global Scale				National Scale
	Local Currency		Foreign Currency		National
	Long Term	Short Term	Long Term	Short Term	Long Term	Short Term
Fitch Ratings (Outlook)	BBB (stable)	F2	BBB (stable)	F2	AAA (bra) (stable)	F1+ (bra)
Standard & Poor’s (Outlook)	BBB (negative)	A-2	BBB (negative)	A-2	brAAA (negative)	brA-1
Moody’s (Outlook)	Baa1 (stable)	Prime-2	Baa2 (stable)	Prime-2	Aaa.br (stable)	Br-1
Ratings assigned according published reports of
Rating agencies: Fitch Ratings (May 28,2013); Standard & Poor's (June
07,2013) and Moody's (October 03,2012).
• Corporate Governance
On July 18, 2013 the Brazilian Central Bank ratified
the election of Mr. José de Paiva Ferreira as Senior Executive
Vice-President in charge of the Human Resources, Supply, Technology,
Organization and Cost areas.
On the Board of Director’s meeting held on July 29,
2013, it was elected as Officer without specific designation, Mr. Sergio
Antonio Borriello, to be in charge of the Media Technology Area and
Operations for Finance Area and his election was ratified by the Central
Bank on August 23, 2013.
On the Board of Director’s meeting held on August
28, 2013 was acknowledged the leaving of the Officers without specific
designation: Mr. Marcelo Audi and Mr. Gilson Finkelsztain, and the member
of the Board of Directors, Mr. José Roberto Mendonça de Barros, and of the
Chairman, Mr. Marcial Angel Portela Alvarez. On the same date, Mr. Celso
Clemente Giacometti was elected to the position of Chairman of the Board
of Directors and the position of Vice-President of the Board of Directors
will remain free until the next Extraordinary Shareholders Meeting to be
held on November 01st, 2013.
On August 27, 2013 and September 3rd, 2013, Mr.
Javier Rodriguez de Colmenares Y Alvarez assumed as Officer without
specific designation of the Risk area, and Mr. Carlos Rey de Vicente,
assumed as Vice-President Executive Officer, to be in charge of the
Strategy and Quality area.
On September 26, 2013 it was knew by the Board of
Directors, the leaving of Mrs. Lilian Maria Ferezim Guimarães, who served
as Vice-President Executive Officer, responsible by the Human Resources
Area, and, on the same date, it was elected as Officer without specific
designation, Mrs. Vanessa de Souza Lobato Barbosa, in order to be
responsible for the Human Resources Area, as well as it was elected as
member of the Risk Committee, Mr. René Luiz Grande, and Mr. Celso Clemente
Giacometti was conducted to the position of coordinator of the same
Committee.
• Risk Management
1. Corporate Governance of the Risk
Function
The structure of the Banco Santander Risk Committee
is defined in accordance with the highest standards of prudent management
and vision client.
Its
main responsibilities are:
• Integrate and adapt the Bank's risk to local, as
well as risk management strategy and the willingness and level of risk
tolerance, all matched with corporate standards Banco Santander
Spain;
• to approve the proposals and operations and
limitations of clients and portfolio (wholesale and
retail);
• references on general themes related to Market
Risk;
• to guarantee Banco Santander activities are
consistent with the risk tolerance level previously approved by Committee
Executive; and

| • to authorize the use of local management tools and
risk models and to be familiar with the result of their internal
validation. |
| --- |
| The risk function at Banco Santander is executed by
the Executive Vice-Presidency of Risk, which is independent from the
business areas and reports directly to the CEO of Banco
Santander. |
| Further details of the structure, methodologies and
control system related to risk management is described in the report
available on the website www.santander.com.br . |
| 2. Structure of Capital Management |
| The goal is to achieve an efficient capital
structure, meeting the regulatory requirements and contributing to reach
the goals regarding the classification of rating branches. |
| The capital management including securitization,
sale of assets, raising capital through shares issues, subordinated debt
and hybrid instruments. Risk management seeks to optimize value creation
in the Banco Santander and the different business units. To this end,
capital management, Return on Risk Adjusted Capital (RORAC) and the
creation of data values for each business unit are generated. The Banco
Santander uses a measurement model of economic capital in order to ensure
it has enough capital available to support the risks of economic activity
in different scenarios, with solvency levels agreed by the
Group. |
| Projections of economic and regulatory capital are
made based on financial projections (Balance Sheet, Income Statements,
etc.) and macroeconomic scenarios estimated by the economic research
service of the Financial Management area. The economic capital models are
essentially designed to generate risk-sensitive estimates with two goals
in mind: more precision in risk management and allocation of economic
capital to various units of Banco Santander. |
| 3. Credit Risk |
| The function of Credit Risk and Market is to develop
policies and strategies for risk management in accordance with the risk
appetite set by the Executive Committee. Additionally, it is responsible
for the control and monitoring system used in credit and market risk
management. These systems and processes are applied in the identification,
measurement, control and reduction of exposure to credit risk in
individual operations or those grouped together by
similarity. |
| Risk Management specializes in the characteristics
of the customers, as well as the process of risk management is segregated
between customers and individual customers with similar characteristics
(standardized). |
| 4. Market Risk |
| Market risk is exposure to risk factors including
interest rates, exchange rates, commodities prices, stock market prices
and other values, according to the type of product, the volume of
operations, terms and conditions of the agreement and underlying
volatility. Market risk management includes practices of measuring and
monitoring the use of limits that are pre-set by internal committees, of
the value at risk of the portfolios, of sensitivity to fluctuating
interest rates, of exposure to foreign exchange rates, of liquidity gaps,
among other practices which the control and monitoring of the risks which
might affect the position of Banco Santander portfolios in the different
markets in which the Bank operates. |
| Banco Santander operates in accordance with the
global policies within the risk appetite of the Bank and aligned with the
objectives in Brazil and worldwide. For this purpose, developed its own
model of Risk Management, the following principles: |
| •
Functional independence; |
| • Executive capacity sustained by knowledge and
customer proximity; |
| • Global scope (different types of risk); |
| • Collective decisions that evaluate all possible
scenarios and not compromise the results of individual decisions,
including Brazil Executive Risk Committee, which sets limits and approves
the transactions and the Executive Committee of Assets and Liabilities,
which is responsible for the management of capital and structural risks,
which includes country risk, liquidity and interest rates; |
| • Management and optimization of the risk / return;
and |
| • Advanced methodologies for risk management, such
as Value at Risk (VaR) (historical simulation of 520 days, with a
confidence level of 99% and a time horizon of one day), scenarios,
sensitivity of net interest income, asset value and sensitivity
contingency plan. |
| The structure of Market Risk is part of the Vice
President of Credit Risk and Market, which implements the policies of
risk, taking into account local and global corporate settings. |

| 5. Environmental and Social Risk |
| --- |
| Social and environmental risk management for the
wholesale banking customers is accomplished through a management system
for customers who have credit limits or credit risk above R$1 million,
which considers aspects such as contaminated land, deforestation, working
conditions and other social and environmental points of attention in which
there is possibility of penalties. A specialized team, with background in
Biology, Chemistry, Health and Safety Engineering and Chemical
Engineering, monitors the environmental practices of our corporate
clients. The financial analysis team studies the potential damage and
impacts that adverse social and environmental situations may cause to the
financial condition of customers and their guarantees. The analysis
focuses on preserving capital and market reputation, and the dissemination
of this practice is achieved by constant training of both commercial and
risk areas on the application of social and environmental risk standards
in the credit approval process for corporate client. |
| The social and environmental risk in suppliers is
managed throughout the procurement process based on the 10 principles of
the United Nations' Global Compact, which considers items such as human
rights, working conditions and ethical, social and environmental issues.
In order to participate in a bid, a company must state that respects these
principles. During approval, a technical evaluation is carried out,
involving social and environmental criteria. Additionally, the suppliers
classified as high impact undergo further evaluation on the operational,
administrative, financial, tax, legal, governance, social and
environmental aspects. This phase includes a visit to check the proofs and
replies obtained during the evaluation. There are also procedures
conducted by independent advisory firms to monitor compliance of the
suppliers’ practices with the Global Compact principles, which are
supervised by the Group’s head office. |
| 6. Operational Risk Management, Internal Controls,
Sarbanes -Oxley Act and Internal Audit |
| Banco Santander’s corporative areas, responsible for
technological and operational risk management and Internal controls are
subordinate to different Vice-Presidencies, with structures, procedures,
methodologies, tools and specific internal models guaranteed through an
appropriate managerial model permitting the identification, capture,
assessment, control, monitoring, mitigation and reduction of operational
risk events and losses. In addition, the management and prevention of
operational and technological risks, the continuity of the business and
the continuous strengthening of the internal control system, meets the
requirements of the regulators, the Basel Accord (BIS II) and the
Sarbanes-Oxley Act (SOX). It is also aligned with the guidelines set forth
by Banco Santander Spain, which are based on the COSO - Committee of
Sponsoring Organizations of the Treadway Commission – Enterprise Risk
Management – Integrated Framework. |
| The developed and adopted procedures aim for Banco
Santander’s continuing presence among the select group of financial
institutions as having the best operational risk management practices,
thereby helping to continuously improve its reputation, solidity,
sustainability and reliability in the local and international markets. |
| The management plays an active part, aligned with
the mission of the areas, recognizing, participating and sharing
responsibility for: the continuous improvements of the operational and
technological risk management culture and structure; improvements in the
internal control environment, in order to ensure compliance with the
established objectives and goals and also the security and quality of the
products and services provided. |
| Banco Santander’s Board of Directors opted to adopt
the Alternative Standardized Approach (ASA) to calculate the installment
of Required Notional Equity related to operational risk. |
| The 2012 review of the effectiveness of internal
controls in the Banco Santander companies, in accordance with section 404
of the Sarbanes-Oxley Act, was concluded in February 2013 and found no
evidence of any material issues. |
| Additional information on the management models can
be found in the annual and social reports at www.santander.com.br/ri . |
| Internal Audit depends directly on the Board of
Directors, whose activities are supervised by the Audit
Committee. |
| Internal Audit’s objective is to supervise the
compliance, efficiency and effectiveness of internal control systems, as
well as the reliability and quality of accounting information. Thus, all
Banco Santander’s companies, business units, departments and core services
are under its scope of application. |
| Audit Committee and the Board of Directors were
informed on Internal Audit’s works during the nine months from 2013,
according to its annual plan. |
| The Audit Committee approved the internal audit work
plan and activity report for 2013. |
| In order to perform its duties and reduce coverage
risks inherent to Conglomerate's activities, the Internal Audit area has
internally-developed tools updated whenever necessary. |
| Among these tools, it is worth mentioning the risk
matrix, for it is used as a planning tool, prioritizing each unit’s risk
level, based on its inherent risks, audit’s last rating, level of
compliance with recommendations and size. |
| In addition, at least annually, the work programs
are reviewed. These documents describe the audit tests to be performed, so
that the requirements are enforced. |
| Throughout 2013, internal control procedures and
controls on information systems pertaining to units under analysis were
assessed on work plan for 2013, taking into account their conception
efficiency and performance. |

| • People |
| --- |
| For Banco Santander ensure the preference of its
clients, it is essential to put the utmost value on its main asset:
People. Since its employees are the strongest link between the Bank and
its clients, it is continuously fine-tuning its management practices and
processes so that they remain fully motivated and fulfill all their
potential. |
| Banco Santander seeks to ensure that its
professionals identify with the Organization and share its values, in the
belief that their dedication is crucial for the consolidation and
dissemination of its differentials. Consequently, in addition to offering
and encouraging a participatory and collaborative working environment, it
prepares its teams so way that they have various career and development
possibilities. Thanks to a series of local and international programs and
opportunities, employees are always alert to new opportunities and
challenges. |
| Some of Banco Santander’s initiatives for supporting
the personal and professional growth of its People are listed
below: |
| • Career Opportunities and Recognition: preparing its employees and interns for various
career and development possibilities. It offers local and international
development programs and encourages mobility between different areas and
countries and identifies the progress of each individual through
transparent and objective assessment procedures; |
| • People Appreciation: valuing its People outside the professional area by
recognizing their social and family needs. It offers opportunities and
benefits geared towards the complete individual, such as the Specialized
Personal Support Program (PAPE), as well as more segmented solutions,
aimed at ensuring a better working, home and social life; |
| • Continuous Managerial Development: Banco Santander’s managers are the strongest link
between the Organization and its professionals. They are therefore subject
to continuous development programs to ensure their alignment with the
Bank’s strategy and proposal and that they inspire their teams and promote
their advancement in the pursuit of excellence, thereby generating results
for shareholders, clients, employees and society as a
whole; |
| • Encouraging Innovation: encouraging its professionals to always look ahead,
trying to glimpse hitherto unseen horizons in order to improve client
service and generate efficiency. Best practices are shared on a daily
basis and ideas are highly valued; |
| • Participatory and Collaborative Environment: there is ample room for employees to question,
discuss and suggest new ways of doing things in a participatory and
collaborative manner within a multicultural and multigenerational
environment. The Bank’s relationships are based on transparency and trust
in order to promote teamwork and self-esteem. Thus everyone progresses and
teams mesh, allowing the Bank to evolve and innovate; and |
| • Being Part of a World Class Company: with a differentiated proposal as an employer, a
talented team with the best professionals in the market, and an
increasingly strong brand, Banco Santander has many reasons to be proud.
International tradition, a global presence and local recognition are
underlined by its 155 years of history, 190 thousand employees worldwide,
52 thousand in Brazil alone, and more than 100 million
clients. |
| • Sustainable Development |
| Sustainability is
part of Santander's business strategy. It is a commitment that is
confirmed by the insertion of the topic in our business model, fostering
social and financial inclusion, investing in better education and doing
business that leads to results for the bank and every stakeholder. In this
quarter, Santander has launched the “Reduza e Compense” (Reduce and
Compensate) program, with the main goal of moving forward at the low
carbon economy development, including customers, employees and society.
Internally, more than 10.000 employees have participated of the
“Sustentabilidade Pra Todo Lado” (Sustainability For Every Side), a large
mobilization and sustainability education program. The Bank has also
reinforced its commitment with inclusive businesses, being accepted as a
Business Call to Action member, an initiative linked to the UN. This wide
action was acknowledged by the “Prêmio Época 360º” (Época 360º Award),
having Santander as Socio-environmental category
winner. |

| • Corporate Restructuring |
| --- |
| We implemented various social movements in order to
reorganize the operations and activities of entities according to the
business plan of the Banco Santander: |
| a) Sale of the Investment Fund Management and
Managed Portfolio Operations, currently developed by Santander Brasil
Asset Management Distribuidora de Títulos e Valores Mobiliários S.A.
(Santander Brasil Asset) |
| On May 30, 2013, Banco Santander disclosed a
Material Fact informing the market about the sale of the investment fund
management and managed portfolio operations, currently carried out by
Santander Brasil Asset Management Distribuidora de Títulos e Valores
Mobiliários S.A., and clarified that said transaction is part of a
partnership abroad between Banco Santander Espanha and the world’s private
equity leaders Warburg Pincus and General Atlantic, and is aimed at
fueling the global growth of its third-party asset management
unit. |
| The conclusion of the operation is subject to
compliance with certain conditions precedent that are usual in similar
transactions, including signing the final agreements and obtaining the
necessary regulatory authorizations. |
| b) Segregation of equity investments of the
temporary nature and of the investments in companies that provide services
complementary to those provided by financial
institutions |
| Aiming to segregate the equity investments of a
temporary nature (private equity) and equity interests in entities that
provide complementary services to the financial services Banco Santander,
were made the following acts: |
| • Partial spin-off of Santander Participações S.A.
(Santander Participações, current corporate name of Santander Advisory
Services S.A.), based version of the spun-off assets to Santander S.A.
Serviços Técnicos, Administrativos e de Corretagem de Seguros (Santander
Serviços) (Partial Spin-Off), approved by shareholders in the meeting held
on December 31, 2012. The spun-off assets corresponded to investments in
Santander Serviços and Webmotors S.A. The Partial Spin-off took place
through the transfer of net assets of Santander Participações to the
capital of Santander Serviços, based on the audited balance sheet on the
November 30, 2012. Equity changes that occur between the base date of such
balance sheet and the execution of the Partial Spin-off were recognized
and recorded directly into Santander Serviços; |
| • Capital increase in Santander Serviços on December
31, 2012 in the amounts of R$371 million, with the issuance of
113,803,680,982 common shares, fully subscribed and paid by Santusa
Holding, S.L. (Santusa) in Spain investment company controlled by Banco
Santander Spain. After such transaction, Santander Serviços capital stock
to be owned by Banco Santander and Santusa, in the proportion of 60.65%
and 39.35%, respectively; and |
| • Acquisition by Santander Serviços shares of the
company Tecnologia Bancária S.A. - Tecban (Tecban) held by Santusa as Sale
and Purchase Agreement entered into between the parties on January 21,
2013. The acquisition, corresponding to 20.82% of the share capital of
Tecban, were approved by Bacen pursuant to Resolution 4.062/2012, and
effective on March 27, 2013. |
| c)
Incorporation of Santander Administradora de Consórcios Ltda (Santander
Consórcios) by Santander Brasil Administradora de Consórcio (Santander
Brasil Consórcio) |
| At meetings held on July 25, 2012, the Board of
Directors of Santander Consórcios and Santander Brasil Consórcio agreed
and decided to submit for approval from their respective partners, the
incorporation propose of Santander Consórcios (Incorporated) by Santander
Brasil Consórcio (Incorporator) (Incorporation) which was approved at
meeting of the Partners Incorporated and Incorporator on July 31,
2012. |
| The merger will give through the transfer of the net
book value of incorporated for the equity of the incorporator, based on
the audited balance sheet at June 30, 2012. The equity variations occurred
between the base date of that balance sheet and the effectiveness of the
incorporation (the date of the Contract Amendment) will be recognized and
recorded directly on the incorporator. |
| On November 30, 2012 this process of incorporation
was approved by the Bacen. |
| d)
Others Corporate Movements |
| We also performed the following corporate
actions: |
| • Constitution of “Atual Companhia Securitizadora de
Créditos Financeiros”, under the meeting held on September 28, 2012, which
aims at the acquisition of exclusive social credits from lending
operations, financing and leasing; |
| • Opening capital of Companhia de Crédito,
Financiamento e Investimento RCI Brasil (CFI RCI Brasil) in the category
“B”, pursuant to the EGM held on August 30, 2012, whose record was
obtained with the CVM on November 27,2012; |
| • Incorporation of all shares of issue Companhia de
Arrendamento Mercantil RCI Brasil (RCI Brasil Leasing) by CFI RCI Brasil,
on May 31, 2012, so that RCI Brasil Leasing became a wholly owned
subsidiary of CFI RCI Brasil. On
August 28, 2012 this process was approved by the
Bacen; |

| • Partial spin-off of CRV Distribuidora da TÍtulos e
Valores Mobiliários S.A (CRV DTVM) with the version of the splited portion
of Santander Participações on August 31, 2011, being that the split
portion was referring solely to the entire interest held by CRV DTVM on
the capital of Santander Securities (Brasil) Corretora de Valores
Mobiliários S.A. (Santander Securities). On the same date, Santander
Securities was acquired by Santander Participações. On
January 23, 2012 this process was approved by the Bacen; |
| --- |
| • Acquisition in January 21, 2013 by Webmotos, 100%
of the share capital of Idéia Produções e Design Ltda- ME. |
| • Partial spin-off of Webmotors with reduction on
capital on April 30, 2013 and subsequent formation of a new company named
Webcasas S.A.; |
| • Was celebrated on June 21,2013 between Webmotors
and Carsales.com the Share Subscription Agreement ("Agreement") with a
view for Carsales to participate in the capital stock of Webmotors
("Transation"), representing 30% of all its capital amounting R$180
million. The Transaction will be implemented through the acquisition by
the Carsales of new shares of Webmotors’ capital, representing 30% of all
capital. This transaction generated a gain in Santander Serviços amounting
R$120 million related to the change in the percentage shareholding in
Webmotors S.A. due to the entry of Carsales in its capital and R$169
million, related to the recognition of the fair value of the indirect
remaining in Banco Santander of Webmotors’ capital of 42.5% (60.65% for
the Bank's investment in the Santander Serviços’ capital under
70.00% of investment to Santander Serviços for Webmotors
S.A.), under IFRS 10 - Consolidated Financial Statements; |
| • Capital reduction of Santander Leasing , on
January 04, 2013, amounts R$5 bilhões, without changing the number of
shares. |
| • Other Information |
| It is part of Banco Santander´s policy to restrict
the services provided by the independent auditors, so as to preserve the
auditor’s independence and objectivity, in accordance with Brazilian and
international standards. In compliance with CVM Instruction 381/2003, we
hereby inform that during in the period 2013, there hasn´t been any
contract for non-audit services from Deloitte Touche Tohmatsu Auditores,
which cumulatively represent more than 5% of the related overall
consideration. |
| According to CVM Instruction 381/2003, we list the
other services and their dates: |
| • March 12, 2013 - Agreement for provision of
identifying improvements in internal controls to calculate the allowance
for doubtful accounts according to the criteria IFRS. |
| São
Paulo, October 23, 2013 |
| The Board of Directors The
Executive |
| (Adopted at the Meeting of the Board of
10.23.2013). |
| *** |

| BANCO SANTANDER (BRASIL) S.A. |
| --- |
| Executive’s Report of Financial
Statements |
| For purposes of compliance with Article 25, § 1, VI,
CVM Instruction 480, of December 7, 2009, the Executive of Banco Santander
(Brasil) S.A. (Banco Santander) (Company) state that discussed, reviewed
and agreed with Banco Santander's Financial Statements for the the period
ended September 30, 2013, the Financial Statements prepared in accordance
with International Financial Reporting Standards (IFRS) and the documents
that comprise it, being: Management Reports, consolidated balance sheets,
consolidated income statements, consolidated statements of comprehensive
income, consolidated cash flow statements, consolidated statements of
changes in equity and notes to the consolidated financial statements,
prepared according IFRS issued by the International Accounting Standards
Board (IASB). These financial statements and the documents that comprise
it, have been the object of an unqualified opinion of the Independent
Auditors and the Audit Committee of the Company. |
| Members of Companies’ Executive on September 30,
2013: |
| CEO |
| Jesús
Maria Zabalza Lotina |
| Vice-President Senior Executive
Officer |
| Conrado
Engel |
| José de
Paiva Ferreira |
| Vice-president executive officer and Investor
Relations |
| Carlos
Alberto López Galán |
| Vice-President Executive
Officer |
| Carlos
Rey de Vicente |
| Ignacio
Dominguez-Adame Bozzano |
| João
Guilherme de Andrade So Consiglio |
| Manoel
Marcos Madureira |
| Marco
Antônio Martins de Araújo Filho |
| Oscar
Rodriguez Herrero |
| Pedro
Carlos Araújo Coutinho |
| Pedro
Paulo Longuini |
| Executive Officer |
| Fernando Díaz Roldán |
| Jose
Alberto Zamorano Hernandez |
| José
Roberto Machado Filho |
| Luciane
Ribeiro |

| Officer
without designation |
| --- |
| Amancio
Acúrcio Gouveia |
| Ana
Paula Nader Alfaya |
| Antonio
Pardo de Santayana Montes |
| Carlos
Alberto Seiji Nomoto |
| Cassio
Schmitt |
| Cassius
Schymura |
| Ede
Ilson Viani |
| Eduardo
Müller Borges |
| Flávio
Tavares Valadão |
| Gilberto Duarte de Abreu Filho |
| Jamil
Habibe Hannouche |
| Javier
Rodriguez De Colmenares Y Alvarez |
| Jean
Pierre Dupui |
| Luiz
Felipe Taunay Ferreira |
| Mara
Regina Lima Alves Garcia |
| Marcelo
Zerbinatti |
| Marcio
Aurelio de Nobrega |
| Maria
Eugênia Andrade Lopez Santos |
| Mauro
Siequeroli |
| Miguel
Angel Albero Ocerin |
| Nilo
Sérgio Silveira Carvalho |
| Nilton
Sergio Silveira Carvalho |
| Ramón
Sanchez Díez |
| Reginaldo Antonio Ribeiro |
| Roberto
de Oliveira Campos Neto |
| Ronaldo
Yassuyuki Morimoto |
| Sergio
Antonio Borrielo |
| Sérgio
Gonçalves |
| Thomas
Gregor Ilg |
| Vanessa
de Souza Lobato Barbosa |
| Wilson
Luiz Matar |
| Pending approval of Brazilian Central
Bank |

| BANCO SANTANDER (BRASIL) S.A. |
| --- |
| Executive’s Report of Independent
Auditors |
| For purposes of compliance with Article 25, § 1, VI,
CVM Instruction 480, of December 7, 2009, the Executive of Banco Santander
(Brasil) S.A. (Banco Santander) (Company) state that discussed, reviewed
and agreed with the views expressed in the Banco Santander's Independent
Auditors' Report for the period ended September 30, 2013, the Financial
Statements prepared in accordance with International Financial Reporting
Standards (IFRS) and the documents that comprise it, being: Management
Reports, consolidated balance sheets, consolidated income statements,
consolidated statements of comprehensive income, consolidated cash flow
statements, consolidated statements of changes in equity and notes to the
consolidated financial statements, prepared according IFRS issued by the
International Accounting Standards Board (IASB). These financial
statements and the documents that comprise it, have been the object of an
unqualified opinion of the Independent Auditors and the Audit Committee of
the Company. |
| Members of Companies’ Executive on September 30,
2013: |
| CEO |
| Jesús
Maria Zabalza Lotina |
| Vice-President Senior Executive
Officer |
| Conrado
Engel |
| José de
Paiva Ferreira |
| Vice-president executive officer and Investor
Relations |
| Carlos
Alberto López Galán |
| Vice-President Executive
Officer |
| Carlos
Rey de Vicente |
| Ignacio
Dominguez-Adame Bozzano |
| João
Guilherme de Andrade So Consiglio |
| Manoel
Marcos Madureira |
| Marco
Antônio Martins de Araújo Filho |
| Oscar
Rodriguez Herrero |
| Pedro
Carlos Araújo Coutinho |
| Pedro
Paulo Longuini |
| Executive Officer |
| Fernando Díaz Roldán |
| Jose
Alberto Zamorano Hernandez |
| José
Roberto Machado Filho |
| Luciane
Ribeiro |

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: October 24, 2013

| Banco Santander (Brasil)
S.A. | |
| --- | --- |
| By: | / S / Amancio
Acurcio Gouveia |
| | Amancio Acurcio Gouveia Executive
Officer |

| By: |
| --- |
| Carlos
Alberto Lopéz Galán Vice - President Executive
Officer |

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