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

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Contents

1.1 – Declaration and identification of persons responsible

The above mentioned directors declare that: a. they have reviewed this reference form b. all information in the form complies with Brazilian Securities Commission (CVM) Instruction No. 480, in particular articles 14 to 19 c. the information herein provides a true, accurate and full picture of the issuer's financial situation and the risks inherent in its activities and its issue of securities

PAGE 1

PAGE 2

Replacement of public auditor

At a meeting held on 03/21/2011, in light of Bradesco's corporate governance practices and management's procedure for engaging auditors, the issuer's board of directors accepted an Audit Committee recommendation to replace PricewaterhouseCoopers by KPMG, as of that date. KPMG is registered with the public accountants body CRC 2SP014428/O-6 and its principal offices are located at Rua Dr. Renato Paes de Barros 33, 17^th floor, Itaim Bibi, São Paulo, SP, corporate tax number CNPJ 57.755.217/0001-29, and it is registered with the Brazilian Securities and Exchange Commission (CVM) as per Declaratory Act 5.180 of 12/7/1998. KPMG was engaged to provide independent auditing services to the company as of the 2011 reporting period.

The replaced auditing firm agreed with the above reason provided by the issuer.

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2.3 – Other material information

Auditors – identification and remuneration in 2008 and 2009

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3.1 – Consolidated Financial information

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3.2 – Non-accounting metrics

Non-accounting metrics were not disclosed in the course of the last fiscal year.

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3.3 – Events subsequent to the most recent financial statements

Subsequent to the most recent consolidated financial statements, on January 24, 2011, Bradesco acquired shares issued by Companhia Brasileira de Soluções e Serviços – CBSS (“CBSS”), held by Visa International Service Association (“Visa International”), corresponding to 5.01% of CBSS' share capital at the value of R$ 85.8 million. Therefore, Bradesco’s holdings in CBSS increased from 45% to 50.01%, thus reinforcing its holdings in the capital of companies operating in the card market. Note that this transaction does not substantially alter the most recent consolidated financial statements.

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3.4 – Policy for allocating earnings

Pursuant to Article 192 of Law No. 6,404/76, together with the accounting statements for the period, and subject to the provisions of articles 193 to 203 and its bylaws the company's management bodies shall draw up a proposal for use of the period's net income and submit it to the Annual General Meeting.

The following table shows use of income for the last 3 (three) years:

a) Rules on retained earnings

Legal Reserve

Allocation of a portion of net profit to the legal reserve is determined by Article 193 of Law No. 6,404/76 in order to ensure the integrity of share capital, and may be used only to offset losses or increase capital.

Five percent (5%) of the period's net profit, before any other use, will be allocated to the legal reserve, which must not exceed twenty percent (20%) of share capital.

There is no requirement to allocate to the legal reserve in a year in which the balance of this reserve, plus capital reserves as per §1 of Article 182, exceeds thirty percent (30%) of share capital.

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3.4 – Policy for allocating earnings

Statutory Reserves

Article 194 of Law No. 6,404/76 which governs the creation of statutory reserves states that the bylaws of the company may establish reserves on condition that in each case:· its purpose is accurately and fully stated;· criteria are set to determine the annual portion of net profits that will be allocated to the statutory reserve; and· the maximum amount of the reserve is stated.

Pursuant to the legislation, Article 31 of the bylaws states that after all statutory allocations have been made, a proposal for the allocation or use of any net income remaining shall be made by the executive board, to be approved by the board of directors and decided by General Meeting, and such income may be allocated one hundred percent (100%) to "Income Reserves – Statutory" in order to maintain an operational margin consistent with the development of the Company's active operations up to the limit of ninety-five percent (95%) of paid-up share capital.

If the board's proposal for use of net income from the period contains provision for distributing dividends and/or payment of interest on own capital in an amount greater than the mandatory dividend pursuant to Article 30, item III of the bylaws, and/or retained earnings under Article 196 of Law No. 6,404/76, the balance of net income for making this reserve will be determined after deducting these allocations in full.

b) Rules for distribution of dividends

With the introduction of Law No. 9,249/95, which came into force on January 1, 1996, companies may pay interest on own capital to their shareholders, to be imputed, net of income tax at source, to the amount of the minimum mandatory dividend.

Minimum mandatory dividend

Pursuant to item III of Article 28 of Bradesco's bylaws, shareholders are assured thirty percent (30%) of net income, each year, as a minimum mandatory dividend, adjusted for any decrease or increase of the amounts specified in items I, II and III of Article 202 of Law No. 6,404/76 (Law of Joint Stock Corporations).

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3.4 – Policy for allocating earnings

Thus the minimum of thirty percent (30%) stipulated in the bylaws is greater than the minimum of twenty-five percent (25%) set forth in §2 of Article 202 of Law No. 6,404/76.

Shareholders holding preferred shares

Preferred shares confer on their holders dividends ten percent (10%) higher than those paid on common shares (item "b", §2, Article 6 of the bylaws).

Reinvestment of dividends or interest on own capital

Reinvestment of dividends or interest on own capital is a product that enables a shareholder and account holder registered with Bradesco Corretora (brokerage), personal or corporate, to invest the amount received and credited to current account in new shares (currently only for preferred shares), thereby increasing their shareholding.

Shareholders have the option of reinvesting monthly and/or special (supplementary or intermediate) dividends. There is no upper limit for reinvesting and the minimum must be enough to purchase at least one (1) share.

c) Periodicity of dividend distributions

Banco Bradesco S.A. ("Bradesco") has distributed dividends monthly since 1970, and became the first Brazilian financial institution to adopt this practice.

Interim dividends

The executive board, on approval of the board of directors, is authorized to declare and pay out interim dividends, semiannual or monthly, from existing earnings, or profit reserve accounts (§1, Article 28 of the bylaws).

It may also authorize payment of interest on own capital in total or partial substitution of interim dividends (§2, Article 28 of the bylaws).

Monthly Payment of Interest on Own Capital

For the purposes set forth in Article 205 of Law No. 6,404/76, beneficiaries are shareholders registered with the Company on declaration dates, which are on the first day of each month.

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3.4 – Policy for allocating earnings

Payments are made on the first business day of the following month, as monthly advances on the mandatory dividend by crediting the account informed by the shareholder or made available to the Company.

Any restrictions on dividend payments imposed by special laws or regulations applicable to the issuer, as well as contracts, court decisions, administrative or arbitration court rulings

There are no restrictions on the distribution of dividends.

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3.5 – Distribution of dividends and retention of net income

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3.5 – Distribution of dividends and retention of net income

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3.5 – Distribution of dividends and retention of net income

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3.6 – Declaration of dividends charged to the retained earnings account or reserves

In relation to the previous three fiscal years, no dividends were declared or charged to the retained earnings account or reserves established in prior fiscal years.

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3.8 – Obligations by nature and due date

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3.9 – Other material information

The selected financial information in this item refers to the consolidated accounting statements.

NB: Item 3.1: Breakdown of net income – consolidated

Distribution of dividends and retention of net income

Note that the accounting statements used policy for use of income and distributionof dividends and interest on own capital as per itens 3.4 and 3.5, respectively, were prepared in accordance with accounting practices adopted in Brazil and applicable to institutions authorized to operate by the Central Bank of Brazil.

Reasons for issuer not filling out data for FY 2008

Note that issuer accounting data disclosed in item 3 and its sub-items refer to consolidated data compiled in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). These consolidated financial statements are covered by First-time Adoption of International Financial Reporting Standards (IFRS 1 R). The statements for the year ended December 31, 2008 were not prepared under the international accounting standard, so we are not including comments or statements on 2008 because they do not enable proper comparison with the years ended December 31, 2010 and 2009.

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4.1 – Description of risk factors

Macroeconomic risks

Bradesco's business and results from operations are substantially affected by conditions on global financial markets.

There was excessive volatility and disruption in global credit and capital markets in 2008, 2009 and the first half of 2010. Global capital and credit markets recent turbulence led to a liquidity crunch and higher credit risk premiums for various market participants, which led to less availability of funding and/or increased costs for both financial institutions and their customers. Rising or high interest rates and/or higher levels of spreads on credit created a less favourable environment for most of Bradesco's business dealings and may impair customers' ability to repay their debts, reducing Bradesco's flexibility in terms of planning or reacting to changes in its operations and the financial industry in general. Therefore, even though conditions in the world and Brazilian economies improved, results from operations may still be affected by adverse conditions in global financial markets for as long as they remain volatile and subject to turbulence and uncertainty.

The Brazilian government has influence on the Brazilian economy and local political and economic conditions have a direct impact on Bradesco's business.

Bradesco's financial conditions and results from operations depend substantially on the Brazilian economy, which in the past has been characterized by frequent and occasionally drastic intervention by the Brazilian government and by volatile economic cycles.

In the past, the Brazilian government has often changed monetary, fiscal and taxation policy in order to influence the course of the Brazilian economy. Bradesco has no means of controlling or predicting which measures or policies the Brazilian government may take in response to current or future economic situations or how the Brazilian government's policies or intervention will affect the economy and directly or indirectly affect Bradesco's operations and revenues.

Our business, our financial situation, and the market value of our preferred shares may be adversely affected by alterations in these policies involving currency controls, taxes and other factors such as the following:

• fluctuating exchange rates;
• fluctuating benchmark interest rates;
• domestic economic growth;
• political, social or economic instability;
• monetary policy;
• fiscal policy factors and alterations to the taxation system;
• currency exchange controls policy;
• liquidity of domestic credit, capital and financial markets;
• customers' ability to meet their other obligations to Bradesco;
• reductions in wages or income levels;
• rising rates of unemployment;
• inflation; and
• other political, diplomatic, social or economic developments in Brazil or internationally, that may affect Brazil.

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4.1 – Description of risk factors

Presidential elections were held in Brazil in October 2010. Uncertainty over the implementation of alterations to monetary, fiscal and pension-fund policies, and in relation to relevant legislation, may contribute to economic instability. These facts may heighten volatility on Brazilian stock and bond markets. We are unable to foresee whether the government elected in October 2010 or any subsequent government will have an adverse effect on the Brazilian economy and consequently on Bradesco's business and the market value of our preferred shares.

Exchange rate variations may negatively affect the Brazilian economy, and Bradesco's earnings and financial situation.

Bradesco’s business is impacted by variations in Brazilian real's exchange rate. Since October 2002 and more intensively since June 2004, the Brazilian real has appreciated against the US dollar, with a few periods of depreciation (reaching R$ 1.5593 per US$ 1.00 on August 1^st, 2008). At the end of 2008, in the context of the global financial crisis, the Brazilian real fell sharply against the US dollar (reaching R$ 2.3370 per US$ 1.00 on December 31^st, 2008, after reaching R$ 2.5000 on December 5^th, 2008). In 2009, the real was again appreciating against the dollar (reaching R$ 1.7412 per US$ 1.00 at the end of the year). In 2010, the real continued its appreciation against the dollar (reaching R$ 1.6662 per US$ 1.00 at the end of the year). Macroeconomic fundamentals and the current global situation (abundant liquidity, high appetite for risk and rising commodity prices) suggest that the vector of currency appreciation is still present.

When the Brazilian currency is devalued or depreciates, Bradesco incur losses on its liabilities denominated in foreign currencies, or indexed to them. For example, its long-term debt denominated in dollars, loans in foreign currencies and gains on monetary assets denominated in foreign currencies or indexed to them, since such liabilities and assets are converted into Brazilian reais. Therefore, if Bradesco's liabilities denominated in foreign currency, or indexed to it, significantly exceed its assets denominated in foreign currency or indexed to it, including any financial instruments used for hedging purposes, major depreciation or devaluation of the Brazilian currency could substantially and adversely affect its financial results and the market price of preferred shares, even though the value of its liabilities had not altered in their original currency. Furthermore, Bradesco's loans depend significantly on its ability to match the cost of dollar-indexed funds with rates charged to customers. Significant depreciation or depreciation may affect its ability to attract customers on these terms or to charge fees indexed in dollars.

On the other hand, when the Brazilian currency appreciates Bradesco sustains losses on monetary assets denominated in, or indexed, to foreign currencies such as the US dollar, and is affected by reductions in liabilities denominated in, or indexed to, foreign currencies since liabilities and assets are converted into Brazilian reais. Therefore, if Bradesco's monetary assets denominated in or indexed to foreign currency significantly exceed its liabilities denominated in or indexed to foreign currency, including any financial instruments used for hedging purposes, major appreciation of Brazil's currency could substantially and adversely affect its financial performance, even if the monetary value of such an asset remains unchanged in its original currency.

If Brazil experiences substantial inflation in the future, Bradesco's revenues and its ability to access foreign financial markets will be diminished.

In the past, Brazil has experienced extremely high rates of inflation. According to the Consumer Price Index -Domestic Availability (or IGP-DI), inflation rates in Brazil reached 9.11%, (1.44%) and 11.31% on December 31, 2008, 2009 and 2010 respectively. Inflation and government measures to curb inflation had significant negative impacts on the Brazilian economy. Government measures to curb inflation and public speculation in relation to possible government measures had a negative effect on the economy and added to economic uncertainty in Brazil and heightened volatility in the Brazilian securities market, which may have a negative effect for Bradesco.

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4.1 – Description of risk factors

These measures have often included restrictive monetary policy with high interest rates, restricting availability of credit and reducing economic growth. As a result, interest rates have fluctuated significantly. Increases in the rate of the Special Settlement and Custody System, known as the "SELIC" rate, and the benchmark interest rate set by the Brazilian Monetary Policy Committee, or "COPOM”, may negatively affect Bradesco by reducing demand for credit and raising funding costs, the cost of domestic debt, and the risk of customer default. SELIC rate reductions may also have a negative effect on Bradesco by reducing financial income, on interest-earning assets and reduced revenues and margins.

Future actions of the Brazilian government – including interest rate cuts, foreign exchange market interventions, or steps to adjust or fix the value of the Brazilian real – may lead to rising inflation. If Brazil undergoes fluctuating inflation rates, Bradesco's costs and net margins may be affected and if there is lack of investor confidence, prices of its securities may fall. Inflationary pressures may also affect its ability to access financial markets abroad and may lead to counter-inflationary policies that may have adverse effects on its business, financial situation, results from operations and market value of its preferred shares.

Alterations of the benchmark interest rate made by the Central Bank's monetary policy committee (COPOM) may substantially and adversely affect margins and results from Bradesco’s operations.

COPOM sets basic interest rates for the Brazilian banking system. Basic interest rates were 13.75%, 8.75% and 10.75% per annum on December 31, 2008, 2009 and 2010, respectively. Variations in the basic interest rate may substantially and adversely affect Bradesco's results from operations for these reasons:

• high basic interest rates raise Bradesco's domestic debt costs and may increase the probability of customer default; and
• low basic interest rates may reduce Bradesco's net financial income.

The monetary policy committee (COPOM) sets the benchmark interest rate to manage certain aspects of the Brazilian economy, including hedge capital reserves and flows. The basic interest rates set by COPOM or the frequency at which these rates are adjusted are not controlled.

Events and perception of risk in Brazil and in other countries, specially other emerging markets, may negatively affect the market value of Brazilian securities, including Bradesco's preferred shares.

The market value of securities issued by Brazilian companies is affected to varying degrees by economic and market conditions in other countries including other Latin American countries, and other emerging countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors' reaction to events in these countries can have an adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging countries may reduce investor appetite for securities from Brazilian issuers, including the ones issued by Bradesco, which might negatively affect the market value of its preferred shares.

The recent global financial crisis has had significant consequences worldwide, including in Brazil, such as volatility on capital markets, tight credit or non-availability of credit, higher interest rates, a slowdown in the global economy, volatile exchange rates, and inflationary pressures, among others that have directly or indirectly had, and will continue to have, negative impacts on Bradesco's business dealings, financial position, results from operations, the market value of securities of Brazilian issuers, including Bradesco, and its ability to finance its operations.

Risks related to Bradesco and the Brazilian banking sector

Bradesco may meet with higher levels of arrears in repayment of loans, as its loan portfolio matures.

Bradesco's loan portfolio has grown substantially since 2004, mainly due to Brazil's economic growth. Any corresponding increase in its level of borrowing taking an abnormal course may lead to a slower pace than the ratio

PAGE 22

4.1 – Description of risk factors

of growth of loans, since the latter are not normally repayable within a short period of their origination. Levels of non-performing loans are higher for Bradesco's personal than for its corporate customers.

The weakening of economic conditions in Brazil, which began in mid-2008, resulted in higher unemployment, which in turn led to increases in Bradesco's levels of non-performing loans, especially for personal customers’ portfolio. This trend towards higher levels of non-performing loans deteriorated in 2009. In 2010 there was an improvement in delinquency levels arising from the economic recovery in Brazil. However, if economic conditions in Brazil deteriorate, the issuer may be forced to increase its provision for loan losses in the future.

Rapid growth of loans may also reduce the ratio of non-performing loans compared to total loans, until the rate of growth slackens or the portfolio becomes more mature. Adverse economic conditions and a lower growth rate of Bradesco's loan portfolio may result in an increase in its provisions for loan losses, write-downs and non-performing loans as a proportion of total loans, which may have an adverse effect on its business dealings, financial condition and results from operations.

The increasingly competitive environment in banking and insurance in Brazil may adversely affect Bradesco's business prospects.

The Brazilian markets for financial, banking and insurance services are highly competitive. Bradesco faces significant competition from other large Brazilian and foreign banks and insurance companies, both public and private, in all the key segments of its operations. There has also been more consolidation of the Brazilian banking market. In November 2008, Banco Itaú S.A. (Banco Itaú), and Unibanco - União de Bancos Brasileiros S.A. (Unibanco), merged to form Banco Itaú Unibanco (Itaú Unibanco), thus creating an important presence in the market. At the end of 2010, Banco Itaú Unibanco was renamed Banco Itaú. In addition, Banco do Brasil S.A. (Banco do Brasil), also joined with Banco Nossa Caixa S.A. in November 2008 and entered into a strategic partnership agreement with Banco Votorantim S.A. (Banco Votorantim).

Banco Itaú entered into a partnership agreement with Porto Seguro Cia. de Seguros Gerais (Porto Seguro) in the automobile and residential insurance sector, to create a market leader in the auto insurance segment.

Moreover, Brazilian regulations create barriers to entry and make no distinction between foreign and Brazilian commercial and investment banks or between Brazilian and foreign insurance companies and insurers. Therefore the presence of foreign banks and insurance companies in Brazil, some of whom have more resources than Bradesco, has increased competitiveness in banking and insurance in general and also brought more competition in markets for specific products. Privatization of public (government controlled) banks has also made the Brazilian banking and other financial services markets more competitive.

A higher level of competition may adversely affect Bradesco's results and its potential business, and may among other factors:

• restrict the ability to build its customer base and expand our operations;
• reduce the profit margins on services and Bradesco’s products, insurance, leasing and other services and products; and
• lead to more competition for foreign investment opportunities.

Losses on investments in securities may have a significant impact on Bradesco's results from operations and are unpredictable.

The value of some of the investments in securities may be significantly reduced due to volatile financial markets and may vary over short periods. The amounts of these gains and losses, which are journalized as investments in securities are sold, or in certain circumstances in which they are marked to market or recognized at fair value, may

PAGE 23

4.1 – Description of risk factors

fluctuate substantially from one period to another. The extent of this fluctuation partly depends on market values of securities, which in turn may vary considerably, and on Bradesco’s policies for investment. It is not possible to predict the amount of gains or losses realized in a certain future period and Bradesco's management believes that variations from one period to another are of no practical value for the purposes of analysis. Additionally, any income from its investment portfolio may no longer contribute to its net income at the same levels as in recent periods, and Bradesco may no longer enjoy rising valuations such as those currently seen in its consolidated investment portfolio, or any portion of the corresponding increase in value.

May suffer losses associated with exposure to counterparties.

Bradesco is subject to the possibility of a counterparty not honouring its contractual obligations. Counterparties default may be due to bankruptcy, lack of liquidity, operational failure, or other reasons. This risk may arise, for example, with swaps or other derivatives in which counterparties have an obligation to repay or execute currencies or other trades that do not occur when required due to inability to make delivery or system failures affecting clearing agents, currency exchange, clearing houses or other financial intermediaries. This counterparty risk is higher in difficult markets where there is greater risk of counterparty failure.

Bradesco’s trading in derivatives and related transactions may cause substantial losses.

Bradesco is actively engaged in trading securities, and in buying fixed-income securities and equity shares, in particular, to sell them in the short-term with the aim of profiting from short-term price differentials. These investments may expose Bradesco to substantial financial losses in the future, since securities are subject to fluctuations in value and may lead to losses. In addition, Bradesco is present in derivatives transactions to manage its exposure to currency and interest-rate risk. The purpose of these derivative transactions is to protect Bradesco against increases or decreases in exchange rates or interest rates, but not in both cases. For example, Bradesco may buy derivatives to hedge against reductions in the rate of the Brazilian real or a lower interest rate; if the Brazilian real appreciates, or interest rates rise, the Bank may incur financial losses. Such losses could significantly and adversely affect Bradesco's cash flow and future results of operations.

The Brazilian government regulates operations of local financial institutions and insurance companies, and changes in existing regulations and laws or new laws or regulations may adversely affect Bradesco's operations and revenues.

Brazilian banks and insurance companies, including Bradesco's banking and insurance operations, are subject to extensive and ongoing regulatory supervision by the Brazilian government. Bradesco has no control over government regulation, which governs all aspects of the Bank's operations, including the imposition of:

• minimum capital requirements;
• compulsory deposits/reserves;
• requirements for investment in fixed assets;
• lending limits and other credit restrictions;
• accounting and statistical requirements;
• solvency margins;
• minimum coverage levels; and
• mandatory policies for provisioning.

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4.1 – Description of risk factors

The regulatory framework for banks and insurance companies in Brazil is constantly evolving. Existing laws and regulations may be altered, or the ways in which the laws and regulations are implemented or interpreted may change, and new laws and new regulations may be introduced. These changes may adversely affect Bradesco's operations and revenues.

The Brazilian government, in particular, has historically promulgated regulations affecting financial institutions in an attempt to implement its economic policies. These regulations aim to control the availability of credit and boost or lower consumption in Brazil. These changes may adversely affect Bradesco, since the returns it earns on compulsory deposits are less than those it would obtain from other investments.

Part of Bradesco's business currently not subject to government regulations may be regulated in the future. For example, various legislative proposals to regulate the credit card sector are now being discussed in Brazil's Congress. Some of these proposals aim to increase competitiveness in the sector and restrict tariffs charged by credit card companies. On November 25^th, 2010, for example, the Central Bank issued new rules on tariff charges for financial institutions, and even set criteria for calculating minimum amounts to be paid on credit card invoices. New regulations affecting the credit card industry may have a material negative effect on Bradesco's revenues from credit card business. Such regulations and regulatory changes affecting other business dealings in which Bradesco is involved, including leasing and brokerage, may have a negative effect on its operations and revenues.

Most of Bradesco's common shares are owned by a shareholder whose interests may conflict with those of other investors.

On December 31, 2010, the Bradesco Foundation (Fundação Bradesco) directly or indirectly owned 51.06% of Bradesco's shares. Under the terms of the Bradesco Foundation's bylaws, all directors, members of the executive board, and department directors working in the Bradesco Group for over ten years are members of the Bradesco Foundation's governing body. The governing body does not have other members. Decisions on our policy in relation to acquisitions, disposals of equity investments, loans or other transactions taken by Fundação Bradesco may be contrary to the interests of holders of common shares and have a negative impact on the interests of holders of common shares.

Changes in regulations relating to reserve requirements and compulsory deposits and taxes may reduce operating margins.

The Central Bank has periodically altered the levels of compulsory deposits that financial institutions in Brazil are required to keep at the Central Bank. For example, in September 2008, the Central Bank revoked and changed various compulsory deposit requirements in an attempt to reduce the impact of the global financial crisis. In February 2010, after the recovery of the Brazilian and global economies in the second half of 2009, the Central Bank raised reserve requirements on time deposits and in June 2010 raised reserve requirements on demand deposits, and in December 2010 raised reserve requirements on time deposits and additional deposits. The Central Bank may raise reserve requirements and compulsory deposits in the future or may introduce new reserve requirements and compulsory deposits.

Compulsory deposits generally yield small return than other investments and deposits for the following reasons:

• part of compulsory deposits are non-interest bearing;
• part of compulsory deposits must be held in Brazilian government bonds;
• part of compulsory deposits must be used to finance the federal housing program, Brazil's agricultural sector, low-income customers and small businesses through what is known as a "microcredit program."

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4.1 – Description of risk factors

Reserve requirements have been used by the Central Bank to control liquidity as part of its monetary policy in the past, and Bradesco has no control over these requirements. Any increase in compulsory deposit requirements may reduce its ability to make loans and other investments and may thus negatively affect Bradesco.

Changes in taxes and other fiscal initiatives may adversely affect Bradesco.

The Brazilian government regularly changes tax regimes and takes other fiscal initiatives that affect Bradesco and its customers. The latter include changes in tax rates and occasionally temporary taxes, the proceeds from which are used for the government's purposes. The effects of these changes and other changes resulting from additional tax initiatives have not been, and cannot be quantified and there is no guarantee that these laws, once implemented, will not have a negative effect on Bradesco's business dealings. Furthermore, such changes may lead to uncertainties for the financial system, raise the cost of loans and contribute to an increase in the loan portfolio taking an abnormal course.

Brazil's Constitution set a ceiling for interest rates on loans, including interest rates on bank loans, and the impact of subsequent legislation containing regulations on this matter is uncertain.

The Brazilian constitution's Article 192, promulgated in 1988, set a 12% per annum cap for interest rates charged on bank loans. However, after promulgation of the constitution, this rate was not put into practice since the regulatory aspects for the cap were still pending. The interpretation that this ceiling has not yet come into force was recently confirmed by Binding Precedent No. 7, a final decision and binding precedent promulgated by Brazil's Supreme Court in 2008, confirming the court's previous view on this issue. Since 1988, several attempts have been made to adjust lending rates, particularly interest rates on bank loans, but none have been implemented or upheld by higher courts in Brazil.

On May 29, 2003, Constitutional Amendment No. 40 (locally known as EC 40/03) was enacted to repeal all paragraphs and subparagraphs of Article 192 of Brazil's constitution. This amendment allows the Brazilian financial system to be regulated by specific laws for each system sector rather than a single law for the system as a whole.

When the new Civil Code (or Law 10406, of January 10^th, 2002) came into effect, unless parties to a loan had agreed to a different rate, the maximum interest rate was geared to the basic interest rate charged by Brazil's Treasury (Office of the National Treasury). This basic rate is now the SELIC rate, which stood at 10.75% per annum on December 31, 2010. However, there is some uncertainty as to whether this applicable base rate would be the SELIC rate or the 12.0% per annum interest rate stipulated in the Tax Code (Código Tributário Nacional Brasileiro).

The impacts of EC 40/03 and the determinations of the new Civil Code are uncertain at the moment, but any substantial increase or decrease in the interest rate may have a material effect on the financial conditions, results from operations or prospects of Brazilian financial institutions, including Bradesco.

Furthermore, some Brazilian courts have, in the past, issued rulings restricting interest rates on consumer financing transactions that are regarded as unfair or excessive in comparison with market practices. Future decisions by Brazilian courts, or changes in legislation and regulations restricting interest rates charged by financial institutions may have a negative effect on Bradesco's business.

Losses relating to insurance claims may vary from time to time and differences between losses on actual claims and underwriting assumptions and actuarial reserves may have an adverse effect on Bradesco.

Bradesco's results from operations depend significantly on the extent to which claims and loss event numbers are consistent with its actuarial assumptions used to evaluate obligations related to claims under current and future policies and to price its insurance products. Bradesco attempts to limit its liability and price its insurance products, based on expected payments of benefits calculated using several factors such as: assumptions for returns on investments, mortality and disability expenses, continuity and certain macroeconomic factors such as inflation and

PAGE 26

4.1 – Description of risk factors

interest rates. These assumptions may differ from past experience due to factors beyond Bradesco's control, such as natural disasters (floods, explosions and fires) or human disasters (riots, terrorist or gang attacks) or changes in rates of mortality and disability as a result of advances in medicine and increased longevity, among others. Therefore, Bradesco is unable to accurately determine the values that will ultimately be paid to settle these obligations, or when these payments will have to be made, or if the assets guaranteeing its insurance obligations, together with future premiums, will be sufficient to cover payments against these obligations. These values may vary in relation to estimates, especially when payments do not occur until the distant future, as is the case with some of Bradesco's life insurance products. To the extent that the actual experience of loss events and claims is less favourable than the underlying assumptions used to calculate obligations, Bradesco may be required to increase its reserves, which may adversely affect its cash flow.

If actual losses exceed reserves for the risks that have been underwritten, Bradesco could be adversely affected.

Bradesco's results from operations and financial condition depend on its ability to accurately assess actual losses associated with the risks that have been underwritten. Bradesco's current reserves are based on estimates that rely on available information and involve many factors, including experiences of recent losses, current economic conditions, internal risk ratings, actuarial and statistical projections of expected costs of settling future claims, such as estimates of future trends for the severity and frequency of claims, legal theories concerning liability, levels and/or time of receipt or payment of premiums and retirement, mortality and incapacity rates, continuity, among others. Consequently, calculating reserves is inherently uncertain and actual losses are often different from such estimates, sometimes by a substantial margin. Discrepancies occur for several reasons, for example: since Bradesco records its provisions for loan losses based on estimates, but provisions may not be sufficient to cover losses; there may be more numerous claims for loss events; or costs could be higher than estimated. If actual losses significantly exceed its reserves, Bradesco may be adversely affected.

Bradesco is jointly liable for customers' losses if its reinsurers fail to meet their obligations under reinsurance contracts.

Purchasing reinsurance does not exempt Bradesco from liability to its customers if a reinsurer fails to comply with its obligations under reinsurance contracts. Consequently, the reinsurer's insolvency or failure to make timely payments as described in the contracts could have an adverse effect on Bradesco, since the latter continues to be liable to its insured persons.

The strategy of marketing and expanding Internet Banking in Brazil may not be well received or may be more costly than profitable.

Bradesco has been aggressively insisting on using the Internet for banking and other customer services and expects to continue to do so. However, the market for our Internet products is evolving rapidly and becoming increasingly competitive. Whether this market will grow, and at what pace, is unforeseeable. Additionally, should Bradesco fail to effectively adapt to growth and new developments in the Internet and technology market, its business, competitiveness or results from operations could be adversely affected.

The Internet may not prove to be a viable retail market in Brazil for a number of reasons, including lack of acceptable security technology, potentially inadequate development of the required infrastructure, lack of marketing and development required for improved performance, or visible lack of customer trust in Bradesco's systems.

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Reference Form – 2011 – BANCO BRADESCO S.A. Version: 1

4.2 – Comments on expected alterations of exposure to risk factors

No reduction or increase in the issuer's exposure is expected in relation to risks mentioned in Section 4.1.

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4.3 – Non-confidential significant judicial, administrative or arbitration proceedings

In terms of assessing materiality, Bradesco has found that there are no cases that could materially damage its image or pose legal risks. Cases relating to this item were obtained from a materiality of R$ 280 million, which represents 0.5% of the issuer's capital base (R$ 56,146 million). Therefore, we selected cases whose financial impacts exceed this material amount. Any differences between the cases shown below and the values shown in Notes refer to processes that individually involve amounts below the level we consider material.

Bradesco is a party in judicial proceedings involving labor, civil-liability and tax claims arising in the normal course of its business.

Provisions were made taking into account: the opinion of legal advisors, the nature of the actions, similarity with previous cases, complexity and positioning of the courts, whenever loss is rated "probable".

Management believes that provision is sufficient to cover any losses arising from these cases.

Liabilities related to legal obligation currently in litigation is maintained until as case is conclusively won, which means favorable legal decisions that may no longer be appealed, or falls due to prescription.

Labor contingency

Currently we are defendants in labor proceedings or actions brought by former employees, claiming in particular "overtime payments”. In cases in which judicial deposit is required, the amount of the labor contingency is made presuming loss of these deposits. For the other cases, provision is based on the average value of payments made in cases judged in the last 12 months, considering the year the action was brought.

Time-clocks were introduced to control actual hours worked in 1992, and overtime is paid in the ordinary course of the employment contract. Therefore, labor claims brought after 1997 individually involve much smaller amounts.

On December 31, 2010, our provision for labor-claim related liabilities rated "probable" reached R$ 1,578,688 thousand.

There are no individually material cases based on the above-mentioned criterion.

Civil-liability contingency

We are a party in civil actions for claims involving compensation for moral damages and property damages, mostly relating to credit reports, returned (bounced) checks, reports in debtor database and compensating for inflation adjustments cancelled under government economic programs.

These actions are controlled individually through our computerized system and provisioned whenever loss is rated "probable", based on the opinions of legal advisors, the nature of actions, similarity with previous cases, complexity and positioning of the courts.

The cases involving credit reports, returned checks and debtor database entries do not normally amount to events capable of causing substantial impact on our financial results. Most of these actions involve the Special Civil Court (Juizado Especial Cível, or JEC), in which claims are limited to 40 times the minimum monthly wage.

Note the increase in the actions claiming inflation adjustments that were cancelled when balances in savings accounts were restated under economic programs introduced as part of Federal Government's economic policy to lower inflation rates in the past. Although the Bank complied with the legislation in force at the time, these cases are being provisioned in light of the actions notified so far and the corresponding perspective of loss analyzed from the point of view the current jurisprudence of the Higher Court of Justice (STJ).

Two points are worth noting in relation to cases involving economic plans: a) there is not substantial potential liability, since the right to bring new claims has been prescribed; b) awaiting a verdict from the Supreme Court (STF)

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4.3 – Non-confidential significant judicial, administrative or arbitration proceedings

is action "APDF" 165 (pleading failure to fulfill fundamental precept) proposed by the National Financial System Confederation (CONSIF), which seeks to suspend all cases involving these plans now underway.

On December 31, 2010, our provision for liabilities relating to civil-law actions rated "probable" reached R$ 2,657,620 thousand.

There are no individually material cases based on the above-mentioned criterion.

Note that repetitive or related civil liability cases based on similar facts or causes, which are considered material as a whole, are listed in item 4.6.

Tax and social-insurance/pension contingencies

Bradesco has brought legal actions challenging the constitutionality of certain taxes and social contributions, which are fully provisioned despite good chances of success in the medium and long term, in the opinion of our legal advisors.

On December 31, 2010, our provision for tax and social security contingencies totaled R$ 9,091,558 thousand.

Based on our assessment of materiality, the cases shown below involve tax and social security issues and the chances of losing were rated "remote or possible":

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4.3 – Non-confidential significant judicial, administrative or arbitration proceedings

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4.3 – Non-confidential significant judicial, administrative or arbitration proceedings

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4.3 – Non-confidential significant judicial, administrative or arbitration proceedings

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4.4 – Non-confidential judicial, administrative or arbitration proceedings in which the other parties are officers, former officers, controlling shareholders, former controlling shareholders, or investors

We are not involved in any case covered by the conditions mentioned in item 4.4.

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4.5 – Significant confidential cases

We are not involved in any case covered by the conditions mentioned in item 4.5.

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4.6 – Repeated or related significant non-confidential judicial, administrative or arbitration proceedings, as a whole

Civil liability action in which customers who had amounts invested in savings accounts when government economic plans were introduced (“Bresser Plan”, “Summer Plan” and the “Collor Plan”) claim that they were adversely affected by altered indices used to adjust savings.

a. amounts involved: R$ 1,265,831,503.80 b. amount provisioned, if applicable: R$ 1,265,831,503.80 c. practice of the issuer or its subsidiary that gave rise to this contingency: Like all the other financial institutions, the issuer complied with legislative programs designed to control inflation in 1987, 1989 and 1999, which were known as the "Bresser Plan", "Summer Plan" and "Collor Plan" respectively.

These "plans" modified indices used for inflation adjustment of amounts in savings accounts. Now, some 20 years later, account holders alleging losses due to these alterations are asking the courts to order financial institutions to use the previous indices.

Individually none of these cases involve significant amounts.

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4.7 – Other material contingencies

There are no significant contingencies other than those covered in previous items.

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4.8 – Rules of the country of origin or country in which securities are custodied

Not applicable as Bradesco is not classed as a foreign issuer.

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5.1 – Description of principal market risks

Bradesco is exposed to market risks inherent to its business, such as currency risk and interest rate risk, since its role as financial intermediary involves borrowing and lending/financing using various types of indexers.

As good governance practice for its risk management, Bradesco has an ongoing process for managing its positions, which includes control of all positions exposed to market risk using measures consistent with best practices internationally and the New Capital Accord – Basel II. A unit working separately from the business units is tasked with monitoring and controlling market risk tolerance limits.

The proposed exposure limits are validated by specific business committees and submitted for approval by the Integrated Risk Management and Capital Allocation Committee, observing the limits set by the board of directors, depending on the objectives of positions, which are divided into the following portfolios: Trading Portfolio: consists of all transactions with financial instruments, including derivatives, held with the intention of trading or to hedge other trading portfolio assets, and not subject to restrictions on their tradability. Transaction held for trading are those intended for resale, to obtain arbitrage benefits from actual or expected prices.

Banking: transactions not classified in the Trading Portfolio. Consists of structural transactions derived from the Organization's different lines of business and its respective hedging transactions.

Market Risk Measurement Models

Market risk is measured and controlled using Value at Risk (VaR), Economic Value Equity (EVE), stress testing and sensitivity analysis, in addition to limits of management of results and financial exposure.

Trading Portfolio and Banking Portfolio Equity Risk

Although controlled separately, risks relating to the Trading and Banking portfolio equity positions are measured using the Delta-Normal VaR methodology for one-day horizons, with a confidence level of 99%, and volatility and correlation levels are calculated using statistical methods that give higher weightings to recent returns.

Trading portfolio risk is also controlled by stress testing to quantify the negative impact of economic shocks and events that are financially unfavorable for our positions. Analysis uses stress scenarios prepared by our Market Risk and Economic units, based on historical and prospective data for risk factors affecting Trading portfolio positions.

Banking Portfolio - Interest Rate Risk

Measurement and control of interest rate risk for the Banking portfolio uses EVE methodology, which measures economic impact on positions arising from scenarios prepared by our Economics units, which chart any positive or negative changes in yield curves affecting our investments and funding efforts.

EVE methodology consists of re-pricing the portfolio subject to interest-rate variation taking into account increases or decreases in the rates used for calculating present value and total tenor/expiration of assets and liabilities. On this basis, the portfolio's economic value is calculated for interest rates on the date of the analysis and for scenarios projected over a one-year horizon. Any difference between the values obtained for the portfolio will be the EVE, or interest-rate risk attributed to the portfolio.

Evolution of Exposure to Risk

This section shows the evolution of Trading portfolio's VaR and stress analysis. Finally, we show the data from sensitivity testing as per the criteria defined in CVM Instruction 475/08.

VaR Internal Model - Trading Portfolio

Total value at risk at the end of 2010 showed a slight increase compared to 2009, as shown in the table below:

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5.1 – Description of principal market risks

Stress Analysis - Trading Portfolio

In order to estimate possible loss not covered by VaR, we make daily assessments of possible impacts on positions in stress scenarios. Taking into account the effect of diversification across risk factors, the estimated medium possibility of loss in stress situations would be R$ 276 million in December 2010, while estimated maximum loss would be R$ 521 million.

Sensitivity analysis

The Trading portfolio is also monitored by daily sensitivity analysis, which measures the effect of varying market curves and prices on our positions. In addition, we run a quarterly sensitivity analysis of our financial exposure (Trading and Banking portfolios) in compliance with CVM Instruction 475/08. However, note that the impacts of the Banking portfolio's financial exposure (particularly the interest rate and price indices factors) do not necessarily represent potential accounting losses for the Organization. This is because some Banking portfolio loans are financed by sight deposits and/or savings, which are natural hedges against any interest-rate fluctuations; interest-rate fluctuations do not have a material impact on our earnings, since securities are intended to be held to maturity.

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5.1 – Description of principal market risks