The following table sets forth information on the commercial marketselling rate for U.S. dollars as reported by the Central Bank for the periods and dates indicated.

Not applicable.

Not applicable.

AnThe following section does not describe all the risks of an investment in our preferred shares and ADSs involves a high degree of risk.ADSs. You should carefully read this annual report in its entirety. You should consider, among other things, the risks described below before making an investment decision.risk factors with respect to Itaú Unibanco Holding, to Brazilian financial institutions and to Brazil not normally associated with investments in securities of United States, European and other similar issuers, including those risk factors set out below. Our business, financial condition and results of operations, financial condition or prospects could be materially and adverselynegatively affected byif any of these risks. The marketsuch risks occurs, and as a result, the trading price of our preferred shares and ADSs could decline due to any of these risks or other factors, and you maycould lose all or part of your investment. The risks

You should further note that the risk factors described below are thosenot the only risks we face or that relate to an investment in our preferred shares and ADSs. These are the risks we consider material as of the date of this annual report. There may be additional risks that we currently believe may materially affect us.consider immaterial or of which we are currently unaware, and any of these risks could have similar effects to those set forth below.

The Brazilian government from time to time intervenes in the Brazilian economy and makes changes in policies and regulations. The Brazilian government’s actions have involved, in the past, included, among other measures, increases in interest rates, changes in tax policies, price controls, capital controlscontrol limits on selected imports and, prior to the current floating exchange regime, currency devaluations. Our business, financial condition, and results of operations may be materially and adversely affected by changes in policies or regulations involving or affecting factors, such as:

As a bank in Brazil, the vast majority of our income, expenses, assets and liabilities are directly tied to interest rates. Therefore, our results of operations and financial condition are significantly affected by inflation, interest rate fluctuations and related government monetary policies, all of which may have a material adverse effect on the growth of the Brazilian economy and on us, including our loan portfolio, our cost of funding and our income from credit operations.

In addition, changes in governmentadministrations may result in changes in government policy that may affect us. Uncertainty over whether the Brazilian government in the future will implement changes in policies or regulations affecting these and other factors in the future may contribute to heightened volatility in the Brazilian securities markets and in the securities of Brazilian issuers, which in turn may have a material adverse effect on us, and, as consequence, on the market price of our preferred shares and ADSs.

Inflation and interest ratesrate volatility have in the past caused material adverse effects in Brazil.the Brazilian economy. While the Brazilian government has been able to keep inflation close to target levels in the last 12 years, we cannot assure you that it will continue to be able to do so and thereso. Inflation, especially sudden increases in inflation, usually causes the loss of purchasing power. Also prolonged periods of high inflation provoke distortions in the allocation of resources. From 2004 to 2010, the average annual inflation was 4.7%. Expected inflation for 2011, as surveyed by the Central Bank, is no guarantee that future administrations will be able5.78%.

Economic and market conditions in other countries, including the United States, the European Union countries and emerging markets,market countries, may affect to varying degrees the market value of securities of Brazilian issuers. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have ana material adverse effect on the market value of securities of Brazilian issuers, the availability of credit in Brazil and the amount of foreign investment in Brazil. Crises in the United States, the European Union, and emerging marketsmarket countries may diminish investor interest in securities of Brazilian issuers, including Itaú Unibanco Holding. This could materially and adversely affect the market price of our securities, and could also make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms or at all.

Banks located in countries considered to be emerging markets may be particularly susceptible to disruptions and reductions in the availability of credit or increases in financing costs, which could have a material adverse impact on our financial condition. In addition, the availability of credit to entities that operate within emerging markets is significantly influenced by levels of investor confidence in such markets as a whole and any factor that impacts market confidence (for example, a decrease in credit ratings or state or central bank intervention in one market) could materially and adversely affect the price or availability of funding for entities within any of these markets.

The financial global markets have deteriorated sharply since the end ofbeginning in late 2007. Major financial institutions, including some of the largest global commercial banks, investment banks and insurance companies have been experiencingexperienced significant difficulties, especially lack of liquidity and depreciation of financial assets. These difficulties have constricted the ability of a number of major global financial institutions to engage in further lending activity and have caused losses. In addition, defaults by, and doubts about the solvency of certain financial institutions and the financial services industry generally have led to market-wide liquidity problems and could lead to losses or defaults by, and bankruptcies of, other institutions.

We are exposed to the disruptions and volatility in the global financial markets because of their effects on the financial and economic environment in the countries in which we operate, especially Brazil, such as a slowdown in the economy, an increase in the unemployment rate, a decrease in the purchasing power of consumers and the lack of credit availability. We lend primarily to Brazilian borrowers and these effects could materially and adversely affect our customers and increase our non-performing loans and, as a result, increase the risk associated with our lending activity and require us to make corresponding revisions to our risk management and loan loss reserve models. For example, in 2009, we experienced an increase in our non-performing loans overdue above 90past due more than 60 days from 3.9%4.5% of total loans onin December 31, 2008 to 5.6% on6.3% December 31, 2009. As of December 31, 2010, our non-performing loans past due more than 60 days represented 5.1% of our total loan portfolio.

The global financial downturn has had significant consequences for Brazil and the other countries in which we operate, including stock, interest and credit market volatility, a general economic slowdown, and volatile exchange rates that may, directly or indirectly, materially and adversely affect the market price of Brazilian securities and have a material adverse effect on us.our business, financial condition and results of operations. In addition, institutional failures and disruption of the financial market in Brazil and the other countries in which we operate could restrict our access to the public equity and debt markets.

Continued or worsening disruption or volatility in the global financial markets could lead to further increase negative effects on the financial and economic environment in Brazil and the other countries in which we operate, which could have a material adverse effect on us.

Any acquisition and merger of institutions and assets and the integration of such institutions and assets involves certain risks including the risk that:

Brazilian banks, including us, are subject to extensive and continuous regulatory review by the Brazilian government, principally by the Central Bank. We have no control over applicable law and government regulations, which govern all aspects of our operations, including regulations that impose:

The regulatory structure forgoverning Brazilian financial institutions, including banks, broker-dealers, leasing companies and insurance companies, is continuously evolving. Parts of our business that are not currently subject to government regulation may become regulated andin the future. For example, there are several legislative proposals to that effect currently under considerationdiscussion in the Brazilian congress. Disruptions and volatility in the global financial markets resulting in liquidity problems at major international financial institutions could lead the Brazilian government to change laws and regulations applicable to Brazilian financial intuitionsinstitutions based on thesesuch international developments. The amendment of existing laws and regulations or the adoption of new laws and regulations could have a material adverse effect on us,our business, financial condition, and results of operations, including our ability to provide loans, make investments or render certain financial services. See “Item 4B. Business Overview –- Regulation and Supervision - - Regulation by the Central Bank.Supervision.”

The markets for financial and banking services in Brazil are highly competitive. We face significant competition from other large Brazilian and international banks, including an increase in competition from Brazilian public banks. Competition has increased as a result of recent consolidations among financial institutions in Brazil and as a result of new regulations by CMN that facilitate the customer’s ability to switch business between banks. See “Item 4B. Business Overview –- Regulation and Supervision.” The increased competition may materially and adversely affect us by, among other things, limiting our ability to retain our existing consumer base, increase our customer base and to expand our operations, reducing our profit margins on banking and other services and products we offer, and to the extent it limits investment opportunities.

The Central Bank has periodically changed the level of reserves and compulsory deposits that financial institutions in Brazil are required to maintain with the Central Bank. The Central Bank may increase the reserve and compulsory deposits requirements in the future or impose new requirements.

ReserveIncreases in reserve and compulsory deposit requirements reduce our liquidity to make loans and other investments.  In addition, theinvestments and, as a result, may have a material adverse effect on business, financial condition and results of our operations.

The compulsory deposits generally do not yield the same return as other investments and deposits because:because a portion of compulsory deposits:

As of December 31, 2009,2010, we had R$9,82781,054 million in interest-bearing compulsory deposits and R$4,0424,736 million in non-interest-bearing compulsory deposits. Any increase in the compulsory deposits requirements may reduce our ability to lend funds and make other investments and, as a result, may have a material adverse effect on us. For more detailed information on compulsory deposits, see “ Item“Item 4B. Business Overview –- Selected Statistical –Information — Central Bank Compulsory Deposits.”

As of December 31, 2009,2010, our loan and financing portfolio was R$245,736298,169 million, compared to R$169,700245,736 million as of December 31, 2008.2009. Our allowance for loan losses was R$20,138 million, representing 6.8% of our total loan portfolio, as of December 31, 2010, compared to R$19,968 million, representing 8.1% of our total loan portfolio, as of December 31, 2009, compared to R$12,202 million, representing 7.2% of our total loan portfolio, as of December 31, 2008.2009. The quality of our loan portfolio is subject to changes in the profile of our business resulting from organic growth and our merger and acquisition activity and is dependent on domestic and, to a lesser extent, international economic conditions. Adverse changes affecting any of the sectors to which we have significant lending exposure, political events within and external to Brazil and the variability of economic activity may have a material adverse impact on our business and our results of operations. Furthermore, our historic loan loss experience may not be indicative of our future loan losses.

In addition, our strategy includes efforts to significantly expand our loan portfolio as well as increase the number of clients, particularly individuals and small and middle-market companies, that we serve. Certain financial products we offer to individuals and other clients are generally characterized by higher margins, but also higher risks of default. AnA future increase in our loan portfolio, as well as a shift to higher margins and higher risk products, could result in increased default rates, which could have a material adverse effect on us.our business, financial condition and results of operations.

Like many other Brazilian banks, we invest in debt securities of the Brazilian government. As of December 31, 2009,2010, approximately 7.0%11.1% of our total assets, and 36.2%44.1% of our securities portfolio, was comprised of debt securities issued by the Brazilian government. Any failure by the Brazilian government to make timely payments under the terms of these securities, or a significant decrease in their market value, will have a material adverse effect on us.

Our insurance and pension plan business sets prices and establishes reserves for many of our insurance and pension products based upon actuarial or statistical estimates. The pricing of our insurance and pension products and the insurance and pension plans reserves carried to pay future policyholder benefits and claims are each based on models that include many assumptions and projections which are inherently uncertain and involve the exercise of significant judgment, including as to the levels of and timing of receipt or payment of premiums, contributions, benefits, claims, expenses, interest credits, investment results, interest rates, retirement, mortality, morbidity and persistency. Although we frequently review the pricing of our insurance and pensions products and the adequacy of our insurance and pension plans reserves, we cannot determine with precision the ultimate amounts that we will pay for, or the timing of payment of, actual benefits, claims and expenses or whether the assets supporting our policy liabilities, together with future premiums and contributions will be sufficient for payment of benefits and claims. Significant deviations in actual experience from our pricing assumptions could have a material adverse effect on the profitability of our insurance and pension plans products. In addition, if we conclude that our reserves, together with future premiums, are insufficient to cover future policy benefits and claims, we would be required to increase our reserves and incur income statement charges for the period in which the determination is made, which may have a material adverse effect on our business, financial condition and results of operations and financial condition.operations.

Our market, credit and operational risk management policies, procedures and methods, including our statistical modeling tools, such as value at risk, (VAR),or VaR, stress test and sensitivesensitivity analyses, may not be fully effective in mitigating our risk exposure in all economic market environments or against all types of risk, including risks that we fail to identify or anticipate. Some of our qualitative tools and measuresmetrics for managing risk are based upon our use of observed historical market behavior. We apply statistical and other tools to these observations to quantify of our risk exposures. These qualitative tools and measuresmetrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors we did not anticipate or correctly evaluate in our statistical models. This would limit our ability to manage our risks. Our losses thus could be significantly greater than the historical measures indicate. In addition, our quantified modeling does not take all risks into account. Our more qualitative approach to managing those risks could prove insufficient, exposing us to material unanticipated losses. If existing or potential customers believe our risk management is inadequate, they could take their business elsewhere. This could harm our reputation as well as our revenues and profits.

In addition, our businesses depend on the ability to process a large number of transactions securely, efficiently and accurately. Losses can result from inadequate personnel, inadequate or failed internal control processes and systems, information systems failures or breaches or from external events that interrupt normal business operations. We also face the risk that the design of our controls and procedures for mitigating operational risk proves to be inadequate or is circumvented.

We face the possibility that a counterparty will be unable to honor its contractual obligations. These counterparties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may arise, for example, from entering into reinsurance agreements or loan facilities or other credit agreements under which counterparties have obligations to make payments to us;us, executing currency or other trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. In addition, we routinely transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients.

As of December 31, 2009,May31, 2011, Itaú Unibanco Participações S.A., or IUPAR, our controlling shareholder, directly owned 51.0%51.00% of our common stock and 25.8%25.54% of our total capital stock. See “Item 7A. Major Shareholders.” As a result, IUPAR has the power to control us, including the power to elect our directors and officers and determine the outcome of any action requiring shareholder approval, including transactions with related parties, corporate reorganizations and the timing and payment of dividends. In addition, IUPAR is jointly controlled by Itaúsa, which is controlled by the Egydio de Souza Aranha family, and the former controlling shareholders of Unibanco, the Moreira Salles family. The interests of IUPAR, Itaúsa and the Egydio de Souza Aranha and Moreira Salles families may be different from your interests as a shareholder or holder of ADS.our preferred shares and ADSs.

The Central Bank treats us and our subsidiaries and affiliates as a single financial institution for regulatory purposes. While our consolidated capital base provides financial strength and flexibility to our subsidiaries and affiliates, their activities could indirectly put our capital base at risk. In particular, any investigation of, or intervention by the Central Bank in, the affairs of any of our subsidiaries and affiliates could have ana material adverse impact on our other subsidiaries and affiliates and ultimately on us.

UnderAccording to Brazilian Corporate Lawcorporate law and our bylaws , holders of preferred shares, and therefore of the ADSs, are not entitled to vote at meetings of our shareholders, except in limited circumstances. See “Item 10B. Memorandum and Articles of Association.”

We may not be able to offer our preferred shares to U.S. holders of ADSs pursuant to preemptive rights granted to holders of our preferred shares in connection with any issuance of our preferred shares unless a registration statement under the Securities Act is effective with respect to the preferred shares and preemptive rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement relating to preemptive rights with respect to our preferred shares, and we cannot assure you that we will file any such registration statement. If a registration statement is not filed and an exemption from registration does not exist, The Bank of New York Mellon, as depositary, will attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of the sale. However, these preemptive rights will expire if the depositary does not sell them in a timely manner, and U.S. holders of ADSs will not realize any value from the granting of the preemptive rights. For more information on the exercise of your rights, see “Item 10B. Memorandum and Articles of Association –- Preemptive Rights on Increase in Preferred Share Capital.”

As a holder of ADSs, you benefit from the electronic certificate of foreign capital registration obtained by the custodian for our preferred shares underlying the ADSs in Brazil, which permits the custodian to convert dividends and other distributions with respect to the preferred shares into non-Brazilian currency and remit the proceeds abroad. If you surrender your ADSs and withdraw preferred shares, you will be entitled to continue to rely on the custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to the preferred shares, you will not be able to remit abroad non-Brazilian currency unless you obtain your own electronic certificate of foreign capital registration or you qualify under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration. If you do not qualify under the foreign investment regulations you will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, our preferred shares. If you attempt to obtain your own electronic certificate of foreign capital registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to our preferred shares or the return of your capital in a timely manner. Moreover, should you surrender your ADSs and withdraw preferred shares, applicable regulations require you to enter into corresponding exchange transactions and pay taxes on these exchange transactions. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes.

Itaú Unibanco Holding S.A.’s legal andOur commercial name is Itaú Unibanco Holding S.A. We were incorporated on September 9, 1943 and registered with the São Paulo State Board of Trade under number NIRE 35300010230. We are organized as a publicly held corporation for an unlimited period of time under the laws of the Federative Republic of Brazil. Our head offices are located at Praça Alfredo Egydio de Souza Aranha, 100, Torre Olavo Setubal, 04344-902, São Paulo, SP, Brazil and our telephone number is +55-11-5019-1267. Investor information can be found on our website at http://www.itauunibancoir.com/docs.www.itauri.com. Information contained on our website is not incorporated by reference in, and shall not be considered a part of, this annual report.  Our agent for service of process in the United States is the general manager of our New York branch, which is located at 540 Madison Avenue, New York, NY 10022-3721.

The Itaú Financial Group traces itsWe trace our origins to 1944, when members of the Egydio de Souza Aranha family founded Banco Federal de Crédito S.A. in São Paulo. Since 1973 we have operated through Banco Itaú S.A., now Itaú Unibanco. Unibanco Financial Group was founded by members of the Moreira Salles family in 1924, making it Brazil’s oldest non-state owned bank at the time of the Association with the Itaú Financial Group.Association.

On November 3, 2008, the controlling shareholders of Itaúsa and of Unibanco Holdings entered into an association agreement to combine the operations of Itaú Holding (now Itaú Unibanco Holding) and its subsidiaries and Unibanco Financial Groups.Holdings, Unibanco and Unibanco’s subsidiaries. To effect the Association, we carried out a corporate restructuring pursuant to which Unibanco Holdings and its subsidiary Unibanco became wholly owned subsidiaries of Itaú Unibanco Holding.Holding through a series of transactions:

The shares of Itaú Unibanco Holding, including those issued in exchange for shares of Unibanco and Unibanco Holdings, commenced trading under the same symbol on March 31, 2009. In May 2009, the trading symbols were standardized to “ITUB” on all the stock exchanges where Itaú Unibanco Holding’s securities are listed. At the extraordinary shareholders’ meeting held on November 28, 2008, our shareholders approved the change of our corporate name from Banco Itaú Holding Financeira S.A. to Itaú Unibanco Banco Múltiplo S.A. At the extraordinary shareholders’ meeting held on April 24, 2009, our shareholders approved a further change of our corporate name to Itaú Unibanco Holding S.A., which change was approved by the Central Bank on August 12, 2009. Finally, at the extraordinary shareholders’ meeting held on April 30, 2009, the shareholders of Itaú Unibanco approved the change of the corporate name of Banco Itaú S.A. to Itaú Unibanco S.A., which change was approved by the Central Bank on December 30, 2009.

In addition, in the second half of 2009, we began the integration process of Unibanco branches under the “Itaú” brand, and we expect to complete this process bywhich began in the endfirst quarter of 2010, was completed on October 24, 2010.

In AprilAs described in detail under “7A. Major Shareholders — Shareholders’ Agreement  — Bank of America” in several transactions in June 2010 Bank of America Corporation, or BAC, a shareholder of Itaú Unibanco Holding, sold all 188,424,758 preferred shares issued subordinated notes worth US$1 billion atby Itaú Unibanco Holding and owned by BAC.

On March 30, 2011, BlackRock, Inc. informed us, according to Article 12 of CVM Rule No. 358 that it owned preferred shares representing approximately 7% of the fixed rateissued preferred shares of 6.20% per annum maturing in 2020. The notes were offered only to qualified institutional investorsItaú Unibanco Holding.  In addition, BlackRock, Inc. informed us that it holds our shares for investment purposes only.

On April 25, 2011, our shareholders approved a reverse split of our common and preferred shares in the U.S.proportion of 100 shares to one share of the same type in order to adjust our shareholder base to reduce administrative costs and to non-U.S. investors outsideimprove the United States, and may not be offered or sold in the secondary market and/or U.S. territory due to offering and trading restrictions. This financing aims at the expansionefficiency of our capital base, thus enablingbook-entry system.  Our shareholders also approved a higher growthsimultaneous stock split of loanone share to 100 shares, which will maintain the market price of our shares at an appropriate level to ensure liquidity.  This transaction is subject to ratification by the Central Bank.  Once this is approved and financing operations.we provide additional details through an announcement to the market, we will establish a period of at least 60 days for holders of our common and preferred shares holding shares in a number not a multiple of 100 share lots to adjust their share lots at their discretion through the BM&FBOVESPA.  Once the 60-day period for adjustment of shareholdings has expired, fractional shares arising from the reverse split will be regrouped into integral numbers and sold at an auction through BM&FBOVESPA.

See “Item 4B. Business Overview – Selected Statistical Information” for additional information relating to our business.