Re Alliance

Telefonica SA
13 June 2001

THE TELEFONICA GROUP AND ITAU BANK SIGN AN ALLIANCE

- The agreement is based on a concrete model of operations and businesses that  
  explores the synergy between the two groups.

Itau Bank, Latin America's financial group with the highest market value, and
the Telefonica Group, Brazil's main telecommunications group, have signed an
alliance for the provision of services to the bank through the management of
Itau's corporate telecommunications network.  This alliance is the first of its
kind introducing a concrete model of operations and businesses in the Brazilian
market, exploring the synergy between the two groups.

This agreement has today been formalized in Sao Paulo through the signing of a
memorandum of understanding between Itau Bank and the Telefonica Group.  The
signing of the definitive contract will take place within the next few weeks,
and will also pave the way for new joint ventures between the two parties.

The Telefonica Group will invest in those Itau companies that possesses the
necessary assets to operate the network, and will also apply for the
authorizations needed to provide telecommunications services.  This whole
process will be carried out within the periods and under the conditions set
forth in the corresponding legislation, and will previously be submitted for
evaluation by government regulators.

'Once again Itau Bank has signed an alliance that aims to offer the best and
most up-to-date technology to our more than 8 million customers. Together, Itau
and Telefonica will build a relationship that will generate quality and
value-added services using state-of-the-art technology', stated the chairman of
Itau Bank, Roberto Setubal.

'For the Telefonica Group, the union with a conglomerate like Itau is an
excellent opportunity to join forces with an outstanding partner, through a
strategic alliance in the corporate data market, one of the most promising in
the world's telecommunications scenario', assured Fernando Xavier Ferreira,
chairman of the Telefonica Group in Brazil.

The business will guarantee Itau the provision of quality services at
competitive prices, which will be periodically revised taking the market as the
reference point, therefore ensuring long-term conditions for Itau that are no
less favourable than those obtained by corporate clients of its same size.

According to Itau Bank, this operation should provide it with average cost
savings that will be 24% lower than those currently incurred from the volume of
existing services, also guaranteeing technological updating and the availability
of state-of-the-art services that benefit both the bank and its customers.

ITAU BANK

Itau Bank's corporate network has more than 3,000 branches, combining agencies,
customer-care points, management and administrative areas, besides its more than
12,000 multifunctional electronic cash-points. Itau is the market leader in Sao
Paulo, Rio de Janeiro, Minas Gerais and Parana, states that make up more than
63.5% of Brazil's GDP. This infrastructure attends the needs of more than
500,000 corporate customers and over 7 million retail customers.

The obtaining of quality technology is a priority for Itau. In order to achieve
this, the company has carried out investments amounting to R$ 3,900 million
between January 1995 and March 2001. These investments have been channelled into
the computerizing of the company (hardware, software, maintenance, personnel,
infrastructure, training and development of systems), as well as the 19 ISSO
9002 certificates. Itau has always managed to take maximum advantage of new
technologies in order to modernise and enhance its business, optimise its
relationships and improve customer-care. More than 2 million customers use some
type of electronic service offered by the bank on a daily basis, making up 71%
of all the transactions carried out.

                                                  Sao Paulo, June 12th, 2001