- Title: Brazil's BNDES bank prioritises tackling debt
- Date: 23rd November 2016
- Summary: RIO DE JANEIRO, BRAZIL (NOVEMBER 22, 2016) (REUTERS) EXTERIOR OF BNDES BANK BUILDING VARIOUS OF BNDES SIGNS (SOUNDBITE) (Portuguese) PRESIDENT OF THE BNDES BANK, MARIA SILVIA BASTOS MARQUES, SAYING: "The discussion that was had with BNDES, and which is still going on, is to focus on returning resources in order to tackle debt." VARIOUS OF MARQUES DURING INTERVIEW (SOUNDBITE) (Portuguese) PRESIDENT OF THE BNDES BANK, MARIA SILVIA BASTOS MARQUES, SAYING: "That is how the consultation was presented to the federal accounting court (TCU), with the objective of returning (resources) and reducing debt. Support for the states is another issue and we are going to find an appropriate format for this." VARIOUS OF MARQUES (SOUNDBITE) (Portuguese) PRESIDENT OF THE BNDES BANK, MARIA SILVIA BASTOS MARQUES, SAYING: "For example, we are working on something that I think is very important, which is the bank having a dividends policy for the majority shareholder, approved by the treasury which represents union (TCU). This will give the bank predictability. As you know in past years BNDES has distributed 100 percent of its dividends for a number of years. This could have a significant impact on cash flow." MARQUES SPEAKING (SOUNDBITE) (Portuguese) PRESIDENT OF THE BNDES BANK, MARIA SILVIA BASTOS MARQUES, SAYING: "The treasury has given us complete autonomy to define the best way to carry out the payment, either in cash or in government bonds, and it is likely to be a mix of the two." A BNDES SIGN
- Embargoed: 8th December 2016 20:11
- Keywords: Brazil BNDES Maria Silva Bastos Marques
- Location: RIO DE JANEIRO, BRAZIL
- City: RIO DE JANEIRO, BRAZIL
- Country: Brazil
- Topics: Economic Events
- Reuters ID: LVA00159O22BN
- Aspect Ratio: 16:9
- Story Text: Brazil's state development bank BNDES plans to repay up to 100 billion reais ($29 billion U.S. dollars) in loans owed to the federal government using a mix of cash and securities, Chief Executive Officer Maria Sílvia Bastos Marques said, helping to curb rapid public debt growth.
BNDES will not use the 70 billion reais worth of equity holdings that it owns through investment arm BNDES Participacoes SA for the repayment, Bastos said in a Tuesday (November 22) interview at the bank's Rio de Janeiro headquarters.
"The discussion that was had with BNDES, and which is still going on, is to focus on returning resources in order to tackle debt," said Marques.
The repayment is eagerly awaited by government officials racing to stem a budget deficit that may hit a record for a second year.
Bastos voiced agreement with Finance Minister Henrique Meirelles that the repayment should be used to cut Brazil's national debt, and not to help debt-laden states, as proposed by some ministers.
The federal accounting court (TCU) ruled on Wednesday (November 23) the early repayment is legal. Under terms of the repayment agreed with the Treasury, BNDES will pay 40 billion reais next year, and 30 billion reais each in 2018 and 2019.
"That is how the consultation was presented to the federal accounting court (TCU), with the objective of returning (resources) and reducing debt. Support for the states is another issue and we are going to find an appropriate format for this," said Marques.
Bastos left the door open for a potential acceleration of the repayment or increasing the size of the earliest instalment if the government agrees to ease the bank's dividend payout to the Treasury.
"For example, we are working on something that I think is very important, which is the bank having a dividends policy for the majority shareholder, approved by the treasury which represents union (TCU). This will give the bank predictability. As you know in past years BNDES has distributed 100 percent of its dividends for a number of years. This could have a significant impact on cash flow," she said.
She said that the bank had been handed a high degree of independence by the government in managing repayment measures.
"The treasury has given us complete autonomy to define the best way to carry out the payment, either in cash or in government bonds, and it is likely to be a mix of the two," said Marques.
Since her appointment in May, Bastos has spearheaded the most ambitious turnaround of BNDES in two decades, reversing years of costly support for handpicked corporate 'national champions'.
She is imposing tougher terms for disbursements, asking BNDES-appointed board members to tighten scrutiny of decisions at major firms, and championing corporate transparency.
As part of that drive, Bastos said BNDES will disburse loans pegged to below-market interest rates mainly for projects that have "significant social impact," such as sanitation.
While details of the new disbursement policy will be announced next month, Bastos wants companies that can tap money elsewhere to consume less subsidised credit.
Since being founded in 1952, BNDES has been practically Brazil's sole source of long-term corporate funding - weakening public finances and squeezing commercial lenders out of capital markets.
Between 2009 and 2013, BNDES annually disbursed three times as much in loans as the World Bank. However, the end of a commodities boom and rampant government spending helped tip Brazil's economy into a painful recession now in its second year. - Copyright Holder: REUTERS
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