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Bank of Brazil President Defended Its Privatization

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The president of the Bank of Brazil, Rubem Novaes, defended last Mar. 15th, in the seminar The new liberal economy, organized by the Getulio Vargas Foundation, the privatization of the institution. According to Novaes, even privatized, the bank could fulfill the government’s goals.

At the same event, the president of Petrobras, Roberto Castello Branco, said that the state-owned company should be privatized, as should public banks. Castello Branco defended the extinction of the National Bank for Economic and Social Development (BNDES).

For Novaes, if the Bank of Brazil were private, it would be much more efficient, would have more return and could better achieve the government’s objectives, such as agricultural credit.

“I do not see anything that could not be achieved as a government priority for the entire banking system,” he said. “I advocate the privatization of Banco do Brasil and Banco do Brasil. Caixa Economica, “he added.

Castello Branco said that, as a liberal, it is contrary to the existence of “99.9% of state-owned enterprises”, with the exception of the Central Bank. “Public banks should be privatized, the BNDES should be extinguished, and Petrobras also privatized,” he said.

The president of Petrobras gave an example of a state that considers a successful case: Codelco (National Copper Corporation of Chile), the largest producer of copper in the world. According to Castello Branco, it is run as a private company and has been the main source of funds for Chile’s sovereign wealth fund.

“In 2010, when there was a terrible earthquake followed by a tsunami in Chile, there was an offer of international aid, and the Chilean government refused and said thank you very much. There were the resources of the sovereign fund generated from Codelco. It’s a profitable business, it’s never been involved in scandals,” he argued.

Castello Branco said that the challenge of the management is to make the state run as a private company. “Since we can not privatize Petrobras and we do not have the mandate to do so, our challenge is to transform it as close as possible to a private company and generate wealth for its shareholders.”

Caixa’s president, Pedro Guimaraes, highlighted the social role of the public bank but said that the institution operates areas and has assets that should not be part of a bank’s portfolio, such as Petrobras shares. According to Guimaraes, this year there will be four operations in the capital market.

“It will be the output of all segments box that is not strategic. Capital openings will be historic. I had 70 meetings in the United States during the carnival, never seen anything like that, they said they believe the structure and want to participate,” he said the president, adding that the lawsuit will start with the Security Fund in September.

BNDES president Joaquim Levy said he is undertaking a series of changes at the bank to contribute to privatizations in the country. According to Levy, the government can quickly structure the privatization process.

“Using the right controls, taking the right risks, in order to respond to the challenges of infrastructure, we are working with several states in this regard, gas and energy companies.

Levy said he is meeting with domestic and foreign investors with interest in Brazil. “We have to mobilize these resources. With this liberal clash we give people opportunities, options for people to put their resources into things that will make Brazil grow, “he said.