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Renewal of Banco do Brasil's partnership with postal service would cost 4.7B reais

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Renewal of Banco do Brasil's partnership with postal service would cost 4.7B reais

The cost for Banco do Brasil SA to renew its banking partnership withthe national postal service, Correios, would cost some 4.7 billion Brazilianreais for an additional five-year contract, ValorEconômico reported, citing an unnamed source following the discussions.

Banco do Brasil reportedly views a potential renewal to runBanco Postal's operations unfavorably, as it doesn't see much in the operationas it focuses on capital preservation amid Brazil's economic woes.

The two parties are reviewing several regarding viability andcompensation models. The negotiations are expected to continue to the thirdquarter as the contract expires in December.

Brazil's federal audit court, the TCU, is reviewing aspectsof the partnership and has asked Banco do Brasil for information on theeconomic impact of a renewed contract. If the contract is terminated, TCU alsowants to understand the potential effect on Banco Postal's clients, the reportsaid.

Presently, Banco Postal has 6,150 service points and 1.98million account holders at the close of the first quarter. Between January andMarch, Banco do Brasil opened 111,200 accounts at Banco Postal, whiledisbursements were some 242 million reais, the publication noted.

As of July 22, US$1was equivalent to 3.28 Brazilian reais.