Brazilian Economy Minister Paulo Guedes said state-owned banks in the country should aim to refurbish their image and eliminate "distortions" of the public credit system following years of corruption and spiraling debt, Valor Econômico reported.
In a Jan. 7 event to inaugurate Rubem Novaes, Joaquim Levy and Pedro Guimarães — the new heads of Banco do Brasil SA, Banco Nacional de Desenvolvimento Econômico e Social and Caixa Econômica Federal, respectively — Guedes blasted the former Worker Party governments of Lula da Silva and Dilma Rousseff for damaging the state-run banking system through fraudulent schemes.
According to the minister, these have led to snowballing national debt and a weak credit system, that ultimately did not serve the Brazilian people.
"[We] lost the public banks due to perverse associations between private pirates, corrupt bureaucrats and creatures from the political swamp," the economy minister reportedly said during the event in Brasilia, which was also attended by President Jair Bolsonaro, according to a separate report by Folha de S.Paulo.
Guedes encouraged the new leaders of the banks to return to the "mission of reducing distortion" in the credit system, which had seen interest rates spiral for most people while only a small minority benefited.
The minister underlined the primary function of BNDES as a lender of long-term credit for infrastructure. He also argued that Caixa should focus on the financing of home ownership while Banco do Brasil should mainly grant "rural and general credit." During the same event, Bolsonaro reportedly pledged to appoint presidents of the public banks only through transparent and nonpolitical channels, according to the newspapers.
The government of Bolsonaro, who took over Jan. 1, has pledged to reduce the size of the state and is reportedly studying various privatization plans, including the sale of some parts of Brazil's state-run banks.
According to earlier reports, Banco do Brasil's new chief, Rubem Novaes, will likely push for the sale of the bank's investment arm, following Guedes' guidelines to withdraw state-owned banks' businesses that are not tied to public policy.
At the event, Novaes said that his mandate would be compatible with the interests of minority shareholders and that he will consider selling assets unrelated to the bank’s main activities, Folha reported. Novaes said that the bank would seek strategic partners in some of these areas.
Meanwhile, the new president of Caixa, Pedro Guimaraes, told Valor Econômico that the bank plans to launch IPOs in order to pay its debt to the National Treasury. Guimaraes explained that the most advanced plans for IPOs are related to the bank’s insurance and credit card operations.