trending Market Intelligence /marketintelligence/en/news-insights/trending/LfAqDlO2ha6FpuQIwcEhDQ2 content esgSubNav
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us
In This List

Caixa Econômica Federal CEO confirms talks to cut government profit payments

Banking Essentials Newsletter December Edition Part 2

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

Caixa Econômica Federal CEO confirms talks to cut government profit payments

Caixa EconômicaFederal CEO Gilberto Occhi confirmed that the bank is in talks withBrazil's national treasury in hopes of lowering the percentage of profits the state-ownedbank pays to the government to just 25%.

"Our plan is to set the [profits] level between 25% and50%, if possible 25%," Occhi was quoted as saying in a Reuters report, effectivelyconfirming reports from a month earlier.  In 2015, the bank transferred 50% of its profitsto the treasury, while in prior years it handed over all of its profits to the government.

The further reduction in the state payment would help to strengthenthe bank's weakened capital positions after years of rapid growth and low profitability.

Occhi said that his management team's primary focus is to improveCaixa's profitability.As part of this goal, the bank has recently created a director position to focuson debt collection and debt renegotiation. The move comes after Caixasaw its 90-day nonperforming loan ratio hit a seven-year high during the first quarter,forcing the bank to take provision charges that dragged its quarterly profit 46%lower year over year.

In the second quarter, the state-run bank will also have to combatwith two one-off items: the marking to market of about 1.9 billion Brazilian reaisin debentures from bankruptedtelecommunications company Oi, and a capital injection reportedly worth 4 billionreais to plug an 8.8 billion reais shortfallin its employee pension fund, Funcef.

Despite the charges, Occhi maintained that Caixa has "nochance of recording loss in the quarter."

As of July 14, US$1 wasequivalent to 3.23 Brazilian reais.