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Report: Banco do Brasil may IPO asset management arm

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Report: Banco do Brasil may IPO asset management arm

Banco do Brasil SA could sell off part of asset management arm BB Gestão de Recursos-Distribuidora de Títulos e Valores Mobiliários SA in an initial public offering under the new government of Brazilian President Jair Bolsonaro, Valor Econômico reported.

The state-run bank could also opt for a strategic partnership deal involving the subsidiary, known as BB DTVM, which manages around 948 billion Brazilian reais in assets, the business daily said.

The news come after Banco do Brasil's new chief executive, Rubem Novaes, has said he will look to sell off bank assets that do not have synergies with its core operations as part of Economy Minister Paulo Guedes' wider austerity plan.

Still, Novaes on Jan. 7 maintained that the bank would not sell off core assets, calling them the "crown jewels." He said the aforementioned austerity plan would not only involve divestment but also seek to generate value for Banco do Brasil.

The bank would instead consider selling shares in IPOs and look to partnerships involving those subsidiaries, according to Valor. Novaes did not specifically mention BB DTVM in his speech, however.

In a Jan. 7 event to inaugurate new presidents of Brazil's state-run banks, Guedes urged executives to refurbish the image of the companies and eliminate "distortions" of the public credit system following years of what he described as corruption and spiraling debt under previous governments. He also criticized the growth of the state-run banks in recent years.

Meanwhile, the new president of fellow state-run Caixa Econômica Federal, Pedro Guimarães, told Valor Econômico that the bank plans to launch IPOs in order to pay its debt to the National Treasury. Guimarães noted that the most advanced plans for IPOs are related to the bank's insurance and credit card operations.

As of Jan. 7, US$1 was equivalent to 3.72 Brazilian reais.