BNDES (National Bank for Economic and Social Development) maintains an investment portfolio corresponding to around R$60 billion in shares of large companies on the Stock Exchange, while the country discusses investments.
The amount is higher than the expected blocking value (R$53 billion) that the government may have to make next year in non-obligatory Budget expenses, such as works, if it maintains the target of zeroing the fiscal deficit, which is increasingly further.
Although the money from the sale of securities cannot be used to help the government achieve fiscal results, the resources could be used in bank financing lines to promote infrastructure, for example.
The return of Luiz Inácio Lula da Silva (PT) to the Palácio do Planalto led to a change of policy for the BNDES. While under the Jair Bolsonaro (PL) administration the institution sold shares, the current management states that the portfolio of shares “is aligned with the policies and priorities of the federal government”.
According to data closed on June 30 available by BNDES, the bank holds shares totaling R$58.69 billion in 16 publicly traded companies that have liquidity, that is, that tend to have a higher flow of negotiations on the Stock Exchange.
They are: Petrobras, JBS, Eletrobras, Copel, Energisa, Cemig, Tupy, Embraer, AES Brasil, Copasa, CSN (Companhia Siderúrgica Nacional), Hidrovias do Brasil, Iochpe – Maxion, Coteminas, Springs Global Participações and Oi.
The value shown on the bank’s website is outdated and could be even higher. Only Petrobras shares, for example, which correspond to 45% of the portfolio, appear to have a value of R$31 billion.
Now, however, this shareholding is worth R$36 billion, after an appreciation of approximately 18% of the stock since June 30th. BNDES holds 7.94% of the oil company’s total shares.
During the Bolsonaro administration, the bank’s then president, Gustavo Montezano, carried out the plan to dispose of assets. In 2020, BNDES raised R$22 billion from the sale of Petrobras shares.
Montezano criticized the bank’s performance on the Stock Exchange. “Maintaining a position on the stock exchange with shares in these companies is speculation. It is necessary to reallocate these resources for the country’s development”, he said, in February last year.
Under Montezano management, the bank began to act more in structuring privatization projects and supporting credit operations for small and medium-sized companies.
Lula is now seeking resources for his government program. “I’m not going to set a fiscal target that forces me to start the year by cutting billions in works that are a priority in this country,” he said at the end of October.
In the case of BNDES, the government could progressively redirect resources to investments, without compromising the budget and fiscal targets. No wonder the BNDES, under the management of Aloizio Mercadante, tries to postpone transfers from the bank to the Treasury under the argument that this would affect credit lines.
Several of the companies in which BNDES has shares have no connection with public administration — such as JBS, which is in the meatpacking sector; from Iochpe – Maxion, which produces steel and aluminum wheels for vehicles; Coteminas, from the textile sector; or from Oi, a telecommunications company.
“It’s worth it for the government to exit some shares to invest in other things. Mainly in companies in which it has a minority stake”, says Elena Landau, former advisor to the BNDES presidency.
Landau, however, considers that, if the BNDES is to sell shares and use the money to subsidize an outdated company, it is better to keep the portfolio as it is. “I think this government has an idea of using BNDES and public credit to stimulate the economy that doesn’t work,” he says.
Maintaining the actions, however, increases the government’s political influence by envisioning the possibility of distributing positions in companies.
Recent report from Sheet showed that companies that have the government as a relevant shareholder are concerned about the use of seats on boards of directors and even in the executive body as a bargaining instrument in Congress.
These are positions that pay their occupants at least R$500,000 per year.
Recently, the BNDES’ appointment of ministers Anielle Franco, of Racial Equality, and Carlos Lupi, of Social Security, to seats on the board of directors of the metallurgical company Tupy, caused controversy. The criticism was due to the lack of experience of both with the business sector.
In a note, the bank stated that the institution’s investment policy “is defined in accordance with the strategic planning of the BNDES System, which, in turn, is aligned with the public policies and priorities of the federal government.”
“The recycling of BNDESPar’s portfolio is a constant practice over the years”, says the bank, but the sale of securities must be conducted with “caution and respecting local rules, under penalty of causing unwanted variation in the share price of investees “.
The institution also states that it is “an independent state-owned company” and that it “distributes resources to its shareholder in accordance with applicable legislation”.
“Poor portfolio management could result in losses to the treasury and the Brazilian people. The sale of shares by BNDESPar under unfavorable conditions would not contribute to the Treasury’s primary result and could, on the contrary, reduce it through a reduction in the taxable profit of the BNDES system.”