Caixa Aims To Privatise Caixa Subsidiaries By 2021

Pedro Guimarães, Chairman of the Federal Bank of Brazil – Caixa Economica Federal (Caaix) said the government is maintaining its goal of ‘privatising five Caixa subsidiaries by 2021.’

Guimarães made his announcement to Metropoles, a Brazilian business newspaper, announcing that his office had named Caixa ‘Loterias’ (lotteries), ‘Seguradora’ (insurance) and ‘Central’ (credit agency) as three divisions that the government would privatise or make public.

Appointed at the beginning of 2019 by President Jair Bolsonaro, Guimarães conducted a study of federal bank branches, charged with ‘shrinking the Caixa’ – regarded as the largest government-owned financial institution in South America.

The privatisation of Caixa assets is considered one of the most contentious issues in Brazilian politics, because the bank is known as an important government-owned institution that funds public services and secures financial support for Brazilian communities.

Recognising public aversion to Caixa, Guimarães emphasised that “President Bolsonaro made it clear that  a complete privatisation is out of the question.”

In 2019, after seven consecutive failed attempts, the government of Bolsonaro will decide on the sale of the LOTEX instant-win division of Caixa to ‘Estrela Instantânea’ – a 50/50 joint venture consortium created by IGT Group and Scientific Games.

LOTEX’s sale was marked as an humiliating chapter for the government and its management of BNDES, Brazil’s national economic and social development bank-tasked with leading tender negotiations that did not draw interest from international operators.

Leading Caixa, Guimarães said he would be preparing IPO plans for the first sell-off of the bank’s subsidiaries by October – “For that, of course, we need a series of authorisations, but we are confident”.

Brazil will host its local elections in November, which are regarded as a vital test of the PSL government of President Bolsonaro, marred by its handling of the COVID-19 pandemic and further allegations of corruption brought against high-ranking PSL leaders.