Caixa should raise dividends to maximum level after government request

After the government asks large state-owned companies to pay more dividends this year, Caixa Econômica Federal is expected to raise the amounts to the maximum level allowed by the statute. The BNDES (National Bank for Economic and Social Development) is evaluating anticipating part of the amount previously scheduled for 2023.

In the letter sent to state-owned companies, the Ministry of Economy asks that the main companies controlled by the Union increase the amounts, but, in the case of banks, maintain the limits required by the Basel accords – international treaties that determine minimum levels of equity for a institution to operate without risk of insolvency.

The request sent to Petrobras, Caixa, Banco do Brasil and BNDES is part of an attempt to neutralize this year the effects of the constitutional amendment that released R$ 41.25 billion on the eve of the election and the tax waivers resulting from the fuel exemption.

Of the four, Caixa and BNDES are the only ones that pay semi-annual dividends — thus, payments referring to the result of the second half of 2022 are only expected for the beginning of 2023. If they start to deposit resources to the Treasury quarterly, as proposed by the government, the result from July to September could already enter this year’s accounts.

In the case of Caixa, the statute allows a distribution of up to 50% of the profit, and today the transfer is 25%. The idea in the bank is to reach this maximum amount.​

Last year, the four state-owned companies paid BRL 43 billion in dividends to the government – ​​the majority, BRL 21 billion, came from Petrobras, which posted record profits.

The amendment enacted this year released, among other measures, an increase in Auxílio Brasil payment from R$400 to R$600 (in addition to the inclusion of families on the waiting list) and financial assistance for taxi drivers and truck drivers. The financial bailout, made with exemption from the country’s main tax rules, should last until the end of this year.

In an attempt to secure votes, President Jair Bolsonaro also zeroed out federal taxes and contributions on fuel. The estimated reduction in revenues, in these cases, will be R$ 16.5 billion.

In addition, the government sponsored in Congress a law that reduced and standardized the ICMS, opening a war against states – which, in some cases, will lose revenue and may eventually be compensated by the Union.

Dividends would help cover the difference in funds to fund this account. The government’s request to state-owned companies was made after negative reactions from the financial market about the treatment of public accounts in the episode.

The government understands that it is ideal to seek to mitigate the impact of the amendment by seeking new revenues, although it is not obliged to compensate the expenses in this case.

The enacted amendment had already exempted resources from complying with the main rules on public accounts – such as the fiscal target (result of revenues minus expenses to be pursued by the government), the spending ceiling (which prevents real growth in federal expenditures) and the need for budgetary offsets. The law that authorized fuel subsidies also waives compliance with different articles of the Fiscal Responsibility Law.

Despite the exemptions, the special secretary of the Treasury and Budget of the Ministry of Economy, Esteves Colnago, says that the government prefers that the extraordinary effects of the measures on public accounts in 2022 are also covered with extraordinary revenues.

“For these expenses that were created in an emergency with the PEC and with the loss of revenue from Complementary Law 194 [que corta tributos federais sobre combustíveis]which total R$ 58 billion, we are seeking to have extraordinary revenues of the same magnitude”, said Colnago.

According to Colnago, Banco do Brasil replied that it could not respond to the request.

Sought by the press office, Caixa and BNDES informed that the government’s request is being evaluated. BB stated that it already pays shareholders 40% of net income, more than the 25% required by law — although it says that the policy provides for a periodic review of the parameters.

Petrobras said that its next quarterly profit will be released next Thursday (28) and that at that time the Board of Directors may decide on possible dividend payments. “All decisions will be made in line with the Policy [de Remuneração aos Acionistas]always respecting the principles of perpetuity and financial sustainability in the short, medium and long terms”, says the company.