Weak economy delays BNDES plan to sell shares of national champions

The damage caused by the coronavirus to the economy hampered the BNDES’ (National Bank for Economic and Social Development) goal of getting rid of the shareholding of companies that, in the past, were elected “national champions”.

This helps to explain the low level of remuneration obtained from the sale of shares held by the bank since the beginning of the mandate of Jair Bolsonaro (PL), who is facing difficulties with the low level of economic growth.

In 2019, when Bolsonaro took over, the bank held R$125 billion in stakes in large companies, most of which were national champions, such as Petrobras, Vale, JBS, Marfrig and Suzano. Today, this share has dropped to R$ 70 billion.

Data from BNDES itself show that the remuneration obtained from the sale of equity stakes under Bolsonaro is among the lowest in almost a decade.

The information, however, does not separate shares from other assets, such as debentures (debt securities that can be converted into shares), held by the bank.

Despite having recorded gains from these operations, the return was not as good as expected. In 2019, for example, the bank sold BRL 17.2 billion in shares and other securities and obtained BRL 2.8 billion in remuneration, equivalent to 16% of the divestment.

The following year, already under the severe effects of the pandemic, the divestment was higher (R$ 47 billion) and the return, worse — R$ 3.3 billion (7%).

Between 2012 and 2018, the average annual gain from asset sales reached 73% in 2014 and was practically zero in 2013.

The bank explains that part of this result is due to the value of the shares, which were low during the pandemic, and another part is due to taxes that were levied on transactions.

During the pandemic, in the face of uncertainty about the future of the economy -committed to social distancing policies-, the stock market registered a low. Today, BNDES still has stakes in closely-held companies of the Odebrecht group, Oi, Embraer and JBS.

Between 2020 and 2021, however, the bank informs that, in shares alone, the sale totaled BRL 22.7 billion in 2020 and BRL 12.8 billion in 2021. The net gains in this period were BRL 14 billion and R$ 8 billion, respectively —62.5% of the divestment value.

A good part of this result is due to the appreciation of the shares of JBS and Vale, which had been recovering from losses with the rise in commodities.

Klabin and Vale alone generated R$ 3.7 billion in net gains for the bank last year.

In February this year, the bank sold a batch of 50 million shares of global food giant JBS for around R$1.9 billion. In mid-December, 70 million shares of the company had already been sold for R$ 2.7 billion.

During the results announcement, this Friday (25), the bank reported that the net profit from the December operation was R$ 1 billion. BNDES said it had not yet determined the net gain from the second transaction.

Without detailing the gains with JBS, the bank’s president, Gustavo Montezano, stated that the sale was made at a time of high shares in order to guarantee profit for the bank.

Divestments were the flagship for the record result recorded by the bank last year – R$ 34.1 billion, an increase of 65% over the previous year.

In 2019, when Bolsonaro assumed the presidency, Economy Minister Paulo Guedes condemned the subsidy policy to finance large companies, the basis of the program led by the governments of former President Lula and Dilma Rousseff known as “national champions”.

Contractors, food manufacturers, capital goods companies, among others, entered this program. For him, the Treasury subsidized interest from BNDES to finance the internationalization of national groups.

Resistance to raising the volume of Treasury loan returns was one of the reasons for the government’s dissatisfaction with Joaquim Levy, the first president of BNDES after Bolsonaro took office, which lasted just over six months in office.

Upon taking over, his replacement, Montezano, listed the return as one of the goals of his management, alongside the reduction of BNDESPar’s equity portfolio (the bank’s investment arm) and the opening of the institution’s so-called “black box”.

Montezano announced the sale of shares in the “national champions” as one of the pillars of the bank’s restructuring, which became an institution focused on structuring privatization projects and supporting credit operations for small and medium-sized companies.

For the large conglomerates, the bank began to work in the preparation of market operations — the issuance of debt papers (such as debentures).

According to Montezano, BNDES stopped having a “speculative position” with these papers on the Stock Exchange.

“They’ve already developed. They don’t need the bank anymore,” Montezano said during the results announcement. “Maintaining a position on the stock exchange with shares of these companies is speculation. It is necessary to reallocate these resources for the development of the country.”

According to him, the bank’s next round of investment will target micro, small and medium-sized companies (MEI), which he calls “national heroes”.

In the pandemic, these companies, which account for most of the jobs generated in the country, received less than necessary, according to representatives of Sebrae (Brazilian Support Service for Micro, Small and Medium Enterprises).