Q Why has the National Bank for Economic and Social Development (BNDES), Brazil’s development bank, decided to set up an international subsidiary?

A One reason is that a bunch of Brazilian firms are investing abroad and it is natural that BNDES could support them. The second reason is the export-import bank role of BNDES, which will necessarily increase given the global credit crunch. The combination of those two [factors] explain the need for having an international subsidiary, not necessarily to be an operational arm but to, in the first phase, source money and finance for reinforcing our funding.


The idea came when we had a fast accumulation of foreign exchange reserves in Brazil. We were accumulating about $4bn to $5bn per month of new reserves, and the Brazilian government envisaged the idea of developing the sovereign [wealth] fund and decided it made sense for BNDES to be the fund manager given BNDES’ excellent management [track record].

Then the scenario changed and the project of having an international operation was not that urgent, but it could be useful for the future. So we are not in a hurry to speed up the development of our international operation, but it is understandable we should have one.

Most of the operation will remain domestic, given the nature of our funding, which is workers’ fund funding and which has a constitutional restriction [as fas as] lending to business abroad [is concerned]. That kind of funding must generate jobs in Brazil, not elsewhere. But because BNDES is able to develop its own sources of funding by issuing long-term bonds or other forms of funding, it would be able to pursue other operations for supporting export business or other operations of Brazilian business abroad.

Q For, say, Brazilian companies buying companies abroad?

A Not necessarily. It could be for Brazilian companies needing funding for investing in greenfield operations.

Q And what about FDI inflows into Brazil?

A BNDES has always supported FDI in Brazil. We finance whatever project [there is] for long-term capital formation in Brazil and BNDES has always been open for financing multinational firms.

Q Will the opening of the international office expand that role in some way?

A We understand we should support and stimulate FDI. There is an effort to attract more capital to Brazil, starting with a big seminar in New York with the presence of President Lula and so forth. There are two main motivations – one is to increase the amount of portfolio investment and the second is to increase the amount of direct investment in Brazil.

Q How does BNDES’s role change in times of economic turbulence, with some Brazilian companies having challenges raising money?

A The fact is that up until 2006 the market was doing the job – the capital market and other forms of long-term finance. This was competing with BNDES. Our scenario was that BNDES would specialise in high-risk, long maturities and so forth.

The market just vanished and there is no perspective for the market coming back within a few years. I am becoming more and more pessimistic. The result is that BNDES became overburdened and either we support long-term investment by offering credit or investment wouldn’t take place.

One of the reasons why we are supporting oil company Petrobras is that the company has a very robust investment programme. This will enable Petrobras in the future to become a more important oil company.




Rio de Janeiro, BrazilStructure

Federal public company linked to the Ministry of Development, Industry and Foreign TradeEstablished