Bankers and businessmen want to form a broad historical front in defense of institutions – 08/30/2021 – Market

Not just Fiesp, the federation of industries in São Paulo, nor just Febraban, the entity that represents the country’s large banks. The document defending the balance between the Powers of the Republic, which attracted strong opposition from Caixa Econômica Federal and Banco do Brasil, to the point that the two institutions threatened to leave Febraban, is designed to be much broader.

According to people connected to its elaboration, it will be the manifesto of the largest business front ever created in defense of institutional balance in Brazil. Unlike other recent initiatives, which took signatures from individuals, the manifesto in preparation brings together entities that represent the largest companies in the country.

Until the publication of this report, those who accompany the organization of the manifesto confirmed that its disclosure is scheduled to take place this Tuesday (31). None of the members of the initiative heard by the sheet I wanted to have the name revealed.

THE sheet he found that the starting point for drafting the document was the exchange of ideas between a small group of bankers and businessmen concerned with institutional stability and the direction of the Brazilian economy. As a result, executives from companies and entities were being brought together to gather support.

In addition to Febraban and Fiesp, Iedi (Institute of Studies for Industrial Development) and Ciesp (Center of Industries of the State of São Paulo) were also among the first mobilized. The president of Fiesp, Paulo Skaf, took an active part in seeking support from different sectors.

When the discussion about the manifesto took shape within Febraban, it started to receive strong opposition from the president of Caixa, Pedro Guimarães, who tried to stop the institutional adhesion of the banking sector to the text. Fausto Ribeiro, president of Banco do Brasil –and who is on the board of directors of Febraban, as well as Guimarães–, supported Caixa’s position, increasing pressure within the entity, until the divergence became public on Saturday (28).

Caixa and BB are threatening to leave Febraban if, when the manifesto is published, its signature appears.

President Jair Bolsonaro (no party), minister Paulo Guedes (Economy) and the president of the Central Bank, Roberto Campos Neto, were informed of the decision. Public banks argue that they cannot remain in an entity that acts as a political party and opposes its shareholder, the government.

According to people who follow the organization of the document, this manifesto has very neutral language, precisely to attract the greatest number of supporters who are concerned about the escalation of tensions between the Powers and want to contribute to improving the institutional environment — and it was thanks to this tone , they say, that more than 200 entities had already adhered to the manifesto over the weekend.

The list, according to these people, includes entities such as Abimaq (which represents the machinery sector), IDV and Fecomércio (retail sector entities), Alshop (which brings together shopping mall tenants), Ibá (from the pulp and paper companies) and including entities linked to the field, such as Abag (Brazilian Agribusiness Association).

Although the initiative tries to calm feelings and strengthen institutions, the differences between public and private banks within Febraban leave a balance considered to be bad.

The reading is that Caixa and BB made a risky option, as the tendency is for the decision to leave the entity to reinforce the idea of ​​government intervention in federal banks. In the words of one banker, the government and the Ministry of Economy leave the incident smaller because they interfere in the governance of state-owned companies and because they want to manipulate the conduct of a private association.

The position of Campos Neto caused even more estrangement. The assessment is that he opted for a political rather than a technical stance, which weakens his position at the head of the Central Bank.

An executive from one of the largest banks in the country also says that the reaction of public banks against private banks will also damage Brazil’s image. The reading is that foreign investors will identify in the conflict that institutional risk, previously restricted to politics, now contaminates relations in the financial sector. The result: it will be more difficult to attract international capital from serious institutions.