Brazil Must Study IPO of Third-Largest Bank Caixa, New CEO Says

Brazil needs to study the possibility of an initial public offering at Caixa Economica Federal, the state-controlled bank’s Chief Executive Officer Miriam Belchior said.

“Major considerations must be considered at Caixa,” Belchior said Monday in Brasilia when asked by reporters about a possible IPO. “No action will be taken in this direction without performing a minimum feasibility study, which doesn’t yet exist. We can’t get ahead of ourselves without further analysis.”

Belchior was speaking at a ceremony to celebrate her new post as she replaces Jorge Hereda, who led the bank since 2011. Before being appointed planning and budget minister in 2010, a position she held until December, Belchior was a special assistant to former President Luiz Inacio Lula da Silva.

Rousseff told reporters in December she was considering an IPO for Caixa as the government strives to increase revenue to shrink its deficit. Speaking at Monday’s ceremony, Finance Minister Joaquim Levy said the government is making fiscal adjustments as it works to improve public accounts and contain inflation. He didn’t say whether the administration would push the bank to curtail lending as the central bank raises borrowing costs to slow consumer price increases.

“Caixa is an instrument of public policy, but also a bank,” he said. “The world is changing, Brazil is changing, and financial institutions are changing. It’s a challenging time for financial institutions throughout the world as they must pay closer attention to performance and efficiency indicators.”

Market Share

Under Hereda, Caixa took market share in loans from Itau Unibanco Holding SA and Banco Bradesco SA, the nation’s biggest banks not controlled by the state. Brasilia-based Caixa was Brazil’s third-largest bank by assets as of September, up from fifth in March 2011, according to central bank data. Caixa has the nation’s second-biggest loan portfolio, the data show.

The Rousseff administration is targeting a primary budget surplus, which excludes interest payments, of 1.2 percent of gross domestic product this year from a deficit of 0.6 percent in 2014. Standard & Poor’s in March last year cut Brazil’s credit rating to one level above junk.

Levy entered office last month when Rousseff started her second term.

Before it's here, it's on the Bloomberg Terminal.