BB will have $80.26 billion for infrastructure

Owner of the largest credit portfolio among Brazilian banks, with 21% share in total, Banco do Brasil (BB) plans to advance the financing of infrastructure projects in 2014. The bank would have $80.26 billion to boost its credit portfolio, according to market projections.

This increase would be possible with the use of a slack in its capital structure. The bank has now more capital than the cushion required by international rules of Basel III (which defines the relationship between loans and capital that a bank must have). Today, the cushion of Banco do Brasil is 15.9%, and can be reduced to 13%.

These resources will strengthen the bank’s plans to support companies and projects in the areas of oil and gas, energy, roads, railroads, ports, airports and urban mobility. We will do it without compromising the required level of capital, said the Vice President of Wholesale and International Business at BB, Paulo Caffarelli, to Estado de S. Paulo.

The Central Bank requires today a cushion of 11% – Basel provides 8%, but this rate will be increased to 13% by 2019.

Caffarelli informs that the bank will focus efforts on the main fronts in the corporate market. From financial advisory activities (advisor), through the structuring of projects and assistance to companies in the private debt market by issuing debentures, to operations of shareholding in companies (private equity).

Market share. The bank is still trying to make an Equity Investment Fund (FIP) around $6.68 billion with other partners to extend bets on infrastructure.
Caffarelli estimated the amount of resources of federal programs in the area until 2018 at $668.9 billion. BB wants a slice of 10% of this nascent market and works to increase its infrastructure portfolio from the current $41.91 billion to $66.88 billion over the next five years. Only in oil and gas it will be $138.90 billion in vessels, rigs, platforms and shipyards, he said. In energy, BB projects a $44.59-billion market. In airports, it will be $8.91 billion. Highways and railroads will require $27.64 billion.

In addition, the subsidiary BB Banco de Investimentos is dedicated to structure a Credit Rights Investment Fund (Fidc), whose shares are sold to the so-called qualified investors, to enter the winning consortia of the concession auctions of highways, railroads and airports.

Auctions of highways BR 163 and BR 040, scheduled by the government this year, should have effective participation of BB through financing in conjunction with other banks. The topic has been exhaustively debated with government and private banks.

The intense movement of BB in the infrastructure area aims to increase the share of investments made by its Corporation clients. Today, 26% of the corporate portfolio, which totaled $133.77 billion in June, is dedicated to investments.

Working capital financing still predominates, with 29% of the total. This relationship will change very quickly in the coming years. We will have investments as flagship of this portfolio, Caffarelli foresees.