Brazil’s biggest state-owned bank plans to sell real estate assets to repay public debt

Caixa Economica Federal also plans to sell stakes in several subsidiaries to repay government bonds totaling about 40 billion reias, or $11 billion

National /
Mar.March 23, 2019 12:00 PM

(Credit: Pixabay)

Under new management, the biggest state-owned bank in Brazil plans to restructure itself by selling distressed real estate and equity stakes in subsidiaries.

Chief executive officer Pedro Guimaraes is overseeing the planned asset sales by Caixa Economica Federal to repay perpetual bonds issued by the Brazilian government that total approximately 40 billion reais ($11 billion).

Caixa has assets valued at 1.3 trillion reais, and all extraordinary gains from asset sales “will be used to repay that debt,” Guimaraes said in an interview with Bloomberg.

Guimaraes, 48, has approached investors in distressed real estate to gauge their interest in buying assets that Caixa has seized. The bank valued its portfolio of seized assets, mostly defaulted mortgages, at nearly 8 billion reais as of September, more than any other Brazilian bank.

Caixa also may sell some non-distressed real estate assets, including all or part of 15 buildings in Brasilia, where the bank is based, and seven buildings on Paulista Avenue in Sao Paulo.

In recent years, the bank has struggled with low returns on assets and controversy, including allegations that Caixa officials have loaned money in exchange for bribes.

Guimaraes, who took over as chief executive officer on Jan. 7, has retained Russell Reynolds Associates to minimize political influence on the bank and help Caixa hire board members and executives with market experience. Caixa already has replaced 90 percent of its top-ranked officers.

The new CEO of Caixa plans dual listings in Brazil and New York to sell minority stakes in bank subsidiaries in the insurance and bank-card businesses.  Guimaraes said the bank’s lottery and asset-management subsidiaries will go public in 2020. The bank could collect 15 billion reais in proceeds from the four sales.

Among other plans, Caixa would auction the right to use its 26,000 offices – the largest branch network in the Brazilian banking industry – to sell insurance and card-processing products that generate fees for the bank.

Caixa has a loan portfolio valued at 694 billion reais, which has grown nearly 10-fold over the past 10 years, largely because of efforts by previous administrations of the national government to provide low-cost credit through state-owned banks.

The Brazilian government supported that effort by lending Caixa $40 billion reias through a perpetual bond issue. [Bloomberg]Mike Seemuth


Related Articles

arrow_forward_ios
Vivian Dimond with 230 Lincoln Road (iStock)
Vivian Dimond, partners acquire Ross-anchored building on Lincoln Road from lender
Vivian Dimond, partners acquire Ross-anchored building on Lincoln Road from lender
“Record-setting” market: Real estate powerhouses talk tech, infrastructure, development and hot housing market at TRD’s Miami event
“Record-setting” market: Real estate powerhouses talk tech, infrastructure, development and hot housing market at TRD’s Miami event
“Record-setting” market: Real estate powerhouses talk tech, infrastructure, development and hot housing market at TRD’s Miami event
From left: The Real Deal editor-in-chief Stuart Elliott, Miami-Dade County Mayor Daniella Levine Cava, City of West Palm Beach Mayor Keith James, City of Boca Raton Mayor Scott Singer, City of Miami Mayor Francis X. Suarez and City of Fort Lauderdale Mayor Dean Trantalis
“We’re crushing it, and we’re going to continue crushing it.” South Florida mayors talk growth at TRD Miami event
“We’re crushing it, and we’re going to continue crushing it.” South Florida mayors talk growth at TRD Miami event
Miami Beach mayor facing ethics complaint for Ocean Drive meeting
Miami Beach mayor facing ethics complaint for Ocean Drive meeting
Miami Beach mayor facing ethics complaint for Ocean Drive meeting
Aventura Mayor Enid Weisman (Facebook via Weisman, Getty)
Aventura votes to require HOAs to submit critical reports within 48 hours
Aventura votes to require HOAs to submit critical reports within 48 hours
Deepak Khosa and Aaron Kurlansky with 123 Ocean Avenue, Palm Beach Shores (Google Maps, iStock)
Deepak Khosa closes on distressed hotel on Singer Island, plans to convert to multifamily
Deepak Khosa closes on distressed hotel on Singer Island, plans to convert to multifamily
Chad Carroll, Mariana Trentini, and Fabio Lopes, and Christopher Burch with 5050 North Bay Road
Heinz Brasil exec sells waterfront North Bay Road home to Christopher Burch
Heinz Brasil exec sells waterfront North Bay Road home to Christopher Burch
André Duek and Carolina Lara with Daniel de la Vega
One Sotheby’s acquires brokerage with Brazilian reach
One Sotheby’s acquires brokerage with Brazilian reach
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...