Brazilian President Dilma Rousseff's recent move to replace Caixa Economica Federal's chief executive is aimed at pushing the big state-controlled bank closer to an initial public offering but a flotation still faces serious obstacles. Rousseff's decision this week to tap former Budget and Planning Minister Miriam Belchior to replace Jorge Hereda as Caixa's CEO is likely intended to take the IPO plan a step forward, a senior vice president at the lender told Reuters.
Belchior is seen as loyal to Rousseff, who in her first term instructed state banks to boost access to credit and slash borrowing costs to jumpstart economic growth. Now Rousseff is looking for ways to plug a yawning budget deficit, a task that would be helped by the up to 20 billion reais ($7 billion) government officials estimate a flotation could bring. But workers at Brazil's No 1 mortgage lender are resentful at the prospect of facing investor scrutiny, and their objections could slow, if not entirely halt, the process.
Beyond their objections, investor wariness about a company as vulnerable to government intervention as scandal-hit Petr?leo Brasileiro SA makes Rousseff's stated timetable of 18 months look unrealistic, according to bankers with five of Brazil's top-ten equity underwriters.
In what is being called the country's worst corruption scandal in history, prosecutors allege that politicians from Rousseff's ruling coalition used Petrobras to skim billions of reais through overpriced contracts for over a decade. "Without more clarity on the Petrobras scandal and its consequences to the company and minority shareholders, the IPO of any public institution in Brazil could be a difficult task," Natalia Corfield, an analyst with J.P. Morgan Securities, wrote in a recent client note.
Rousseff's December announcement that her government planned to list the bank took Caixa's more than 104,000 workers by surprise, irking many among both among its senior management and rank-and-file. Outgoing Chief Executive Hereda already voiced his opposition to the IPO, saying Caixa serves Brazilians better as a state entity. "My personal opinion? I am against it," he said at an event in S?o Paulo on Thursday. "There's still room for a fully-owned state bank in Brazil and the need for a public policy agent to preserve equilibrium in the system is huge."
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