Caixa chairman seeks to offload Brazil lottery assets by 2021

Pedro Guimarães, the Chairman of Brazil’s federal bank – Caixa Economica Federal (Caixa), has stated that the government maintains its objective of ‘privatising five Caixa subsidiaries by 2021’.

Guimarães made his statement to Brazilian business journal Metropoles, revealing that his office had identified Caixa ‘Loterias’ (lotteries), ‘Seguradora’ (insurance) and ‘Central’ (credit agency) as three divisions that will be privatised or made to go public by the government.

Appointed by President Jair Bolsonaro at the start of 2019, Guimarães has undertaken a review of federal bank subsidiaries, tasked with the remit of ‘shrinking the Caixa’ – recognised as South America’s biggest government-owned financial institution.

The privatisation of Caixa assets is regarded as one of Brazilian politics’ most controversial issues, as the bank is recognised as an effective government-owned institution funding public services and securing financial support for Brazilian communities.

Acknowledging public sensitivities towards Caixa, Guimarães underlined that “President Bolsonaro has made it clear that a complete privatisation is out of the question”.

In 2019, following seven straight failed attempts, the Bolsonaro government would agree on the sale of Caixa’s LOTEX instant-win division to ‘Estrela Instantânea’ – a 50/50 joint venture consortium formed by IGT Group and Scientific Games.

The sale of LOTEX was marked as an embarrassing chapter for the government and its management of BNDES, Brazil’s national bank for economic and social development – charged with leading tender negotiations which drew no interest from foreign operators.

Leading Caixa, Guimarães stated that he would draft IPO plans for the first sell-off the bank’s subsidiaries by October. He said: “For that, of course, we need a series of authorisations, but we are confident.”

In November, Brazil will host its municipal elections, which are recognised as a critical test of President Bolsonaro’s PSL government, which has been marred by its handling of the COVID-19 pandemic and further corruption charges brought against high ranking PSL members.

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