January 7, 2019 / 3:02 PM / 5 months ago

UPDATE 1-Brazil state banks to rely less on Treasury -officials

(Adds more details on repayments)

By Marcela Ayres

BRASILIA, Jan 7 (Reuters) - The new heads of two Brazilian state lenders on Monday said the banks would depend less on the Treasury for funding, underscoring an overhaul of public-sector banks under new right-wing President Jair Bolsonaro.

The new administration also plans to make development bank BNDES and mortgage lender Caixa Econômica Federal speed up repayment of Treasury loans, officials said.

The strategy marks a departure from an economic model championed by previous left-wing administrations that funneled public funds to BNDES and other state banks to create “national champions.”

Economy Minister Paulo Guedes said such policies are “regressive” in a speech where he pledged that public-sector lending by public banks should focus on credit for the unprivileged and let the private-sector handle most lending.

At a swearing-in ceremony for the bank executives, new BNDES head Joaquim Levy said its lending activity should be adjusted in line with the equity of its shareholder, the federal government.

Carlos Thadeu de Freitas, the financial director of BNDES, told two local newspapers that the bank aims to return up to 100 billion reais ($27 billion) in loans owed to the Treasury in 2019.

BNDES had planned to repay 26 billion reais to the Treasury this year, but raising that figure would allow the government to cut public debt faster as is the desire of Bolsonaro’s new economic team, Freitas said.

“The BNDES has to reinvent itself,” Freitas was quoted as saying in newspaper O Estado de S.Paulo. “It cannot compete with private banks, providing working capital to companies which have other means to access such lines.”

In the same vein, Caixa will sell stakes in four subsidiaries to repay loans to the Treasury, said Pedro Guimarães, its new chief executive. The plan will involve the insurance, cards, asset management and lottery units.

Guimaraes also said the bank intends to increase its volume of micro loans, targeting 30 million potential clients.

BNDES received about 500 billion reais in loans from the Treasury during the left-wing administrations of Luiz Inácio Lula da Siva and Dilma Rousseff from 2003 to 2016, O Estado wrote. The balance of outstanding loans at BNDES is 260 billion reais, according to the newspapers.

$1 = 3.7134 reais Reporting by Marcela Ayres Editing by Chizu Nomiyama and Susan Thomas

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