RIO DE JANEIRO, BRAZIL – The president of Banco do Brasil (BB), Rubem Novaes, believes that the financial institution should be privatized to better compete with Fintechs (financial startups) and to adjust to the open banking model. The company is not on the list of state-owned companies to be privatized, such as the Correios (Postal Service) and Telebras.
In open banking, financial data from one bank could be shared with another bank through an API (application programming interface), to be used in Apps and third-party services. This would allow clients greater freedom and increase competition among large companies and fintechs. The Central Bank is currently studying the model.
“As this new world of open banking and fintech competition deepens, the drawbacks of being a public bank will become more pronounced,” Novaes told Folha. “And I think that we should start to anticipate privatization, so there would be no trauma.”
To Novaes, the BB would have more flexibility and would be more efficient if privatized: “I am convinced that without those ties, we would outperform private competitors,” said the executive. “One day privatizing Banco do Brasil will be inevitable.”
The sale of BB is not included in the privatization plan, but it would be backed by the economic team and the Minister of Economy, Paulo Guedes. Congress and President Jair Bolsonaro would also need to be persuaded.
President of BB has advocated privatization for months
Last year, Novaes advocated the privatization of BB with the same argument: according to him, “it is obvious that a public institution will not be as fast” as a fintech in adapting to the banking system modernization.
“With the constraints a state-owned company must face, it will be very difficult to adjust to this new world of open banking and fintechs in 2, 3, 4 years,” Novaes said in October 2019. “It is very difficult for an institution linked to government to keep up with this pace; we compete with a kind of iron ball on our leg”.
Source: Folha