Lean, Mean Banking Machine
Banco do Brasil, the state-owned bank, is in top form and higly profitable. Now, under new management, Brazil's biggest bank needs to convince the markets that it still means business.
In all its 195-year
history, Banco do Brasil has probably never been in such good
health. In 2002, pretax income rose by 50% in dollar terms to
$951.1 million. The government-owned bank is well-capitalized,
tightly managed and ready to do battle with the country's
aggressive private sector banks. Indeed, last year it posted a
22% return on equity, better than the country's largest private
sector bank, Bradesco, which reported an 18.6% ROE and $438.4
million in pretax profit.
This is quite an achievement. Between 1995 and 1996, Banco
do Brasil posted net losses of $11.61 billion. The government
had to inject $6.39 billion in fresh equity in 1996 after Banco
do Brasil's capital ratios collapsed under the weight of bad
loans, foreign exchange losses and the cost of recognizing
unfunded liabilities to its employee pension fund. Although the
bank had nearly $80 billion in assets at the...
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