Feb 4, 2014

• The Bank reiterates its priority to investment, competitiveness and environmental sustainability, besides opening up access to MSMEs.
• Rules increase room for financing in the private credit market
• Changes also aim at operational simplicity and efficiency

The Brazilian Development Bank (BNDES) has revised its Operational Policy (OP) aligning it to suit investment trends in the country, the national financial industry’s experience and the need to serve companies more efficiently and provide higher quality services. The new rules (fees, terms of loan and shares) are already available on the BNDES website.

OP guidelines had already been mentioned by the BNDES’ president, Luciano Coutinho, at the end of last year. At the same time, the previously announced conditions for the BNDES’ PSI 2014, which are currently in force, have been maintained. These are associated with acquisitions or support for exports of capital goods, as well as investments in innovation. Therefore, PSI 2014 is part of the cost of investment financing in all sections. 

In the new policy, the Bank has sought to align the financing conditions to government guidelines and to the needs of the production sector. There are three priorities: 

Infrastructure, especially new investments into: logistics, energy, urban mobility and sanitation. This group also includes support to modernize public management. 

Competitiveness: innovation, technical and technological services; exports of engineering services and capital goods; engineering and knowledge- intensive sectors; the creative economy.

Production inclusion and sustainability: Micro, Small and Medium –sized Enterprises (MSMEs), the environment and regional development.

These priorities have the lowest financial costs, the longest loan terms and the highest participation levels from the Bank in financing. The levels of participation have been suited to the arrival of new sources of resources, taking into account that the banking industry and the capitals market already have the means to engage in long-term financing. 

In the same vein, the new OP enables companies to raise complementary resources from markets, as is currently happening with infrastructure debentures. 

Economic infrastructure – Among priorities, one of the sectors which stands out is Logistics, with higher levels of participation and loan terms suited to the characteristics of investment projects. In Energy, the BNDES has maintained high levels of participation in generation projects using renewable sources, due to its contribution to environmental sustainability. Support for transmission has included reduced rates, and the distribution segment will now receive one of its installments at the market price.

MSME – BNDES financing for smaller enterprises offers 90% participation in projects, which proves the priority given to the sector by the Bank. The new OP has created special conditions for micro and small enterprises in the lines of the BNDES Automatic: the companies may be reimbursed for consolidated investments. To do so, the investment project must be completed within 12 months prior to the date the request for BNDES financing is submitted.

The BNDES has also changed its policy with the goal of making operations simpler and swifter by rearranging processes and support tools. 

In indirect transactions (those in which the BNDES’ resources are transferred via an intermediary financial agent), simplifying norms and operations also undergoes the data transmission process, with all operation–related data forwarded electronically. 

Among the new aspects is the alteration of the minimum required in direct financing operations (BNDES Finem), which has been changed from R$10 million to R$ 20 million. 

Performance – Consolidated data from 2013’s performance is also available on the BNDES’ website. Last year, the BNDES’ disbursements reached R$ 190.4 billion, up 22% compared to 2012.

All sectors supported by the Bank have seen releases increase. Industry accounted for 30% of the total released (R$ 58 billion) and infrastructure for 33% (R$ 62.2 billion). This represented 22% and 18% percent of disbursements to these sectors in comparison to the previous year. 

The largest relative expansion took place in the agricultural sector (up 64%), with a total R$ 18.6 million, reflecting the large volume of investments in the area due to the record crop in 2013. In the trade and services sector, the BNDES released R$ 51.5 billion, a 17% increment.

One of the BNDES’ performance highlights last year was its 27% expansion in disbursements to micro, small and medium-sized companies, which surpassed the Bank’s global releases the year before. The record amount of R$63.5 billion, equivalent to 33% of the total released by the institution last year, was disbursed to MSMEs. 

Moderation – Loan approvals by the BNDES totaled R$ 239.6 billion in 2013, down 8% if compared to 2012. Consultations, at R$ 277.4 billion, also decreased by 11% in the same comparison, following suit with what happened to eligibilities (R$ 275.1 billion), down 7%. 

The fall in approvals, consultations and eligibilities is due to the high comparison base, but it is also a sign of the Bank’s more moderate disbursements in 2014.