MESSAGE FROM THE PRESIDENT
The year 2016 was one of many challenges. Faced with a troubled political scenario and a recessive economic environment, we had the enormous responsibility of upholding our institutional mission of promoting the sustainable and competitive development of the Brazilian economy.
The entire Bank staff worked hard over various months to find alternatives to the most urgent issues, while continuing at the same time to address long-term issues. We discussed and established new principles and guidelines and reviewed our operational policies – our guide to action. We eliminated overlapping programs, products and lines by streamlining and enhancing the transparency of our financial support criteria.
We defined priority qualifiers such as education, health, innovation, environment, exports and MSMEs. These qualifiers determine the best financing conditions for projects, regardless of their sector of origin. Thus, we aim to focus on those that largely create social rather than private return and that make a difference in the lives of the Brazilian population.
It has been a transition year and in 2017 we will be able to evaluate the evolution and results of all changes introduced. We will carry out a strategic planning cycle, seeking a long-term vision, until 2030. We therefore hope to contribute to the sustainability of BNDES, pursuing the balance between economic, social and environmental outcomes. We are committed to strengthening the Bank so that it continues being an important agent of Brazil’s development.
Maria Silvia Bastos Marques
President of BNDES
PROFILE
Who are we?
We are a State-owned company linked to the Ministry of Planning, Development and Management, being the main instrument of the Federal Government for long-term financing and investment in the various segments of the Brazilian economy. Headquartered in Brasília (DF) and focusing our activities in Rio de Janeiro, we operate throughout the entire country, with offices in São Paulo, Recife and Belém. We have been operating since 1952 and are now one of the major development banks in the world. Sustainability is a transversal strategy and the balance between economic, social and environmental outcomes is our goal.
Mission, Vision and values
Mission
To foster sustainable and competitive development in the Brazilian economy, generating employment while reducing social and regional inequalities.
VISION
To perform its duties as the development bank of Brazil, an institution of excellence that is innovative and proactive in light of the challenges in our society.
VALUES
Commitment to development
Ethics
Public principles
Excellence
Our strategy
In 2016, due to the change in management and the need for organizational alignment, we reevaluated the principles and guidelines that govern our activities. We then reviewed our operational policies which specify the criteria for financing approval. Through the definition of qualifiers such as innovation, education and health, we moved from industry-focused analysis to project-based analysis. The new rules take into account the need to resume economic growth and the scenario of fiscal restraint, and streamline our instruments of financial support.
OUR STAFF
Breakdown of executive and
appointed staff PER gender
Male 76%
Female 24%
Breakdown of all staff PER gender
2.808
employees
Breakdown of all staff PER race
Breakdown of all staff PER career/education
Undergraduate 81%
Secondary 17%
Primary 2%
Breakdown of all staff PER undergraduate level
HOW DO WE CREATE VALUE?
Our relationships
Socio-environmental RESPONSIBILITY
OUR PERFORMANCE IN 2016
HighlightS
VISION FOR THE FUTURE
CHALLENGES
The year 2016 was marked by many challenges, largely due to the enduring economic crisis coupled with political and fiscal crises; changes in economic policy; reduced investment levels; and increased credit risk. The decline in economic activity and increased risk aversion by financial agents led to a fall in the performance of our main programs and automatic credit lines.
OPPORTUNITIES
To mitigate these challenges, our goal is to increase access to credit, especially for smaller businesses. We are looking for new models that will bring us closer to our end clients. To this end we have structured a digital action plan using alternative distribution channels that can expand our capillarity. In addition we have worked to simplify and streamline our processes by studying ways to reduce lead times for direct operations. Finally, we have strived to improve our monitoring and evaluation processes to measure the effectiveness of our performance.
2017 PLANNING
In the first half of 2017 a seminar was held in partnership with the World Bank, with the presence of several development banks, to discuss the role of institutions such as ours in stable economies. This event will be the starting point of a participatory process for the elaboration of a 2018-2023 Business Plan and a broad strategic reflection of the 2030 horizon.
ENERGY
Our support to the energy sector has contributed to diversify the Brazilian power matrix with clean energy sources. This year the Itarema Complex started operating. The nine wind farms in the municipality of Itarema (CE) have 207 MW of total installed capacity and associated power transmission lines. The surrounding community also benefited from social investments. The project has sold energy at auctions and supplies power to 426,000 households.
Photo: Paulo Del Vale/Rio Energy Collection
LOGISTICS
Initial operation of the waterway project Hidrovias do Brasil S.A. in Pará, supported by us, which is part of a logistics system including the Tapajós and Amazon rivers destined for the transportation of bulk grain such as soybean and corn. In 2016, about 800,000 tonnes of grain were transported. In its final configuration the system will be able to transport 5.5 million tonnes of grain per year by 2018. The project helps reduce pressure on the ports of the Southeast region, replacing rail and road transport with the waterway, which is cleaner, cheaper and safer, besides reducing logistics costs, since the terminal is closer to producing regions and also to regions that import Brazilian grain.
Photo: Rafael Dantas/Hidrovias do Brasil S.A. Collection
Mining and steel industry
The Ferro Carajás – S11D project of the company Vale do Rio Doce, which started operating in 2016, had R$ 6.2 billion financed by BNDES. It is the largest mining complex in the company’s history. The project will allow expansion of iron ore production by 90 million tonnes per year and expansion of the transportation capacity of the Carajás Railroad to 230 million tonnes per year. It is estimated that such production will significantly increase Brazilian ore exports. Also in 2016, Companhia Siderúrgica do Pecém (CSP) started operating. It is expected to produce three million tonnes of steel slabs per year for exportation. Of the amount invested, approximately R$ 1 billion will be allocated to environmental control equipment and processes, which include waste management, monitoring of atmospheric emissions and effluent discharge.
Photo: Falcão Júnior/CSP Collection
URBAN MOBILITY
In 2016 we supported important projects in the field of urban mobility. Line 4 of the Rio de Janeiro subway, which connects the existing network to Barra da Tijuca, was inaugurated in July 2016, with approximately 13 km of track and five operating stations. Around 110,000 passengers commute daily on the system during the week. The first segment of the VLT, also in Rio de Janeiro, was inaugurated in June 2016, carrying an average of 25,000 to 30,000 passengers per day. All new stations of Line 1 and three stations of Line 2 of the Bahia subway were inaugurated last year, totaling 12 km in length. Regarding Line 5 – Lilac of the São Paulo subway, which will cover approximately 11 km between Alto da Boa Vista and Chácara Klabin stations, tunnel excavation has been concluded. It is estimated that following completion, scheduled for 2018, the line will transport 781,300 passengers per day.
Photo: André Telles/BNDES Collection
SANITATION
Water supply and sewage collection and treatment are one of our priority segments. For example, in one operation with SANEPAR, which supports 39 projects in several municipalities of the state of Paraná, 5,200 water and 1,684 sewage connections were added, with the completion of 13 major works in 2016. Another operation worth mentioning is the implementation of the Rio das Velhas Supply System in Sete Lagoas (MG), which started supplying water to 100,000 inhabitants from a total of 250,000. This reduced dependence on existing wells, which have recently shown signs of depletion and lowering of the water table. The project will meet local demand for the next twenty years.
Photo: Shutterstock
PUBLIC HEALTH
In 2016, two flagship operations were supported with potential to fight the epidemics that have plagued the country in recent years. The first is the funding of plans by FIOCRUZ to cope with the zika virus epidemic, with positive impacts on dengue and chikungunya fevers as well. Resources to the amount of R$ 23 million will be allocated to the development of diagnostic kits and action to fight the virus transmission vector. The second operation consists of R$ 97 million to support the Butantan Foundation in the development of a tetravalent dengue vaccine. It is estimated that the vaccine will benefit around 180 million people in Brazil. Our resources account for 31% of the total investment and will be used to fund clinical trials and build a plant to supply the vaccine.
Photo: Shutterstock
Making a difference
COP 22
Launch of the Biofuture Platform, an international alliance of twenty countries that seeks, among other goals, to advance technological development for the production of second-generation ethanol (E2G), from any kind of biomass, through international cooperation. We took part in the design, development and detailing of the platform, in partnership with the Brazilian Ministry of Foreign Affairs. We also presented the results of the Amazon Fund in opposing deforestation and promoting sustainable development.
Amazon Fund
Among the main activities of the fund in 2016, we highlight the strengthened support to the indigenous peoples inhabiting the Amazon region with the approval of three additional projects within the sphere of the Public Call-for-Submission for Projects Supporting Territorial and Environmental Management Plan in Indigenous Land, totaling six initiatives. Another highlight was the Amazon Integrated Project, which aims to invest in technologies and knowledge for the recovery, conservation and sustainable use of the biome. The support is intended for the undertaking of research and technology transfer projects of the various Brazilian Agricultural Research Corporation (EMBRAPA) units, which serve as regional offices.
Efficient public lighting
We elaborated our strategy to foster the sector, focusing on greater energy efficiency provided by new technologies, notably LED lighting, which combines consumption reduction with environmental protection. We started developing our methodology for the accreditation of high-powered LED lamps for several segments, with the requirement of progressive nationalization for accredited manufacturers. We also supported a public-private partnership in Belo Horizonte in the sector and started working to extend this support to other cities in the country.
Inova Mineral
In 2016 we launched a specific line of credit for technologies geared towards reducing and mitigating social and environmental risks and impacts through the Development, Sustainability and Innovation Plan for the Mining and Mineral Transformation Sector – Inova Mineral. We selected and supported business plans for innovation in the development of high-performance materials, agricultural fertilizers and increased safety of tailings dams etc.
Inova Social
We developed a partnership with EMBRAPA through the Program of Support for Social Innovation and Sustainable Territorial Development – Inova Social, with estimated R$ 30 million in non-refundable support for the inclusion of family agriculture production and transfer of EMBRAPA knowledge of animal and plant production to small farmers. The program will benefit 5,530 families in 203 municipalities.
Sport
The year 2016 yielded excellent results in our strategy of sponsoring canoeing, which began in 2011. For the first time Brazil won Olympic medals in this sport, a total of four, considering both Olympic and Paralympic Games. Isaquias Queiroz (photo) was one of the successful athletes, winning two silver medals and one of bronze.
Culture
Through sponsored projects we fostered the cultural sector in all five regions of Brazil and enabled products and cultural manifestations in areas such as cinema, music and literature. Our initiatives in 2016 included the free broadcast of lectures from the FLIP Literary Encounter in Paraty, workshops at the 11th CineOp – Ouro Preto Film Festival (photo) and the Tiradentes Film Festival, as well as master classes with renowned musicians at the Mimo Festival and the Piano Brazil project.
BNDES Cultural Space
In 2016 we offered more than eighty attractions – 78 musical shows and five exhibitions – all selected through public notices. One of the highlights was the exhibit “Image Agriculture” (photo), by Rodrigo Braga, which re-opened the BNDES Gallery. Our theater also hosted music and film festivals as well as events such as lectures and chats. Over 25,000 people visited the BNDES Cultural Space throughout the year.
COP 22
Amazon Fund
Efficient Public Lighting
iNOVA mINERAL
iNOVA Social
sport
CulturE
BNDES Cultural Space
New administration
On June 1st, 2016, Maria Silvia Bastos Marques took office as president of BNDES, appointing a new board of directors and reducing the number of deputy managing directors from 25 to 19. The positions of legal and controllership directors were created to provide a solid and consistent framework to work with and address issues in an institutional manner.
State-owned companies law
Law 13,303 of June 30, 2016 introduced important changes to the BNDES System, especially regarding new rules for the appointment of directors and members of the Advisory Board; compliance with minimum transparency requirements, such as the annual release of an integrated or sustainability report and the ruling that control agencies must have unrestricted access to information necessary for their activities, including confidential ones. The new law required a review and adaptation of the bylaws of BNDES, BNDESPAR and FINAME, as well as the internal regulations of the Advisory Boards and Fiscal Councils. New policies were also established: the BNDES System policy for appointment to collegiate bodies and the dividends policy.
Ethics and integrity
In 2016, we approved our Corporate Compliance Policy and the Integrity Program, which outline principles and guidelines to enhance the culture of compliance, ethics and integrity in all our activities and operations. We also took part in discussions on those themes, joining different groups and initiatives such as the Rio Compliance Group, which brings together professionals from public and private companies and other institutions located in Rio de Janeiro to spread knowledge and exchange experiences among its members and also the Brazilian National Strategy to Combat Corruption and Money Laundering (ENCCLA), an initiative of the Ministry of Justice and Public Security to develop action to prevent and fight corruption and money laundering.
Auditing and relationship
with control agencies
Our internal auditing department directly linked to the Advisory Board, coordinates our dialog with external control and supervision agencies such as the Federal Court of Accounts (TCU), the Office of the Comptroller General (CGU) and the Brazilian Central Bank. In 2016 we underwent due diligences and audits which together generated 974 requests for information, all of which were properly addressed. We developed work plans, events and agreements with the control bodies to improve governance and transparency in our operations and reinforce our commitment to openness and integrity in the conduct of our activities.
Transparency
The Transparency corporate project concentrates initiatives developed by several areas to afford our stakeholders greater visibility, disclosure and understanding of several aspects related to our performance. The new website was one of the project’s main deliveries in 2016, and the Bank’s main active transparency tool. Therein we provide information on funding sources, accountability reports, purchase and contract information, as well as fund disbursement statistics.
Risk management and
financial sustainability
One of the main objectives of our risk management and internal control system is to contribute to our financial sustainability by measuring and monitoring the risks to which we are exposed and the assessment of internal controls. In 2016 we developed a global risk appetite framework, implemented a new market risk management system and improved operational risk management with the development of a specific methodology to assess risks associated with fraud, among other initiatives. From a financial point of view, one of the main events of the year was the early settlement of R$ 100 billion in debt with the National Treasury without any impairment to our operational capacity in the coming years.
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785
corporate assistance contacts
454,200
contacts via Call Center
(88% by phone)
718
requests for information via Citizen Information Service (SIC) – all answered within legal deadlines
1,376
messages via the Ombudsperson’s Office
82
preliminary proceedings filed with the Ethics Committee
In September 2016, we launched our new website, to facilitate access to our information and come closer to our different audiences. We have expanded the site’s content and release of variable income data. We have also simplified the search for credit lines, offering users interested in financial support suggestions of the most appropriate financing options and simulation of terms of payment.
166,000
281,576
53,000
followers on Twitter
views on YouTube
likes on our Facebook fan page
Up 123% over 2015
We have started streaming main interviews live on Facebook
Up 134%
over 2015
R$ 23 million
invested in 2016
Our sponsorship of canoeing was the theme of an advertising campaign launched during the Olympic Games
712
requests from media channels answered
Up 138% over 2015
190
press releases, notes, statements and agenda announcements published
Meetings with journalists to clarify doubts, inform about ongoing activities and improve relations with the press
22 institutional lectures held for
492 people
12 O BNDES Mais Perto de Você (BNDES Closest to You), lectures to counsel micro, small and medium entrepreneurs, attended
1,693 people
154 credit seminars in partnership with the Brazilian Micro and Small Business Support Service (SEBRAE) to publicize our modes of support, attended by over
9,000 people
Channels
Website
Social Media
Advertising
Press service
Lectures,
events and
trade fairs
R$ 88.3 billion
was disbursed in
597,565 operations with
144,912 clients
R$ 14.5 billion
green economy
R$ 3.6 billion
innovation
R$ 9.7 billion
social development
Disbursements
per sector
Disbursements
per client size (% of number of operations)
Disbursements
per client size (% of disbursement amounts)
Disbursements
PER REGION (% of disbursement amounts)
MSME
We outlined an action plan to simplify, streamline and expand access to credit by micro, small and medium-sized enterprises (MSME) with the objective of cooperating to resume economic growth and preserve and generate employment and income. One of the initiatives was to increase the budget and prolong terms of payment for working capital credit. We also sought greater automation in granting credit for automatic indirect operations to reduce deadlines for the approval, contracting and release of funds. We made progress in launching a relationship environment on our website where entrepreneurs can identify lines of credit available for their purposes and simulate financing conditions, among other options. We approved the increase of credit limit for MSME businesses from R$ 90 million to R$ 300 million, based on gross operating income. That change is in line with standards used by financial agents and the General Law of Micro and Small Enterprises.
MicrocrEdit
In order to expand distribution channels and expedite the granting of financial support, we started a review of our instruments to finance formal and informal microentrepreneurs who generally have poor access to credit in the traditional financial system. Since 2005 we have disbursed more than R$ 1 billion for the segment, with an end multiplier effect of R$ 4.5 billion. The funds have enabled 1.3 million operations. In 2016 alone we supported around 250,000 individuals and micro and small companies.
InfrastruCturE
We approved 22 projects to finance the generation, transmission and distribution of energy in 2016. Investments in renewable electric power totaled 2,525 MW. Our new operational policy includes specific guidelines for the electricity sector, ensuring better financing conditions for energy-efficient and solar power projects. In November 2016, Celg Distribuição, an electric power company operating in Goiás, was privatized in auction and the second stage of the 13/2015 power transmission auction was held, in cooperation with Aneel. In the area of sanitation we disbursed R$ 700 million for different projects with a focus on interventions that directly influence the quality of life of the Brazilian population. The program for state concessions in sanitation is a priority agenda. We will serve as a projects office for state governments, hiring consultants to diagnose the situation, carrying out technical studies and proposing appropriate models. By the end of the year, 17 states had shown interest. In the area of urban mobility, the highlights were projects such as the VLT and subway line 4 of Rio de Janeiro, linked to the Olympic Games, and the subways of Bahia and São Paulo.
IndUstrY
Political and economic uncertainties continued to affect the performance of Brazilian industry in 2016. The unfavorable scenario did not stop us from taking important initiatives, such as the approval of an independent technical study to perform a diagnosis and propose public policies related to the internet of things (IoT). The study will be used as input for the Brazilian National IoT Plan, an initiative to be launched by the Brazilian Ministry of Science, Technology, Innovation and Communications. In 2016 we also approved the first loan to a company in the segment of electronic games, for the development of multiplatform digital games. We consolidated our position as main financial supporter of rural credit in Brazil, with focus on agricultural machinery and equipment, sustainable agriculture, rural production cooperatives and support to family farming. In partnership with Finep and INPI, we launched two development plans for the primary industry segment: the Chemical Industry Innovation and Development Plan (PADIQ) and the Development, Sustainability and Innovation Plan for the Mining and Mineral Transformation Sector (Inova Mineral). In the biofuels segment, our support helped Brazil become world leader in second generation ethanol (E2G) technology. In 2016, two of the supported plants began full-time production of ethanol for the first time.
Exports
Disbursements of our exports support lines in 2016 more than doubled over the previous year, reaching US$ 4.1 billion. Our support accounted for 11% of total exports of capital goods in Brazil. US$ 2.6 billion was disbursed over the year in pre-shipment operations and US$ 1.5 billion in post-shipment operations. Annual amortizations and interest on post-shipment financing are a stable source of foreign exchange earnings for Brazil. Prominent projects included support for exports of hydro-mechanical equipment manufactured in Brazil by Alstom and destined for the construction of the Ituango Hydroelectric Power Plant in the Colombian department of Antioquia. We also continued funding Embraer’s exports to SkyWest by contracting two new financing operations amounting to US$ 1.5 billion, related to the purchase of over sixty E-175 aircraft.
cAPITal mARKET
One of our priorities has been to contribute to better corporate governance of Brazilian companies. To that end, last year we renewed our technical cooperation agreement with the Brazilian Institute of Corporate Governance (IBGC), besides carrying out the Novo Mercado (New Market) reform in partnership with BM&FBovespa. Two further priorities are encouraging alternative energy and the capital market, which led to the creation of the Sustainable Energy Fund. Its objective will be to invest in incentive debentures of infrastructure projects, especially assets related to the low-carbon economy. We have approved an internal resolution to establish new rules to monitor shareholdings according to TCU and CGU recommendations, in order to guarantee more transparency and operational efficiency and to demonstrate the effectiveness and efficacy of operations.
mSme
Microcredit
Infrastructure
Industry
exportS
capital
Market
GOVERNANCE, CONTROL AND TRANSPARENCY
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