Brazilian President Jair Bolsonaro swore in Fausto Ribeiro as chief executive of Banco do Brasil SA on Thursday, according to a securities filing, just hours after the bank’s chairman and a second board member announced their resignations after criticizing Ribeiro’s appointment.
The swearing in of Ribeiro marked Bolsonaro’s latest political intervention in a state-controlled company. Ribeiro, 53, has been the head of a small business unit at Banco do Brasil since September but has been at the bank for more than three decades. As CEO, Ribeiro will manage executives who are now his bosses.
Chairman Helio Magalhaes and fellow board member Jose Guimaraes Monforte, whose board resignations were announced in a securities filing, were among the four members of Banco do Brasil SA’s eight-member board who said that Ribeiro was not ready for the job.
The four directors said in a publicly issued statement that the board should have the power to appoint its leader.
In his letter of resignation, Magalhaes said he decided to quit because the government has neglected Banco do Brasil, the country’s second largest bank by assets, and other state-controlled companies.
Currently, the far-right Bolsonaro is entitled to nominate Banco do Brasil’s chief executive, leaving the bank’s board of directors little say, in a deviation from corporate governance best practices.
Ribeiro, whose appointment also makes him a board member, replaces Andre Brandao.
In their statement, board members Magalhaes, Monforte, Luiz Spinola and Paulo Roberto Evangelista de Lima said that while Ribeiro met the legal requirements to become Banco do Brasil’s CEO, he lacks management experience to run the bank.
Brandao did not participate in the meeting. He submitted his resignation as CEO in March, two months after Bolsonaro disagreed with cost-cutting measures he had undertaken.
LETTER OF RESIGNATION
Magalhaes, who previously headed the Brazilian units of Citigroup Inc and American Express Co, wrote that the interference in the efficiency program illustrates the government’s disrespect for Banco do Brasil’s corporate governance, saying it is no longer among the government priorities for the bank.
One board member said he learned about Ribeiro’s appointment from a government statement, which he said signaled that it was a political nomination.
Amid a snowballing coronavirus pandemic, Bolsonaro has been facing political pressure as he prepares to run for reelection next year.
Brandao had antagonized Bolsonaro by planning to close more than 100 branches and cut 5,000 jobs through a buyout program. Leaving a small city without a brick-and-mortar Banco do Brasil branch can hurt local politicians’ popularity, given that many Brazilians still lack internet connections.
When Bolsonaro took power in 2019, he pledged to sell off many state companies and appoint executives with private-sector experience to run or oversee them.
However, earlier this week, the Brazilian government named three new board members at Banco do Brasil, replacing private-sector veterans previously named by Economy Minister Paulo Guedes. Two of them, Aramis de Andrade and Walter Ribeiro, are former Banco do Brasil executives. Ieda Cagni is a civil servant at the Office of the General Counsel to the National Treasury.
It is not the first time that Banco do Brasil has been the target of political interference. Former leftist President Dilma Rousseff forced the bank to reduce interest rates on loans and fees, hitting profitability.
“Ribeiro’s appointment was very odd given that the bank had several executives in its ranks better suited to the CEO position,” said Carlos Daltozo, head of equities at research broker Eleven.
The changes at Banco do Brasil come less than two months after Bolsonaro replaced the CEO of Petrobras over fuel price hikes. The CEO of state power company Centrais Eletricas Brasileiras SA, known as Eletrobras, quit in January over what he called a lack of political support in Congress for privatizing the company.