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Caixa-BI | Public Investment Bank Emerges

Caixa Econômica Federal: Apps

Caixa Econômica Federal: Apps

Source: Estado de S. Paulo

Nearly a year after requesting authorization from the Central Bank, the investment bank of the Caixa Econômica Federal  — Caixa-BI — will enter the market between now and year’s end, according to Broadcast, the Agência Estado’s real time information service. The bank will commence operations with R$ 500 million of assets, R$ 360 billion under management, and more than 300 collaborators.

Although the investment bank is new to the Caixa organization, the numbers cited are explained by the fact that the Caixa-BI will oversee asset management for third parties and will serve as the bank’s capital markets division.

Caixa BI, the likely name of the investment bank, will have as its primary mission the channeling of funds from the capital markets into Caixa programs for the financing of infrastructure, with an emphasis on fixed income, a source close to the institution said.

“Caixa-BI will be an additional source of revenue for the CEF and will be used as a competitive tool that allows the bank to assert itself more forcefully in structuring capital markets transactions,” a source close to the bank said.

On the distribution side, the Caixa wants to provide a bridge that broadens access to investment opportunities in the capital markets.  The target demographic is individuals with average monthly income of R$ 7,000. To this end, the Caixa has set out to benefit its network of more than 5,000 banking agencies.

Among the names cited to command Caixa-BI is Marcos Roberto Vasconcelos, the bank’s VP Third-Party Asset Management.

Backing. About a month ago, the investment bank submitted a series of documents to the capital markets regulator and expects, according to source, to obtain a definitive license in the coming months, after the North American holidays. The initial expectation was that the investment bank would emerge from the drawing board in the first half of 2013.

However, fact that Caixa-BI  was the first institution to be processed according to Resolution 4,122 of 2012, which amends and consolidates the rules for the founding of banks in Brazil, might have had an effect on the amount of time the regulator would require.

As its investment bank awaits definitive permission from the Central Bank,  Caixa Econômica Federal is developing systems and preparing leadership of the institution.  For this reason, the bank has invested heavily in training in the last three years. The next step was to track and select candidates using an internal competitive exam.

The retention of talents is, according to an executive close to the Caixa, one of the principal challenges for the bank, given the difference in salaries between public- and private-sector competitors.  Despite this, 90% of Caixa BI employees are already vetted and trained.

The project of creating an investment bank emerged from the CEF in mid-2008, but in the midst of global crisis it was tabled until the end of last year.  Caixa-BI is part of CEF’s desire to be one of the three largest banks in Brazil by 2022.

The Caixa’s push for the CEF-BI in this market comes as Banco do Brasil is also working to reinforce its position in this sector of the market.  At the same time, competition with such private banks as Itaú BBA, Bradesco BBI, BTG Pactual and Credit Suisse, remains heated.