April 10, 2017 / 1:37 PM / a year ago

BNDES to limit dividends for Brazilian government -paper

SAO PAULO, April 10 (Reuters) - Shareholders of Brazil’s BNDES have approved a statute guaranteeing the state development bank will keep at least 40 percent of its earnings, capping dividends to the federal government for the first time, newspaper Valor Economico reported on Monday.

The new statute calls for the bank to pay the government 25 percent to 60 percent of its adjusted annual profit, Valor reported. In recent years, the government took all available earnings to cover its fiscal deficit.

Media representatives for the bank did not immediately respond to a request for comment.

Previously, BNDES had no defined dividend policy, its legal director, Marcelo de Siqueira Freitas, told Valor. The paper said the bank’s technical staff saw the policy as helping to guarantee capital levels and reduce the need for the repeated funding that the government provided in recent years.

The move is another step toward curbing political influence in strategic planning at BNDES. Under the leftist Workers Party’s 13-year administration, the bank became a tool for economic policies that contributed to a huge fiscal deficit.

Since the party lost power last year, the new center-right government has encouraged BNDES to write stricter bylaws curbing political intervention in lending decisions and demanding better corporate governance from borrowers. (Writing by Brad Haynes and Guillermo Parra-Bernal; Editing by Daniel Flynn and Lisa Von Ahn)

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