(Adding a cailout size car maker to demand)
By Marcela Ayres and Carolina Mandl
BRAZIL / SAO PAULO, April 15 (Reuters) – The Brazilian Ministry of Economy is talking to banks about providing bailouts to sectors such as airlines, car makers, power companies and major retailers to help them survive the coronavirus virus crisis, the bank’s executive confirmed on Wednesday in live presentation.
Reuters reported earlier on Wednesday that Brazil’s biggest lenders – such as Banco Bradesco, Itau Unibanco Holding SA, Banco Santander Brazil and Banco do Brasil SA – have discussed with the country’s central bank and the development bank BNDES how and which financial instruments can be used for save. fighting company.
The auto sector demanded in talks with the government and the 100 billion reais ($ 19.10 billion) bailout bank, three people with knowledge of the matter said. However, sources doubt that the package will reach that amount.
“Talks between banks, BNDES and the Ministry of Finance are very productive,” said Brazilian CEO Banco Santander SA Sergio Rial in a direct presentation to discuss the impact of the coronavirus on the economy, citing sectors such as airlines, hotels and car manufacturers.
In another live presentation, Bradesco CEO Octavio de Lazari said the bailout for the electricity sector is likely to be completed within the next two weeks.
The ministry wants BNDES, whose role Minister of Economy Paulo Guedes previously tried to reduce, to lead the talks. Development banks can use a portion of about 80 billion reais ($ 15.23 billion) in cash to buy conventional or convertible bonds sold by troubled companies, along with other banks and investors under the ministry’s plan.
A source close to the government said BNDES did not plan to take all risks in certain companies, because that would limit the total outreach of the bailout. By sharing risk with more banks and investors, more companies can be helped.
To receive funds, the company must present a restructuring plan to BNDES.
The participants discussed using a conversion debt or loan partially guaranteed by the Ministry of Finance, said the source. But the Ministry of Finance did not want to directly inject funds into the company.
The division remains in ongoing talks, with banks willing to cooperate in several ways but insisted the government take most of the risks in some cases, the source said.
BNDES and the Ministry of Economy did not comment on this issue.
Rial said discussions with registered airlines and retailers included the use of convertible bonds, which could be redeemed in the form of shares or money in the future.
Airlines including Gol Linhas Aereas Intelligentes, Azul SA and Latam Airlines Group SA have previously been reported in talks with BNDES about funding.
Azul CEO John Rodgerson said on Wednesday that the carrier was still “a bit far” from reaching an agreement with a loan from BNDES.
CEO of Santander Brasil said car manufacturers were more likely to use debt with collateral, without determining how it works. Rial added that hotels can use their real estate assets as collateral for debt. ($ 1 = 5.2539 reais) ($ 1 = 5.2367 reais) (Reporting by Carolina Mandl in Sao Paulo and Marcela Ayres in Brasilia Edited by Paul Simao, Richard Chang, Jonathan Oatis and Cynthia Osterman)