SAO PAULO (Reuters) – Brazilian President Jair Bolsonaro was sworn in on Thursday to Fausto Ribeiro as chief executive of Banco do Brasil SA, according to a securities filing, just hours after the bank’s president and a second member of the board of directors announced their resignation after criticizing the appointment of Ribeiro.
Ribeiro’s swearing-in marked Bolsonaro’s last political intervention in a state-controlled enterprise. Ribeiro, 53, has been running a small business unit at Banco do Brasil since September, but has worked at the bank for more than three decades. As CEO, Ribeiro will lead executives who are now his bosses.
President Helio Magalhaes and his colleague Jose Guimaraes Monforte, whose resignation from the board of directors was announced in a securities deposit, were among the four board members of Banco do Brasil SA, who said that Ribeiro n was not ready for the job.
The four directors said in a public statement that the board should have the power to appoint its leader.
In his resignation letter, Magalhaes said he decided to step down because the government overlooked Banco do Brasil, the country’s second largest bank in terms of assets, and other state-controlled companies.
Currently, far-right Bolsonaro has the right to appoint the CEO of Banco do Brasil, leaving the bank’s board of directors with little to say, in a deviation from best practices in corporate governance.
Ribeiro, whose appointment also makes him a member of the board of directors, replaces André Brandao.
In their statement, board members Magalhaes, Monforte, Luiz Spinola and Paulo Roberto Evangelista de Lima said that while Ribeiro meets the legal requirements to become CEO of Banco do Brasil, he lacks the managerial experience to run the bank.
Brandao did not attend the meeting. He tendered his resignation as CEO in March, two months after Bolsonaro disagreed with the cost-cutting measures he had taken.
Magalhaes, who previously headed the Brazilian units of Citigroup Inc and American Express Co, wrote that the interference with the efficiency program illustrates the government’s lack of respect for the corporate governance of Banco do Brasil, saying it does not is no longer a government priority for the bank.
A board member said he learned of Ribeiro’s appointment in a government statement, which he said indicated it was a political appointment.
Amid a snowballing coronavirus pandemic, Bolsonaro has faced political pressure as he prepares to run for re-election next year.
Brandao had upset Bolsonaro by planning to close more than 100 branches and cut 5,000 jobs through a buyout program. Leaving a small town without a Banco do Brasil branch can hurt the popularity of local politicians, given that many Brazilians still do not have an internet connection.
When Bolsonaro took power in 2019, he pledged to sell off many state-owned companies and appoint executives with private sector experience to lead or supervise them.
However, earlier this week, the Brazilian government appointed three new members of the Banco do Brasil board, replacing private sector veterans previously appointed by Economy Minister Paulo Guedes. Two of them, Aramis de Andrade and Walter Ribeiro, are former executives of Banco do Brasil. Ieda Cagni is a civil servant in the Office of the Legal Adviser of the National Treasury.
This is not the first time that Banco do Brasil has been the target of political interference. Former left-wing president Dilma Rousseff forced the bank to cut interest rates on loans and fees, which hurt profitability.
“Ribeiro’s appointment was very strange given that the bank had several executives in its ranks better suited to the role of CEO,” 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 due to rising fuel prices. The CEO of state-owned power company Centrais Eletricas Brasileiras SA, known as Eletrobras, resigned in January due to what he called a lack of political support in Congress for the privatization of the business.
Reporting by Carolina Mandl; Edited by Leslie Adler