Banco do Brasil stops offering export guarantees for local defence industry

The Brazilian-made Astros II 6×6 multiple rocket launch system has been exported to Indonesia, Malaysia, Qatar, and Saudi Arabia. A Brazilian Army Astros II MK6 rocket launcher is shown above. (Victor Manuel Saraiva Barreira)

Brazil's state-owned Banco do Brasil (BB) recently announced it will no longer use its equity capital in business with the country's defence sector. Responsibility for financing such operations, including guaranteeing exports, now falls to the government.

The local defence industry reacted negatively, expressing concern about widespread bankruptcy in the sector, local industry sources told Janes on 1 February.

BB was the only Brazilian bank still negotiating export guarantees with defence firms.

BB is owned by the Brazilian federal government (50%), the Brazilian Treasury (0.4%), foreign capital (25.5%), and domestic capital (24.01%), according to the bank.

The decision aligns BB with the practices of private banks, which avoid doing business with companies producing military hardware, following corporate governance standards.

The Brazilian Ministry of Defence (MoD) said it was surprised by the decision and is now considering expanding its Export Financing Programme (Proex) to support local defence industry.

The Proex programme enables companies to obtain financing as well as the guarantees required by foreign buyers.

The Brazilian National Bank for Economic and Social Development (BNDES) and the Foreign Trade Chamber (CAMEX), linked to the Ministry of Development, Industry, Trade, and Services (MDIC), were called in to look for solutions, although there is no defined schedule to revise the programme.

The MDIC said that it “seeks solutions that ensure the maintenance and strengthening of Brazilian industry”.