Banco do Brasil Hands Its Own Debtor a $448m No-Bid Deal

Governance

Banco do Brasil has just agreed to pay a loss-making state company nearly half a billion dollars over five years, without asking anyone else for a price. Its own filing calls the arrangement a related-party transaction.

The counterparty is Correios, Brazil’s state postal operator, and the deal covers conventional, special and telematic postal services at home and abroad. It was signed on the twenty-sixth of June and took effect on the second of July.

The bank disclosed it to the market on the evening of the seventh. Nothing about it appears to be unlawful, and that is precisely what makes it worth examining.

Why Banco do Brasil could not hold a tender

Brazil still runs a genuine postal monopoly. Article nine of the 1978 postal law reserves to the state the receipt, transport and delivery of letters, postcards and what it calls grouped correspondence.

Card mailings, statements and legal notices fall inside that reservation. The bank says such services account for almost ninety-eight percent of what it spends on postage, so a tender would have had nobody to invite.

For the small remainder outside the monopoly, the bank says it checked market prices and found the state operator’s rates comparable. It adds that no private firm reaches the remote municipalities its branches serve.

There is a wrinkle the coverage has missed. The same article exempts a company that carries letters between its own premises, by its own means, without commercial intermediation.

The monopoly binds a bank only when it hires somebody. Brazil’s law does not compel Banco do Brasil to buy the service, but it does dictate whom the bank must buy it from the moment it decides not to do the job itself.

Lender, customer, sibling

Now hold the two positions together. In December the postal company borrowed twelve billion reais, about two and a third billion dollars, from a syndicate of five banks, guaranteed in full by the National Treasury.

Banco do Brasil is one of those five lenders. It is now also the counterparty of a five-year contract awarded to the same borrower without competition, and both companies answer to the same controlling shareholder, the Brazilian state.

The bank says the decision was taken independently, through its own technical and legal review, with no participation by Correios in the negotiation. Its own paperwork nonetheless classifies the deal under related-party transactions.

Roughly seven billion reais more, some one and a third billion dollars, is under negotiation in a second credit round. The audit court has already flagged weaknesses in the government’s assessment of whether the postal company can service what it has borrowed.

As a rescue, the sums are small

Spread across sixty months, the contract is worth about four hundred and sixty million reais a year, roughly ninety million dollars. Set that against a company that lost eight and a half billion reais last year.

A full year of the contract covers a little over five percent of that hole. Against the first quarter of this year alone, when the net loss reached three point one six billion reais, a whole year of postal revenue from the bank amounts to under fifteen percent of a single quarter’s deficit.

That loss was eighty-three percent worse than the same quarter a year earlier. As a bailout this contract is a rounding error, which is exactly why the interesting question is not the money.

One detail invites a second look. The ceiling rose by about six percent from the contract signed in 2021, an increase the bank attributes exclusively to inflation, with the scope of services unchanged.

Brazilian consumer prices rose by a good deal more than six percent across those five years. Either the earlier ceiling was never fully drawn down, or the correction is a great deal gentler than the word inflation implies.

For a minority holder of Banco do Brasil stock, the lesson is structural rather than scandalous. A statutory monopoly lets the state route recurring revenue to a failing company through the purchase ledger of a listed bank, and every step of it is legal.

Did Banco do Brasil break any rule?

Nothing published suggests so. The postal monopoly is set by a 1978 statute, and the bank disclosed the deal as a related-party transaction.

Why does the no-bid contract matter?

Because the buyer is also one of the seller’s lenders, and both are controlled by the same shareholder. Legal purchasing and indirect rescue become hard to tell apart.

How badly is Correios doing?

It lost eight and a half billion reais in 2025 and a further three point one six billion in the first quarter of 2026, eighty-three percent worse than a year earlier.

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