Banco do Brasil shares down almost 5% amid rumors of CEO resignation

RIO DE JANEIRO,  BRAZIL – After the market closed on Friday, February 26th, however, Banco do Brasil released a statement saying that its CEO has not submitted his resignation.

This Friday’s session was again turbulent for state-owned companies. According to information from O Globo newspaper, which quotes presidential palace sources, Banco do Brasil’s CEO André Brandão had handed in his resignation to President Jair Bolsonaro. Consequently, the bank’s share price sharply dropped toward the end of the day, closing down 4.92% at R$28.05, after losing 5.39% at the day’s minimum.

After the market closed, Banco do Brasil released a statement denying the information, saying there had been no resignation request by its CEO and that BB had no knowledge of the sources of the news reported in the newspaper.

BBAS3 shares, which had registered some volatility during the session, saw losses accelerate just before 4 PM, when the news was published.

The newspaper states that earlier in the week Brandão had a meeting with Economy Minister Paulo Guedes, at which time he voiced his discomfort about remaining in the post after rumors that Bolsonaro was looking to replace him.

According to the newspaper, he was asked to remain in charge of BB for a while longer until a replacement would be found. Among the potential candidates are the CEO of Banco de Brasília (BRB), Paulo Henrique Costa, the executive secretary of the Ministry of Citizenship, Antônio Barreto, and BNDES CEO Gustavo Montezano.

Brandão had been in a difficult situation since early this year, when he announced a restructuring plan that involved closing bank branches and a voluntary resignation plan that displeased President Jair Bolsonaro, who was trying to force resignation by the executive, highly rated by the market. However, Central Bank president Roberto Campos Neto managed to persuade Bolsonaro not to dismiss Brandão from his post.

At the time, Campos Neto, highly regarded by the president, alerted him that a dismissal would be seen as political intervention in a public company listed on the stock exchange.

According to O Globo newspaper, Brandão made the decision to hand over his position after observing the fate of Petrobras’ CEO Roberto Castello Branco, who was fired by Bolsonaro. “The executive, who took office in September last year, wanted to avert this kind of embarrassment,” the newspaper points out.

In a brief note after the news, Credit Suisse reported that Brandão is well regarded by the market and was advancing restructuring initiatives. “If confirmed, the focus should be on his potential successor, thereby increasing uncertainty,” the analysts said.

Source: InfoMoney