Decree enacts agreement to establish New Development Bank headquarters in Brazil

RIO DE JANEIRO, BRAZIL – President Jair Bolsonaro issued a Decree, published this Monday, 22, in the Federal Gazette, which enacts an agreement between the Brazilian government and the New Development Bank (NDB), formerly referred to as the BRICS Development Bank, which provides for the installation of the institution’s regional headquarters in Brazil. The deal was concluded in Johannesburg, Africa, in 2018.

The Decree has the text of the agreement attached. The headquarters of the NBD’s Regional Office of the Americas (ERA) will be in São Paulo, and the bank may establish dependencies in Brasília and, upon government consent, in other cities.

“The creation of the Regional Office aims to intensify the NDB’s activities in Brazil, through better identification and preparation of projects to be evaluated by the Bank, taking into account the physical distance from the Bank’s international headquarters in Shanghai and the particularities of the Brazilian legislative and regulatory framework,” says the General Secretariat in a statement released on Monday morning.

According to the Brazilian government, in addition to prospecting for projects in the country, the office should make it easier for the NDB to raise funds in the Brazilian financial market to finance projects in local currency to reduce the exchange rate risk of its operations.

“The ERA will also have jurisdiction over other countries in the Americas that may be admitted to the Bank, being the second regional office established by the Bank to carry out its functions,” says the General Secretariat. There is a Regional Office of the NDB in Johannesburg.

NEW DEVELOPMENT BANK (NDB)

The New Development Bank (NDB), is a multilateral development bank established by the BRICS states (Brazil, Russia, India, China and South Africa). According to the Agreement on the NDB, “the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments.” Moreover, the NDB “shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.”

The initial authorized capital of the bank is US$100 billion divided into 1 million shares having a par value of US$100,000 each. The initial subscribed capital of the NDB is US$50 billion divided into paid-in shares (US$10 billion) and callable shares (US$40 billion).

The initial subscribed capital of the bank was equally distributed among the founding members. The Agreement on the NDB specifies that every member will have one vote and no one would have any veto powers.

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