Banco do Brasil
Banco do Brasil
Banco do Brasil, Brazil's first formal bank and Latin America's first modern-style bank, founded in 1808 after the Portuguese prince-regent Dom João VI established his court in Rio de Janeiro. As a mixed institution under state control, the Banco do Brasil served as a commercial bank, the government's fiscal agent, and Brazil's first bank of issue. The bank realized great profits but played an inadequate commercial role because it concentrated on financing government deficits. It greatly expanded its issues of currency, particularly to finance Brazil's war in the Banda Oriental (today Uruguay) between 1825 and 1828. When Dom João left Brazil for Portugal in 1821, he took all of the precious metals that backed the bank's issues. This first Banco do Brasil tottered and finally closed its doors in 1829.
The second Banco do Brasil was founded in Rio in 1851 by the entrepreneur Baron of Mauá as a private commercial bank with a capital of 10,000 contos (about £1.2 million or $5 million). Two years later Parliament merged this bank with another private bank and eventually with three provincial banks to form the third Banco do Brasil. A bank of issue, it also served as the country's largest financial institution and the government's banker. Although its stocks were held privately, it often benefited from government contracts and loans and was an important vehicle for enacting public policy.
The Banco do Brasil lost its dominant position during the explosion of new banks created during the Encilhamento between 1889 and 1891. In 1894 Congress merged the Banco do Brasil with the country's largest bank, the Banco da República dos Estados Unidos do Brasil, to create the Banco da República, capitalized at 200,000 contos (about $40 million). This was again a semipublic bank with a government-appointed president who had veto power. It was the sole government agency for affecting the exchange rate, collecting and depositing tax revenues, servicing the foreign debt, and lending to the federal treasury, while also being the largest commercial bank in the country. Severely weakened by many poor loans granted during the Encilhamento, the Banco da República had to be bailed out by the state in 1900.
In 1905 the institution reformed its charters, reduced its capital to 70,000 contos, and again assumed the name Banco do Brasil. The new bank, now with one-third public ownership, continued its previous public functions but refrained from investment banking. The bank's branches spread throughout the country; by 1930 it had over eighty. Although an attempt in the early 1920s to give the bank many of the powers of a central bank proved short-lived, after 1937 it played an important role in long-term industrial and agricultural loans.
The Banco do Brasil continues as one of the most important semipublic banks in the country, acting as a commercial lender and a government agent. By 1964 it was the twenty-eighth largest bank in the world and the largest in Latin America and the entire third world. But as the state's institutionalized financial presence increased after the 1950s with the creation of a central bank, the Banco Nacional do Desenvolvimento Econômico e Social (BNDES), the Banco Nacional da Habitação (BNH), and public banks in all of the states, the Banco do Brasil's importance as an agent of state policy declined. The growth of private Brazilian and foreign banks has reduced its relative commercial position as well. Even so, it continues to be, as it has been for most of its history, the largest bank in Brazil.
See alsoBanking: Overview; Banking: Since 1990.
BIBLIOGRAPHY
Victor Viana, O Banco do Brasil: Sua formção, seu engran-decimento, sua missão nacional (1926).
Claudio Pacheco, História do Banco do Brasil, 4 vols. (1973).
Steven Topik, "State Enterprise in a Liberal Regime: The Banco do Brasil, 1905–1930," in Journal of Inter-American Studies and World Affairs 22, no. 4 (1980): 401-422.
Additional Bibliography
Medeiros, Cezar. O banco universal contemporâneo: Uma estratégia para financiar os investimentos: O papel do Banco do Brasil, dos demais bancos oficiais e dos fundos de pensão. Rio de Janeiro: INsight Editorial, 1996.
Rodrigues, Lea Carvalho. Metáforas do Brasil: Demissões voluntárias, crise e rupturas no Banco do Brasil. São Paulo: Annablume, 2004.
Triner, Gail D. Banking and Economic Development: Brazil, 1889–1930. New York: Palgrave, 2000.
Steven Topik