(Adds details, background throughout)
By Guillermo Parra-Bernal
SAO PAULO Nov 21 Banco do Brasil SA
plans to save up to 3.05 billion reais ($900 million) by
shedding up to 18,000 jobs, aiming to become a stronger digital
player, boost returns and catch up with rivals, Chief Executive
Office Paulo Rogêrio Caffarelli said on Monday.
The state-controlled lender plans to close 402 branches,
downsize another 379 and give early retirement to employees who
accept terms proposed during an offer period ending Dec. 9.
Expected annual savings, excluding personnel costs, could be as
much as 750 million reais.
Caffarelli's steps to cut the size of Brazil's largest bank
by assets aim to tackle a structure currently paying three times
more in wages than rivals. The early retirement plan, which
could help cut Banco do Brasil's payroll by 17 percent, could
bolster profitability and ability to generate capital in coming
years, Caffarelli said.
The reorganization, Banco do Brasil's most ambitious in two
decades, reinforces Caffarelli's commitment to make the best use
of capital as new, tougher rules are implemented. Since his
appointment in May, Caffarelli has accelerated Banco do Brasil's
loan book repricing and the renegotiation of troubling credits -
triggering a 63 percent surge in the bank's stock price.
"We are just adapting the bank to a new era, where digital
services and a more challenging competition framework force us
to become a more agile player," Caffarelli said at an event in
Caffarelli wants a 9.5 percent regulatory capital ratio by
next year, compared with about 9.1 percent now.
Brazil's government, the lender's top shareholder, says the
bank needs to restructure to cater to clients' increasing
dependence on digital channels. Caffarelli said digital and
mobile banking transactions surpassed 1 billion last year,
representing most of Banco do Brasil's business flow.
Executives at the same event said the impact of the early
retirement plan could be bigger than initially expected, since
the targeted employees are entitled to higher salaries. Based on
Thomson Reuters consensus estimates, the impact of branch and
payroll reductions could bolster profit by about 10 percent in
Caffarelli stressed that the folding of the equivalent of
7.4 percent of Banco do Brasil's branches and the transformation
of 7 percent of them into points of service will not weaken the
business model of insurance unit BB Seguridade Participações SA
, which relies heavily on branches to distribute
($1 = 3.3769 reais)
(Additional reporting by Paula Arend Laier in São Paulo;
Editing by Robin Pomeroy and Ruth Pitchford)