Brazil's oldest bank wins $1.7bn Correios postal contract
Brazil’s Post and Telegraph Company, Correios, has selected Banco do Brasil for a five-and-a-half-year contract to run its postal banking services from January. The country’s oldest bank – and third largest – will take over the Postal Bank from current operator Bradesco, which has been providing financial services through Correios for nearly 10 years.
Banco do Brasil won the deal in 12 rounds of bidding against Bradesco and other major banks Caixa Economica Federal and Banco Itaú.
The successful bidder will pay Correios R $2.3bn ($1.45bn USD) for the privilege of accessing the Post’s 6,195 branches, through which 10m bank accounts have been opened since 2002. Bradesco originally paid R $200m for the contract back in 2001 (then worth about $80m USD).
Banco do Brasil will pay an additional R $500m (USD $315m) to provide postal banking services for government agencies.
The deal includes the option of a five year extension, said Correios, which is also expecting yearly income from Postal Bank deals of around R$350m ($220m USD) a year.
Confirming the contract, Brazil’s minister for communications, Paulo Bernado Silva, said the bidding had seen a “close race”, demonstrating the value of a partnership with Brazil’s Post Office.
This partnership opens up a huge space for the internalization of banking services,” he said, referring to the Postal Bank’s part in the Brazilian government’s ambition to promote social inclusion in the country, including through banking. About 40% of Brazilians currently have no bank account.
Correios has branches covering some 95% of Brazil’s municipalities and provide an important financial service for the nation’s low-income workers, with around 93% of account holders holding at least three minimum-wage jobs.
Banco Brasil chief financial officer Ivan de Souza Monteiro confirmed in a statement that his company had won the contract with a $2.8bn offer (USD $1.76bn), stating that the deal was an investment that meant expanding access to the bank’s services.
“Through this investment, Banco do Brasil anticipates the implementation of a strategic plan that aims to extend its service points for all Brazilian municipalities,” he said.