Banco do Brasil SA has announced plans to cut 18,000 jobs, as it seeks to expand its digital business, as a means of being more competitive. The Chief Executive of the state-controlled bank, Paulo Rogêrio Caffarelli, said the move will save 3.05 billion reais ($900 million). 402 branches will be closed, and operations in 379 other branches will be limited. An early retirement offer has been proposed to employees willing to accept it, with a deadline-agreement date of December 9th. The expected annual savings from the move is expected to top 750 million reias, not including employee costs. Banco do Brasil is Brazil’s largest bank by assets, and pays the most in wages, with their bill being three times more than their competition. Caffarelli hopes to reduce the bank’s payroll by 17 percent, which will better position the bank to raise capital moving forward.
Caffarelli’s appointment in May has brought about major changes in the bank, with stricter regulations put in place. He has also boosted the bank’s loan book repricing and the renegotiation of troubling credits. The reward has been a 63 percent surge in Banco’s share 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. The Brazilian government (the largest shareholder) wants the bank to have greater responsiveness to client needs, which right now is a greater offering of digital services. The bank reported mobile and digital transactions of over 1 billion last year, which accounted for most of its business flow. Caffarelli assured investors that the branch closures and downsizes won’t affect the performance of the bank’s insurance arm – BB Seguridade Participações SA – even though it uses the branches to promote its products.