After a judicial battle which lasted months and resulted in successive delays in the privatisation of Banespa (Bank of the State of São Paulo), the auction took place on November 20, 2000, at the Stock Exchange of Rio de Janeiro. The winner was Santander, the largest private bank of Spain, which paid approximately US$ 3.6 billion, a premium of 281% over the minimum price established by the Federal Government. With the acquisition of Banespa, Santander is now the third largest private bank in Brazil. The Spanish bank had already acquired three other Brazilian banks: Banco Geral do Comércio (US$ 130 million), Banco Noroeste (US$ 260 million) and Grupo Meridional (US$ 650 million), which includes the Banco Bozano, Simonsen.
The share of the foreign capital in the total of assets of the Brazilian financial system is now increased to 27.8%. In December 1995, by comparison, this share was of 8.96%. The foreign banks are now owners of approximately US$ 120 billion of the total amount of US$ 415 billion in assets.
The Brazilian financial market has been experiencing great changes since 1994, with the increase in privatisations of state financial institutions and mergers and acquisition of private ones.
Banco do Brasil, a federal government bank, is still the largest Brazilian bank with 17.6% of all the assets, followed by the Caixa Econômica Federal, another federal institution, with 15%.
Banco Itaú, the second largest private bank of Brazil, won the auction for the Banestado (Bank of the State of Paraná), paying approximately US$ 800 million, a premium of 303% over the minimum price, in the auction held on 17 October 2000, at the Stock Exchange of Paraná.
After these privatisations, the ten largest banks in Brazil are: 1) Banco do Brasil; 2) Caixa Econômica Federal; 3) Bradesco; 4) Banco Itaú; 5) Banco Santander; 6) Unibanco; 7) ABN Amro Bank; 8) Banco Safra; 9) HSBC Bank Brasil, and; 10) Nossa Caixa Nosso Banco.
Resolution n. 2.786, issued by the National Monetary Council on October 18, 2000, exempts foreign investors of CPMF payments when they invest in the stock exchanges.
CPMF is a federal contribution created by Law n. 9.311 of October 24, 1996 and is incurred in all financial transactions. The current rate is of 0.3% over the amount of the transaction.
With the new rule, foreign investors will be able to pay for the shares in dollars, directly to the Brazilian Company of Liquidation and Custody (CBLC) and the CBLC will be responsible for the payment in Reais (R$) to the share´s seller. This will avoid the transfer of money through current accounts, and consequently, the payment of CPMF.