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Tuesday, 5 November, 2002, 11:47 GMT
Lula opposes Brazilian bank sale
Brazil's president-elect Luiz Inacio Lula da Silva
Lula opposes the sell-off of more Brazilian assets
Brazil's president-elect has asked the outgoing government to cancel the sale on Tuesday of a stake in the state-owned Banco do Brasil, Latin America's largest bank.

Luiz Inacio Lula da Silva said the decision on the privatisation should be left to his government, which takes office on 1 January.


We could wait for a more opportune moment, when the share price is on the rise

Aloizio Mercadante
Workers' Party Senator-elect
Brazil's privatisation agency, the National Economic and Social Development Bank (BNDES), plans to sell 17.8% of the bank's shares, valued at about 1.32bn reals ($372.8m; 239.5m) at current stock prices.

Mr da Silva and the Workers' Party romped home in Brazil's presidential elections on 27 October with 61% of the vote.

Investors have interpreted Mr da Silva's call as a sign he may roll back some of the neo-liberal policies of the incumbent President Fernando Henrique Cardoso.

Mr Cardoso's government has not responded to the request.

The sale is being seen as a test of investor confidence in the centre-left government of Mr da Silva.

Right timing

A leading member of the Workers' Party has said Mr da Silva is simply questioning the timing of the sale.

"We could wait for a more opportune moment, when the share price is on the rise," said Workers' Party Senator-elect Aloizio Mercadante.

Brazilian stock traders
Traders have been nervous about Lula
The sale was delayed in August, ahead of the elections, due to the weak local market conditions.

"It will be up to the vendor to decide if it is worth carrying out the operation or not," BNDES President Eleazar de Carvalho told reporters.

"It will depend on the price."

The share offer is open until 22 November.

On Monday the bank reported 36% growth in third quarter profit despite weak economic growth in Latin America's biggest economy.

Market fears

Banco do Brasil has traditionally been used by the government to offer below market rate loans to stimulate the economy.

And a sale could limit Mr da Silva's use of it in this way.

Shares in Banco do Brasil, 7.2% of which has already been privatised, have lost about 7% of their value this year, while the overall Brazilian share market is down 27% this year.

In the months before the presidential poll, Brazil's currency, stocks and bonds dropped as investors panicked about the pending election of the former metalworker.

The financial markets have recovered after signals from Mr da Silva that he would stick to International Monetary Fund deals, honour the country's debts and keep inflation low.


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01 Nov 02 | Business
29 Oct 02 | Americas
28 Oct 02 | Business
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