Banco do Brasil Annual Report 1998 - Página Inicial - Você · Annual Report Banco do Brasil, 1854...
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Banco do Brasil Annual Report 1998 Banco do Brasil Annual Report 1998
Transcript of Banco do Brasil Annual Report 1998 - Página Inicial - Você · Annual Report Banco do Brasil, 1854...
Banco do Brasil Annual Report 1998Banco do Brasil Annual Report 1998
Annual ReportBanco do Brasil, 1854Brasília, Marketing and CommunicationISSN 0101-064611. Banco do Brasil – PeriodicalCDU – 3336.711 (81) (05)Detail of Technology Center in Brasilia, DF, inaugurated in 1998.
Annual Report 1998
Index
Theme Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Message from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Time Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
The Banco do Brasil in Large Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
The Economic Environment and the Banking Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Credit Management: Actions for New Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Credit Recovery: Systematization and Creativity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Inside Banco do Brasil: the Mission to Build a Better Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Business Expansion: Completely Attuned to the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Government Programs: Competence in Managing Government Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Business Reputation: Winning Together . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Investor Relations: Sharing Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Banco do Brasil: 190 Years of History, 190 Years to Come . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Banco do Brasil Conglomerate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Theme Presentation
Speed is the main characteristic of the cycle of
technological expansion that is preceding the turn of the century.
New electronic discoveries are taking place at a frantic pace and,
as a result, cause chaos at the same time as they bring a promise
to organize the world through a new rationale. Institutions, science,
the full spectrum of social thought and man’s expectations for the
future are trampled by changes that intercalate and compress
themselves into increasingly smaller intervals of time.
Caught in the midst of this maelstrom, over the past few
years Banco do Brasil has been doing practically little else than
renewing itself. Today it is in the process of totally modernizing its
branches, which are being furnished with technologically advanced
equipment connected together in real time.
But the pure and simple application of leading edge
technology will not guarantee the future of a company if it is not
accompanied by gains and benefits for society. The theme of Banco
do Brasil’s 1998 Annual Report – 190 Years of History, 190 Years to
Come – extrapolates the questions of technique in order to inquire
about social and subjective conflicts that are becoming real through
technological expansion.
In a series of previously unpublished articles written by
Gerd Bornhein, Maria Rita Kehl, Renato Ortiz and Stephen Kanitz,
readers have before them a set of reflections that question many of
the beliefs and promises that have been mobilized by the technological
spiral. They deal with the need to understand the shape of this
contemporary utopia – its interactivity, the universal access to
information – that is anchored, also, in a new cycle of economic
expansion of capitalism.
For Stephen Kanitz, the question is to try to know what
should be the paradigm of modernity for a country like Brazil.
Frontiers and limits still exist, according to Renato Ortiz. They are
being redefined and not simply pulverized by globalization and
technological advances.
The ground beneath us is shifting at every moment and
it is no longer possible to fit the future neatly into prefabricated molds.
However, the reality that is before us is not necessarily a negative one.
It also brings with it liberating possibilities, based upon the expansion
of new channels of expression and the mobility that is the characteristic
of the new era. Gerd Bornheim speaks to us of education by machine,
approaching the subject through the anthropomorphic connection
between mankind and its technological creations. Maria Rita Khel,
in dealing with the contemporary whirlwind, notes the illusion of our
longing for the past, reminding us how the stability that was so desired
by the Victorians also required so much in terms of repression.
Banco do Brasil’s 1998 Annual Report puts these questions
up for debate, duly illustrated through unique iconography of the
Bank’s branches in a record of yesterday and today, the pre- and
post-technology eras. Through this edition, and for the third year in
a row, we are pleased to reinforce our proposal to give an account
of ourselves by debating great ideas. Have a good read!
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G. Endelman lithograph: Rua Direita, now Rua Primeiro de Março, Rio de Janeiro, circa 1820.In the middle, by guard post, the “ Casa dos Contos” that was the site of Banco do Brasilat the time. In the background, the São Bento Monastery.
Profile
More than symbolic references stimulated by a brand name
with the force of 190 years behind it, there are indicators that make
it possible to understand the fundamental presence of Banco do Brasil
on the Brazilian scene: it is a company that through the qualifications
and the energy of its 72,000 employees holds R$ 130 billion in assets
and R$ 60 billion in deposits, has 10 million customers and 5,000
points of service, directly operates in 2,700 Brazilian municipalities,
reaches the overseas market through 34 operating units and is the
leader of the mutual fund and portfolio market with assets under
management of over R$ 25 billion.
Any picture to be painted of Banco do Brasil must include
its contribution to the productive sectors of the economy. Its boldness
particularly can be seen through the Banco do Brasil’s generation
of business throughout the agricultural chain, in the strengthening
of small and medium-sized businesses and the expansion of foreign
trade activities. The available data demonstrates the Bank’s action
in these fields: the Banco do Brasil is responsible for financing 80%
of the farm harvest, invests R$ 1.5 billion in over 87,000 individual
working capital operations for micro and small companies and holds
27% of the Brazilian foreign exchange market.
In its role as the Federal Government’s principal financial
instrument, Banco do Brasil carries out projects that generate
employment and income and that provide incentives for multiplying
regional development sites and that efficiently carry out government
social programs (education, health, welfare, etc.). Nevertheless, the
Bank’s activities are legitimized through consolidation of a business
culture that translates into a striving for results. A strong and healthy
bank, indispensable to its customers, profitable for its shareholders
and attractive to investors is a guarantee of a competitive standard that
permits carrying out a line of action consistent with the development
requirements of the nation.
It is in this sense that Banco do Brasil’s marketing efforts
have been put to the test since 1995 – and with notable success. In
recent years the Bank has attained relevant positions in a number of
areas of the banking and financial services markets. Of particular note
has been the performance in the fields of pension funds, insurance,
capitalization investment plans and credit cards, among others.
In a segment marked by accelerated change, pressed
by the need to be increasingly more competitive, Banco do Brasil
has undergone radical reform from within. The maturing of these
reorganization projects, which have had a profound impact on
a company of the size and complexity of the Banco do Brasil, has
meant being able to count upon results that are capable of going
beyond the role of being a public bank.
By diversifying the possibilities of its financial relationship
with companies and individuals, upon changing the paradigms that
affect productivity, through modernization of technological standards,
by moving forward to a higher level of automation for customers and
users, by reducing its infrastructure in exchange for greater speed
and an optimization of resources, Banco do Brasil hopes to continue
its string of day-to-day successes within the country, based upon
the premise of being useful to all society.
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P. Beatichen lithograph, 1856: Rua Direita, Rio de Janeiro. The building on the secondPraça do Comércio (with eight Doric columns supporting the veranda) was where thepreliminary meetings for setting up Banco do Brasil were held.
Message from The Board
Already caught up in the orbit of the movements symbolic
of the 500th anniversary of the discovery of Brazil and the transition
into the next century, as in other notable periods of Brazilian history
the year of 1998 reawakened the challenge to rethink the Nation.
Inserted into this perspective, 1998 left the absence of
structural reforms and the impact of external shocks deriving from
crises that weakened important players in the world economy as its
problematical legacy, with traces to be found all around the planet.
Despite this adverse scenario, in which endorsement of the
stabilization policies – understood as a precondition for the recovery
and stimulation of sustainable growth – has been the most valuable
lesson to be learned, the Nation nonetheless possesses the means
to quickly overcome the domestic structural obstructions and defend
itself from the crises brought on by the international situation.
Buffeted by the unstable and unpredictable winds of capital
movements, the financial sector today has been a mechanism that
is either a barrier to or, if poorly structured, an opening for the
propagation of crises. Cleaned up credits, a solid system and the
capacity to confront tougher global competition are indispensable
initiatives to ensure that the effects of the crises do not contaminate
the economy’s dynamics.
From this point of view, by changing its course over the
last few years the Bank has rebuilt the parameters of credit quality,
diversified the supply of its products and services, rationalized costs
and invested intensively in technology. Today it is capable of facing
the challenges of the turn of the century. Considering the Bank’s
position as a co-player in the regulation of the markets, its particular
history – that of being the principal financial agent of the Union –
has left no room for any other attitude.
It is particularly evident that, in terms of Banco do Brasil’s
performance, the results of the 1998 fiscal year – profitability of 13.1%
of net assets – demonstrates that the strategies adopted up until now
have been successful. It shows that the trend of the Banco do Brasil’s
indices are on the rise, moving closer to market levels.
Other significant accomplishments also highlighted the
year during which Banco do Brasil celebrated its 190th birthday:
reduction of personnel expenses, an increase in services revenues,
a new credit management model and adoption of innovative
mechanisms for credit recovery.
Along with training of its human resources, the Bank’s
investment of R$ 798 million in the technology area allowed for an
extraordinary leap forward in its data processing capacity and its
ability to offer automated transactions for customers, accompanied
by speed, safety and convenience.
The expansion of its business could be seen in the growth
of its retail customer base. Some 2.3 million new individual clients
were won over, an increase of 32% in relation to 1997.
In the company segment, Banco do Brasil consolidated
new business partnerships. Expressive numbers were attained in
a wide range of business operations with companies: credit operations
based on receivables (check discounting, advances to shopkeepers),
specialized portfolio management for large and medium-sized
customers, financing through the BB Vendor credit line and
leasing operations.
9
The upward curve of the Sistema Brasilseguridade,
today ranked among the top positions in the insurance and pension
markets, proves definitively that the strategic alliances arranged by
Banco do Brasil with private companies to enter new market
niches have been successful.
The Bank’s leadership was also confirmed in the capital
markets, in foreign trade operations and in the agribusiness segment.
Through new initiatives – such as the Programa de Geração de
Negócios Internacionais – PGNI (Program To Generate International
Business), developed to bring small and medium-sized companies
into the effort to export more or by continuing successful projects
such as BB Rural Rápido, sales through Electronic Auctions, agricultural
price protection through BB CPR and futures and options markets –
the Banco do Brasil’s performance was noteworthy for its high
rates of growth.
Without boasting, these conquests are significant to the
Company’s efforts toward recovery, becoming stronger and achieving
efficiency gains. And they make it certain that Banco do Brasil
today is a company capable of readily carrying out the mission its
shareholders and customers have attributed to it: to be Brazil’s
best bank, to assure customer satisfaction, to satisfy shareholder
expectations and to contribute to the development of the Nation.
The Board
11
Preceding page: detail of the façade of the São Paulo branch building (inaugurated in1927) with the Bank’s seal. Insert: details of the skylight and the rosaceous floor.
Opposite page: newspaper page with the news of the inauguration of the new Banco doBrasil branch in São Paulo.
Per 1,000 shares – in R$ 1998 1997 1996 1995* 1994*
Net Profit / (Loss) 1.22 0.80 (10.57) (41.16) 1.05Dividends/Interest on Legal Capital – Common 0.32702 0.22015 – – –Dividends/Interest on Legal Capital – Preferred 0.35972 0.24216 – – –Book Value 9.31 8.43 7.85 33.55 55.67
* Number of shares: 103,334,152,842
1998 1997 1996 1995 1994Shareholder’s Equity 6,630 6,003 5,592 3,466 5,753Total Assets 129,564 108,916 82,633 79,855 72,610Credit Operations (w/o the effects of provision for doubtful loans) 40,268 36,944 31,598 38,200 36,164Provision for Doubtful Loans 12,119 10,937 5,862 4,330 1,355Deposits 61,039 55,305 45,196 54,313 34,331
Demand 11,005 9,333 4,193 5,802 4,924Time 30,129 27,604 25,967 28,211 16,325Savings 18,682 16,613 12,460 12,231 8,068InterBank Deposits 1,223 1,754 2,577 8,069 5,014
Gross income from Financial Brokerage 3,542 2,231 (2,555) (231) 2,043Services Fees 2,785 2,538 2,523 1,762 744Personnel Expenses 5,653 6,268 6,572 6,318 5,217Other Administrative Expenses 2,502 2,115 2,006 1,548 946Tax Expenses 271 191 127 115 117Income from Associated and Subsidiary Companies 601 644 (976) (1,075) (99)Other Operating Income 3,316 4,300 3,358 3,194 2,741Net profit 870 573 (7,526) (4,253) 108
Return on Equity 13.1% 9.6% – – 1.9%
The Banco do Brasil in Large Numbers
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Consolidated Operating Balance Sheet for related companies (Branches and Subsidiaries in Brazil and Overseas) – Corporate Legislation –
in R$ millions.
Number of Shares 711,972,313,081
Common 399,184,582,309
Preferred 312,787,730,772
Time Line
13
The German dirigible Hindenburg flies over the Banco do Brasil branch inCuritiba – PR in 1936, as seen in this Arthur Wischral photograph.
Accounting Department, as of 1926. Former site of Banco do Brasil on Rua Primeiro de Março, in Rio de Janeiro. Acquired in 1922 from the Commercial Association of Rio deJaneiro and inaugurated in 1926. The Banco do Brasil Cultural Center currently operates from this site.
1934
190619041829
19891987
1808 1816
18541821 1851
1864 1888 1892 1937
1944
1953
1960 1964
1969 1974 19761853 1857
1866 1905
1941 1945 1967 1971
1973 1980 1985 1995 19971978
1986 1990
1991
1994 1996 19981981
1808 The Portuguese Royal Family settles down in Brazil. A royallicense establishes Banco do Brasil on October 12.
1816 Banco do Brasil is authorized by Act to open branches.
1821 D. João VI and the Court return to Portugal, taking with them theBanco do Brasil funds.
1829 Banco do Brasil is liquidated by an Act.
1851 The Viscount of Mauá founds a private bank called Banco do Brasil.
1853 The Viscount of Itaboraí establishes a new Banco do Brasil, underGovernment control, with the merger of Banco do Brasil, of theViscount of Mauá, and Banco Comercial do Rio de Janeiro.
1854 The Directorate of Banco do Brasil determines the opening ofcontests for the positions of bank clerks.
1857 Banco do Brasil loses the monopoly of currency emission.
1864 Bankruptcy of Banco Souto & Cia. Panic widens the crisis. Banco do Brasil authorized to aid troubled institutions.
1866 Insatiable demand for resources to support the war against Paraguay.Banco do Brasil’s permission to issue currency is revoked by law.
1888 Abolition of slavery in Brazil. Banco do Brasil opens first creditlines for agriculture.
1892 Banco do Brasil merges with Banco da República dos Estados Unidos do Brasil and takes the new name of Banco da República do Brasil.
1904 A group of 51 employees establishes the Caixa Montepio dosFunccionários do Banco da República do Brazil (a mutual insur-ance for employees of the bank).
1905 Banco da República do Brasil is liquidated and transformed, througha change in its shareholder composition into Banco do Brasil S.A.Beginning of the third and present legal phase of the Company.
1906 Beginning of trade of common shares (ON) of Banco do Brasil onthe Rio de Janeiro Stock Exchange.
1934 The Government creates the Official Social Security. The Caixa deMontepio is changed into Caixa de Previdência dos Funcionáriosdo Banco do Brasil, Previ (social security fund).
1937 Establishment of the Carteira de Crédito Agrícola e Industrial doBanco do Brasil (credit line for agriculture and industry).
1941 Opening of the first Banco do Brasil branch office abroad, in Asuncion, Paraguay.Establishment of the Export & Import credit lines of Banco do Brasil.
1944 Brazil enters World War II. A representation of Banco do Brasilaccompanies the troops: making payments and attending theBrazilian Embassy and Consulates in Italy.Establishment of the Caixa de Assistência dos Funcionários do Bancodo Brasil – Cassi (an internal assistance fund for employees).
1945 Creation of Sumoc - Superintendência da Moeda e do Crédito(Superintendency for Currency and Credit) and its integration in theadministrative structure of Banco do Brasil.After the end of WWII in 1945, Banco do Brasil takes active part inthe industrial development.
1953 Establishment of Cacex - Carteira de Comércio Exterior (Foreign Trade Credit Line).
1960 Foundation of Brasília, the new capital, on April 21. Banco do Brasiltransfers its headquarters to Brasília on the date of the inaugurationof the new capital.
1964 Sumoc is transformed into Banco Central do Brasil.
1967 New Previ bylaws. The Caixa de Previdência becomes responsiblefor the complementation of pensions for those admitted after April 14.
1969 Banco do Brasil installs its New York branch.First Banco do Brasil contest open also to women.Launching of the Cheque Ouro, the first overdraft checking accountfacility on the market.
1971 Opening of the first European branch, in London.
1973 Banco do Brasil’s preferred shares are exchanged on the stock market.Opening of the first branch office in Central America, in Panama.
1974 Opening of the BAMB – Brasilian American Merchant Bank sub-sidiary, on the Cayman Islands.
1976 Banco do Brasil opens its 1000th branch, in Barra do Bugres, MT.
1978 Opening of the first Asian branch, in Singapore.
1980 Opening of a BB subsidiary in Vienna, Austria.
1981 Opening of a BB Leasing Company subsidiary, on the Cayman Islands.
1985 Establishment of the Banco do Brasil Foundation.
1986 Plano Cruzado: Brazil with a new currency (Cz$).End of the conta movimento, automatic supply of resourcesfrom the National Treasury to Banco do Brasil. Banco do Brasil is authorized to act in all market segmentsthat are allowed to all other financial institutions.The Bank establishes the BB Distribuidora de Títulos e ValoresMobiliários S.A. for trading of securities.
1987 Inauguration of the subsidiaries: BB Financeira S.A.; BBLeasing S.A.; BB Corretora de Seguros e Administradora deBens S.A. and BB Administradora de Cartões de Crédito S.A.Launching of the Caderneta de Poupança Rural (Poupança-Ouro/Savings Accounts) and of Ourocard, first multiple purpose cardon the market. Establishment of BB Banco de Investimento S.A.
1989 New currency: Cruzado Novo (NCz$). Opening of Banco do Brasil Cultural Center.
1990 Deactivation of Cacex - Carteira de Comércio Exterior, of Banco do Brasil.
1991 Beginning of sponsorship of Brazilian Volleyball by Banco do Brasil.
1994 Opening of a BB Securities subsidiary in London.Establishment of Brasilprev.Plano Real: Brazil with a new currency (R$). Banco do Brasilresponsible for the replacement of the old currency throughoutthe whole country.
1995 Beginning of Banco do Brasil’s restructuring: 13,388 employeesleave by accepting the Program for Voluntary Leave – PDV.Establishment of Brasilcap and Brasilsaúde (Capitalization andHealth Plans).
1996 Bank Cleanup: R$ 7.8 billion filed as losses in the first half year.Call for underwriting of capital in the amount of R$ 8 billion.Issue of subscription bonuses.Profit of R$ 255 million in the second half year.
1997 Banco do Brasil reduces its Share Capital to R$ 5.6 billion,without changing the shareholder basis.Agreement with Previ: reduced the liabilities referring to the com-plementation of pensions for the employees admitted until 1967.The Bank publishes its first Social Balance Sheet.Bylaws change: preferred shares (PN) with dividends 10%above those of common shares (ON).Establishment of the Companhia de Seguros Aliança do Brasil(insurance) and Brasil Veículos Companhia de Seguros (auto-mobile insurance). R$ 573.8 million profit in the year 1997.
1998 Banco do Brasil is the first bank to be granted an ISO 9002certification in credit analysis.BB receives top national rating (“AAA”) from Atlantic Rating, beingclassified as the institution offering the highest overall quality. Banco do Brasil opens its Technological Center, ranking amongthe most modern and well equipped worldwide.BB closes the year with a profit of R$ 869.9 million.
Values in R$ millions – position on 12/31/1998
Subsidiaries Assets Shareholders Equity Net Profit Net Profit/Shareholders Equity %BB Banco de Investimento S.A. 1,384.8 302.4 8.1 2.7BB Dist. de Tít. e Val. Mob. S.A. 1,720.9 60.1 9.2 15.3BB Financeira S.A. 1,422.8 101.3 67.7 66.9BB Leasing S.A. 710.9 121.1 47.4 39.1BB Administradora de Cartões S.A. 837.9 73.8 58.9 79.8BB Corretora de Seguros S.A. 146.8 33.5 2.9 77.7
Subsidiaries overseas Assets Shareholders Equity Net Profit Net Profit/Shareholders Equity %BB Europe 32.6 13.9 (8.2) (59.1)BB Leasing Co. 430.8 138.1 13.2 9.5BAMB 7,047.8 1,383.4 180.5 13.1BB A.G. – Vienna 203.4 20.0 1.4 6.9
15
The Economic Environment and the Banking Industry
The international financial crisis which began in Asia in
October 1997 is the main reason for the economic instability which
persisted throughout 1998, causing greater selectivity in the capital
markets and in world financial flows particularly in regard to the
emerging countries.
In Brazil, the impact was felt particularly in the reduction
in the inflow of foreign capital investment. As a consequence, between
June and October of 1998 the level of international reserves of foreign
exchange fell by about US$ 30 billion to levels which, while still
considered satisfactory, suggested the immediate adoption of measures
to keep the crisis of confidence in emerging markets from damaging
the ongoing economic stabilization of Brazil.
The first action taken was to increase interest rates to
a maximum level of 41.58% per year. At the same time, a series of
measures were adopted to correct the course of the economy, among
which the most important were fiscal adjustments and administrative
and welfare reforms.
In early 1999, still under the pressure of losses of foreign
exchange reserves, the Central Bank abandoned its policy of exchange
rate bands in operation since 1995 in favor of a floating exchange
rate system, and authorized intervention by the Monetary Authority
only to smooth out the abrupt movements and the sharp variations
in exchange rates.
This set of measures will serv to return the Country in
the direction of development. However the impact of the adjustments
will be felt principally during 1999 in the form of a reduction in
the GDP. The forecasts point to a gradual return to normality –
both internally and externally – and a return of capital flow to Brazil.
The recovery should begin to take place in the year
2000, with the economy registering growth, and interest rates well
below those in effect in 1998 and in part of 1999.
These set of adjustments, and the later recovery from the
crises, present business opportunities for the companies which best
adapt to the new competitive environment. This is particularly true
for financial institutions because it opens the possibility to strengthen
of their competitive positions and expansion of activities in segments
considered strategic in the market.
17
1997 1998
GDP – % 3.47 0.15p
Inflation – annual rate % IGP-DI 7.48 1.71
Interest rates (annual) Selic – % 24.80 28.80
Trade Balance – US$ billion - 8.37 - 6.43
Exchange Rate – Nominal % variation 7.40 8.30p = preliminary
Detail of the interior decoration project for the branch in Vitória – ES, circa 1910.
We expect that foreign banks maintain their interest in
increasing their participation in the Brazilian market notwithstanding,
the contraction in the economic growth. With this, we expect
the continuity of investments in technology and of concentration
of the banking sector of the Country. This will mean that products
and services with growing value-added and low operating costs will
become more and more important to the viability of all organizations.
In this environment, continued large investments in technology are
required to confront the increased competition in a global economy.
19
Perspective and plans (opposite page) of the branch in Campos dos Goytacazes – RJ,inaugurated in 1910.
Banco do Brasil branches in Taguatinga de Goiás – GO, Belo Horizonte – MG and Santo Antônio, Recife – PE.
Financial Performance
As a consequence of the net profit of R$ 869.9 million
earned on the fiscal year 1998, Banco do Brasil´s shareholders
will receive the amount of R$ 243.1 million as payment of interest
on legal capital (to whom R$ 116 million relative to the first half
of the year had already been paid) according to the value of the
minimum obligatory dividend, net of income tax withheld.
According to the by-laws, the remuneration of the preferred shares
is 10% greater than that of the common shares.
In addition, 5% was set aside for Legal Reserves (R$ 43.5
million) and 3% for Statutory Reserves (R$ 26.1 million). The remainder
was destined for the Expansion Reserves (R$ 557.2 million) with
a view to meeting the needs of the policy of modernization and
investment in the Company and to maintain shareholder’s equity
at the minimum levels required by the Basle Agreement.
The Basle Index reached 11.1% on 12/31/1998. The mix
of assets was readjusted to give preference to that of greater return
to the Conglomerate and to those operations where the risk factor
is reduced.
The net profit earned by the Bank during the year is due
mainly to the performance of the Income from Financial Brokerage –
R$ 3.5 million – which increased 58.8% over 1997. This was due,
in large part, to the Results of Securities Portfolio - R$ 6.2 billion,
an increase of 88.1% and the Return on Compulsory Investments,
which grew by R$ 1.8 billion, 82.2%, to a total of R$ 4 billion.
Personnel and Other Administrative Expenses totaling
R$ 8.2 billion fell by 2.7% compared to 1997.
Personnel Expenses are declining relative to Administrative
Expenses, reaching 69.3% in 1998.
In 1998, Service Fees covered 34.2% of total administrative
expenses. This ratio has increased significantly over the recent period
as a result of the policy implemented by the Bank since 1995, designed
to increase this income. The strategy adopted placed increased
21
2,043
-231
-2,555
2,231
3,542
1994 1995 1996 1997 1998
Gross Result from Financial BrokerageConsolidated according to Brazilian Corporation Law
In R
$ m
illio
ns
emphasis on retail banking, giving more attention to the customer
base and reducing Personnel Expenses by 9.8% from R$ 6.3 billion
in 1997 to R$ 5.7 billion in 1998.
The Total Assets of the Conglomerate were R$ 129.6 billion
on 12/31/1998, 19% greater than in the previous year. This was due
in large part to the performance of the Securities Portfolio (R$ 12.2
billion growth, a 42.8% increase) and Interbank Accounts (R$ 5.1
billion growth, a 35.9% increase).
Credit Operations totaled R$ 40.3 billion, an increase of
R$ 3.3 billion or 9% over 1997.
According to National Monetary Council (Conselho
Monetário Nacional – CMN) Resolution 2,568, dated 11/6/1998,
and CMN Resolution 2,589 dated 1/28/1999) rural credit operations
of R$ 2.7 billion (not included in the securitization process) are
considered performing loans. Nevertheless, in face of the uncertainties
in recovering these credits, the bank decided to transfer them to
overdue operations during the second semester of 1998, maintaining
its conservative position in the accounting treatment of its credits.
Therefore, the percentage relationship between the
Provision for Doubtful Loans and the total of Delinquent Loans
(overdue and doubtful loans), which includes Credit Operations,
Leasing Operations and Other Receivables, fell to 90% in 1998,
compared to 140.8% in 1997.
Service Fees/Administrative Expenses
84.680.3
76.6 74.869.3
12.1
22.429.4 30.3
34.2
1994 1995 1996 1997 1998
Personnel Expenses/Administrative Expenses
In p
erce
ntag
e
EfficiencyConsolidated according to Brazilian Corporation Law
28.6
75.9
111.9
140.8
90.0
Dec./94 Dec./95 Dec./96 Dec./97 Dec./98
Provision/(Overdue and Doubtful Loans)Consolidated according to Brazilian Corporation Law
In p
erce
ntag
e
23
The building where a branch was located in Vitória da Conquista – BA, in 1942.
In that connection, the Bank recalls that the Provisions
registered on the Financial Statements for 6/30/1997 (see Explanatory
Note 3C) sought to set aside sufficient reserves to cover the
uncertainties related to the collection of these debts, which are still
being negotiated pursuant to the Program described in CMN
Resolution 2,471 of 2/26/1998.
The level of total deposits increased by R$ 5.7 billion
to R$ 61 billion, 10.4% greater than the year before, of which Time
and Savings Deposits were the largest items, with additional deposits
of R$ 4.6 billion.
Shareholder’s Equity rose to R$ 6.6 billion after taking
into account the distribution of Net Profits for fiscal year 1998.
Stock´s book value reached R$ 9.31 per lot of 1,000 shares. There are
711,972,313,081 shares outstanding.
Credit Management: Actions for New Times
The Bank developed a new methodology and initiated
the development of a corporate system for the pricing of credit risk.
The objective is to improve the structure of lending rates, offering
clients differentiated loan pricing.
The operations analyzed by the Credit Analysis
Center of São Paulo recorded delinquency rates of less than 1%,
a rate well below the market average of 4%. Together with the
maintenance of ISO 9002 Certification for 1998, this confirms
that the methodology adopted for the quantification of risk and
the analysis of credit are adequate.
25
53.5
1.6
9.8
79.6
20.4
71.1
19.1
44.9
General Lending Rural Lending Foreign Exchange
DoubtfulLoans
OverdueNormal
The Status of the Credit PortfolioCommercial Bank - According to Brazilian Corporation Law
In p
erce
ntag
e
0
Project for the Banco do Brasil building in Rio de Janeiro, according to the plan by the architect Schreiner, modeled on the Vereisbank building in Munich. Work was begunin 1892. The Bank never occupied the building, which was turned over to the federalgovernment in 1897 for use by the Federal Supreme Court.
Credit Recovery: Systematization and Creativity
The process of outsourcing the collection of debts up to
a limit of R$ 50 thousand has been extended to the entire Banco
do Brasil branch network. This has made possible the rehabilitation
of 79,455 operations with a volume of R$ 95.1 million. In addition
to these debts, there are another 570 thousand operations with a total
value of R$ 1.5 billion that are in the hands of the collection branches.
In July 1998 the Bank implemented an automatic system
for the collection of overdue debts from individuals, which has made
the process more agile and effective and has resulted in a decline in
these debts. The value of late payments (of up to 15 days) for Special
Checking Accounts (with overdraft facilities), Direct Consumer Credit
and Credit Cards fell by 45% on average, after the installation of the
Automatic Collection System.
The operations that are not included in the process of
securitization of rural debt were the object of the Programa Especial
de Saneamento de Ativos – PESA (a special program for the recovery
of assets), authorized by CMN Resolution 2,471 of 2/26/1998.
Under this program, the borrower acquires CTNs (National Treasury
Certificates) and offers them to the Bank as a guarantee of loan
principal repayment. Of the R$ 8.5 billion stock of debts that are
considered under this Program, R$ 745.3 million was renegotiated
in 1998. Of this amount, R$ 128.5 million was already registered
as doubtful credits or write-offs. R$ 1.6 billion is being
renegotiated.
Another innovative measure was the Credit Auctions
carried out by the Bank in the Distrito Federal, Espírito Santo and
São Paulo. This mechanism authorizes the purchase of bank debts
taken to auction by individuals or corporations.
0.4
0.1
0.4
0.1
0.5
Dec./94 Dec./95 Dec./96 Dec./97 Dec./98
Loss Recovery/Credit Assets Consolidated according to Brazilian Corporation Law
In p
erce
ntag
e
27
On the opposite page, two moments in the history of the Banco do Brasil branch in downtown Belém – PA. Circa 1910 and 1960, respectively.
Inside Banco do Brasil: the Mission to Build a Better Future
Human Resources – At year’s end, the Bank had 72,350
employees and 10,914 temporary workers who have been trained
to work in an increasingly competitive banking system. During
1998, 2,951 new employees were contracted and 6,988 persons
left the workforce.
Since June 1998 the Excelência Profissional (Professional
Excelence) training program is being offered to help all new employees
in assimilating the Bank’s values and learning the basics of how
to meet, serve, and negotiate with customers, as well as to sell
the Bank’s products and services.
Of a total of R$ 37 million invested in training in 1998,
some R$ 10 million was used to finance 3,841 undergraduate courses,
630 graduate courses, 40 Masters and Doctors programs and 38
international training courses. In-house training programs received
R$ 11.7 million in support, while R$ 7.2 million went for training
outside the Bank, R$ 6.9 million for training for high level executives
(MBA) and R$ 1.2 million for international seminars and language
education and training.
The Bank implemented a provisional and spontaneous
Program for Profit Sharing with the objective of leveraging the business
and profits of the Company by creating a stronger partnership between
its employees and the Bank.
The Bank adopted new personnel regulations for new
employees who are hired. The new rules establish that these employees
will take part in a defined contribution plan.
Technology – In 1998 the Bank invested R$ 798 million in
technology, automatic banking and physical installations. The updating
of technology in the branches has allowed 65.8% of client transactions,
including bank statements, to be performed by clients themselves.
TotalEmployeesTemp. Workers
143.1
115.5
99.188.8 83.3
119.4
94.785.3
76.4 72.3
23.7 20.813.8 12.4 11.0
1994 1995 1996 1997 1998
In th
ousa
nds
Human Resources
29
BB Personal Banking has a base of 447,219 registered
clients, of which 100,000 perform an average of 2 million transactions
per month through the internet. The 81 thousand clients registered for
home office banking perform an average of 10.6 million connections
per month.
The data communications network of the Bank,
composed of 8,225 lines, makes Banco do Brasil the largest user
of data communications circuits in Latin America.
In 1998 the Bank increased its data processing capacity
to 6,375 MIPS and its storage capacity to 10.4 TB, which means an
increase respectively, of 190.6% and 40% over the previous year.
Banco do Brasil inaugurated a Central Technology
Complex in 1998, one of the most modern and best equipped
of its kind in the world, which will be able to store the entire
database of the Company in complete security. The Complex has
the ability to take the place of any one of three Data Processing
Centers (located in Rio de Janeiro, São Paulo and Brasília) in case
of emergency.
Banco do Brasil was able to complete all the changes
necessary to adapt its electronic information and automatic banking
systems so that they are able to process data after the year 1999
(the so-called “Year 2000 Bug”) prior the deadline of 12/31/1998
set by the Regulating Agencies. Independent auditors ran random
systems checks in January 1999 to verify compliance.
Distribution Channels – During 1998, the Bank
installed 5,534 self-service terminals which in December totaled
12,456 installed , including multi-function, check issuing and
deposits receiving terminals. The 24-Hour Banking network, of
which Banco do Brasil is a part, was increased from 731 to 1,014
locations. At the end of the year, customers had at their disposal
Processing 1995 1996 1997 1998
Computers PC 19,923 27,600 35,743 80,321
Mainframe (TB) 2.4 4.9 7.4 10.36
Mainframe (MIPS) 962 1,600 2,194 6,375
31
57.1
90.6
144.1
219.5
1995 1996 1997 1998
In m
illio
ns o
f tra
nsac
tions
The Evolution of Self-Service Banking
some 2,189 self-service installations, where they are able to perform
nearly all operations formerly available only at the bank teller’s stations,
reducing lines and facilitating service.
In 1998, the Bank installed 923 new Electronic Banking
Outlets for a total of 1,005, of which 603 are located inside private
companies and 402 are in public institutions. There were also another
89 service outlets set up, in cities where only one financial institution
is in operation, for a total of 244 units, which makes Banco do Brasil
the only bank present in 812 municipalities. Banco do Brasil is
represented in 2,112 cities in Brazil with a total of 5,492 service units
of which 2,819 are full branches, all on-line, the largest distribution
network of the Brazilian banking industry.
The presence of Banco do Brasil has been increased in
the capital cities of the south and southeast regions, where 58 new
branches (32 in São Paulo) were created. Twenty-three mega-branches
(those with more than 50 employees) were broken up to make 43
smaller branches. This allows the Bank to focus on the client and
on the ability to generate business, because of the reduction in the
administrative complexity of those units.
The Bank has undertaken a project for Visual Reform,
designed to standardize the environment in the branches and service
outlets, which reached 2,456 units (1,004 branches and 1,452
service outlets) throughout the country in 1998.
TotalBranchesOthers*
4,9024,657
4,443 4,445
5,492
3,101 2,999 2,931 2,7772,819
1,801 1,658 1,512 1,668
2,673
Dec./94 Dec./95 Dec./96 Dec./97 Dec./98
* Bank Branches, Eletronic Banking Outlets, Service Outlets and Reception an Payment Outlet.
In u
nits
Distribution Channels
33
2,571
4,096
6,922
12,456
1995 1996 1997 1998
In u
nits
Self-Service Terminals
35
In July 1998, the Bank inaugurated a sub-branch in Nagoya
Japan, with the objective of strengthening its presence and its ability
to serve the needs of the Brazilians of Japanese descent living in Japan.
In only six months, 4,600 accounts were opened in the unit, which
represents an additional US$ 43 million to Bank deposits.
Continuing with the program of revising the Bank’s
activities in the European Monetary Union, it has begun the process
of closing down it’s Banco do Brasil Europe NV/AS subsidiary in
Brussels, Belgium. The overseas network is now composed of 22
branches, three sub-branches, five offices and four subsidiaries.
The Bank is active in the Americas, Europe and Asia, with a presence
in 22 countries.
Changes and evolution of the public service counters
Business Expansion: Completely Attuned to the Customer
Retail – With an expansion of the number of products
and services and the startup of payroll agreements with companies
serviced by the Bank, we finished the year with a total of 9.4
million individual accounts, 2.3 million more than in 1997 – an
increase of 32%.
In December, 1998 the Bank launched its Gold Plan of
Services for individual account holders. The Plan consists of a single
monthly payment for the use of a range of products and services.
Depending upon the customer’s investment and loan portfolios,
discounts of up to 100% may be obtained.
We launched the Classcard Internacional and Classcard
Visa Fácil credit cards, aimed at individuals in the eight to 30 and
three to 10 minimum wage income brackets, respectively. Banco
do Brasil continues to be the leader in terms of overall Visa system
credit card billings in Brazil, with R$ 3.3 billion in accumulated
transactions during 1998 – an increase of 32% compared to 1997.
37
Legal DepositsCorporate AccountBanco do Brasil CampusElectronic Payment CardBanco do Brasil Teen
Executive Overdraft CheckingAccount (Cheque Ouro Executivo)
Traditional Overdraft CheckingAccount (Cheque Ouro)
Classic Special Checking AccountCommon Account (individual)
0.1
9.5
14.7
1.30.80.2
18.617.3
37.6
In p
erce
ntag
e
Current Accounts – by Type (Dec./98)
6.56.1 6.3
8.3
11.3
1994 1995 1996 1997 1998
In m
illio
ns
Customer Base
We have a 23% market share of the Visa credit card business in Brazil.
The volume of transactions with Travelers Cheque Banco
do Brasil was R$ 463 million during 1998, representing an increase
of 31% compared to the previous year. The Bank, now fourth in the
world in Visa’s overall rankings, maintained its ISO 9002 certification
for the product during 1998 and continues to be the only Latin
American issuer of Visa-brand traveller’s cheques.
We approved 1.5 million new loans through the Direct
Consumer Credit, involving resources of some R$ 2.4 billion. The
Bank will continue to pursue its strategy of providing automated
credit operations for individuals, with priority to holders of special
current accounts (with overdraft facilities) and those who receive
their salary payments through Banco do Brasil.
Business with Companies – Banco do Brasil Middle,
a system for determining the composition and managing the portfolios
of companies with gross annual sales of between R$ 720 thousand and
R$ 100 million, now services 50,174 customers through 1,148 portfolio
accounts. The Bank also has some 339 corporate customers –
companies with billings above R$ 100 million annually. Based in
eight regional offices located in various Brazilian states and the Distrito
Federal, exclusive account managers specialized in specific sectors
of the economy provide personalized service to these customers.
Credit operations based on receivables reached R$ 1.1
billion as of December/1998. Check discounting transactions grew
by 16%, with 25.3 million checks totaling R$ 5.1 billion being
discounted over the period. The Adiantamento de Crédito ao Lojista –
ACL, credit advances to shopkeepers, had a positive balance of
R$ 57 million on transaction volume of R$ 919 million during
the year, 93% more than in 1997.
Special mention must be accorded to the 164% growth
during the year of BB Vendor, a sales financing service whereby
the Bank pays cash to a seller while the buyer pays the Bank in
installments. The balance of these operations totaled R$ 103.7 million
at the end of the year with business volume of some R$ 1.2 billion.
Within the range of options for rotating lines of credit
offered by the Bank, Cheque Ouro Empresarial (overdraft account
for companies) should be mentioned. The balance of this credit line
in December/98 was R$ 183.3 million. Also noteworthy was Conta
Garantida BB, a credit product, involved operations totaling R$ 389.7
million during the year, with an ending balance of R$ 90.8 million.
In 1998, we negotiated 15,089 new leasing contracts
totaling R$ 301 million, a 45% increase compared to the previous
year. Contracts with companies represented 61.4% of the total, with
a balance of R$ 359.5 million and 6,458 contracts in this portfolio
at year’s end.
Agribusiness – Priority was given to furnishing credit to
producers who work towards achieving rural integration and for mass
market and automated operations, the idea being to reduce costs and
risks to the Bank as well as to diminish the amount of red tape involved
for issuing rural credit.
Judging by the significant number of farmers involved in the
program in 1998 – 463,588 contracts corresponding to investments
of R$ 966.1 million – the Programa Nacional de Fortalecimento da
Agricultura Familiar – Pronaf (National Program for Strengthening
Family Farming) credit lines attained the objectives that had been
proposed for them.
39
BB Rural Rápido is one of Pronaf’s access lines. This type
of rotating credit permits operations to be quickly and simply
contracted, thus facilitating access of small farmers to the resources
available through the Program. In 1998, we carried out 207,000 such
operations, representing 56% of the overall volume of Pronaf resources.
We created 34 Agribusiness Offices in eight states. The
Offices are located inside Bank branches in regions where there is
good potential for agribusiness. Through computer terminals at these
facilities, local farmers have access to on-line information about
price trends, futures quotations and products, and services aimed
at the rural market. Noteworthy among these products is BB Futuro
Agropecuário, a mechanism to protect agricultural prices in the
future markets.
Banco do Brasil made an important agricultural price
support mechanism available during the year, linking BB CPR to
the futures and options markets.
In 1998, we conducted 961 auctions through BB Leilão
Eletrônico (Banco do Brasil Automated Auction), selling 3.5 million
tons of agricultural products and cattle valued at R$ 973 million.
Private auctions represented 5% of total sales.
The Capital Market – With net assets of R$ 25.3 billion,
Banco do Brasil remains the largest asset manager of Brazilian-
sourced investment funds. Of this total, 77% is in fixed income
and 23% in equity funds. Of particular note are the retail funds,
which totaled R$ 14.2 billion – an increase of 33.6% in relation
to 1997. The Bank also grew in terms of market share.
The Bank also manages 73 private portfolios whose
balances went from R$ 2.4 billion in December/1997 to R$ 4.1
billion at the end of 1998, an increase of 67%.
We carried out 24 underwriting operations in Brazil,
totaling R$ 1.6 billion. Even with the retraction of the international
41
Market Share (%)
Net Assets of Brazilian-Sourced Investment Funds(in R$ Billion)
12.714.8
17.1 17.2 17.8
6.1
9.3
18.320.6
25.3
1994 1995 1996 1997 1998
Evolution of Asset Management
1996 1997 1998Change %
97/98
Auctions 441 674 961 42.6
Tons 4.0 3.2 3.5 9.4
Sales R$ 708 million R$ 721 million R$ 973 million 35.0
market, we participated in 32 overseas operations involving a total
of US$ 246.8 million.
The process of transferring the shareholder control of
Banco do Brasil DTVM and Banco do Brasil Securities is in the
modeling and price setting phase. Unfavorable market circumstances
after the Russian crisis does not as yet permit the setting of an
auction date.
Insurance and Pension Funds – During 1998, Sistema
Brasilseguridade, the Bank’s insurance arm (Banco do Brasil holds
a 63.7% ownership), went from 14th to sixth place in the insurance
market, maintained first place in the capitalization investment plan
market (savings with lottery prizes) and was third in the open-end
pension segment. The total sales volume of the System was R$ 2.3
billion, representing growth of 29% compared to 1997.
Sales of Aliança do Brasil (a partnership of BB Banco
de Investimento with Grupo Aliança da Bahia), a company active
in the life and basic insurance segments, exceeded R$ 570 million
during the year, a 47% increase over 1997. The total amount of
investment portfolio resources totaled R$ 91 million, an increase
of 22% in relation to the previous year.
Brasilveículos, which works exclusively in the field
of automobile insurance, implemented a pilot project in September,
1998: Ouro Auto Perfil do Consumidor is a tool that introduces
a new calculation system for policies that assures customers the
best price for their particular profile. During the year the company
had sales of R$ 310 million, an increase of 296% over 1997.
Its investment portfolio totaled R$ 94 million, a 217% increase
over the previous year.
Brasilcap remained in first place in the capitalization
investment plan market with sales of R$ 1.2 billion in 1998, up 20%
in relation to the previous year. The amount of funds the company
managed reached R$ 1.2 billion in 1998, a rise of 41% compared
to 1997. During the year Brasilcap sold 1,061,945 individual
capitalization plans, for an accumulated total of 3,846,088 plans
sold since its entry into the marketplace in October, 1995.
In September 1998, Brasilcap launched the PU 500,
a capitalization plan commemorative of the 500th anniversary
of the discovery of Brazil, to be celebrated in the year 2000.
The new plan – with a shorter capitalization period, shorter maturity,
single installment repayment and more frequent drawings
(four per month) – has sold in record numbers. This product was
responsible for 75% of the company’s sales during the last four
months of the year.
Brasilprev remained in third place in the open-end private
pension fund market in terms of pension plan sales and took over
second place in number of plans under management. During the year
the company had sales totaling R$ 345.7 million, an increase of 37.4%
over 1997. The total of resources it managed was R$ 698.5 million,
up 56.5% compared to the previous period.
Banco do Brasil Previdência ended the year managing
13 pension plans encompassing 22 sponsors and 15,700 participants.
In December, 1998 there were 69 plans under development involving
60 thousand participants. Its management portfolio totaled R$ 25
million, 4% higher than the prior year.
Foreign Trade Operations – We reached US$ 145 million
in pre-paid export financing operations and US$ 4.6 billion in the
43
ACC/ACE modality (Advance for Foreign Exchange Contracts/ Advance
for Export Contracts). More than 30% of this volume was deferred
to 1,682 exporting companies, of which 287 became customers during
1998 through the Programa de Geração de Negócios Internacionais,
a program to generate international business.
This Program was set up in November, 1997. Its goal is
to help small and medium-sized companies by providing conditions
to participate competitively in overseas markets, with resources and
highly trained consultants based in the Bank’s main branches available
to them, including assistance in promoting products and finding
international buyers.
Besides being the manager of the Programa de
Financiamento às Exportações – Proex, a export financing program,
Banco do Brasil also operates as a player of the Program. We are the
market leader, holding about 26% of the total registered operations,
around US$ 3 billion.
In terms of import financing, we contracted a volume
of US$ 160 million in Supplier’s Credits through foreign exchange
discounting operations on the primary market. Buyer’s Credits for
the period totaled US$ 433 million.
We maintained a leadership position, 20.2%, in the
commercial segment of the foreign exchange market – 18.5% in
exports and 22.2% in imports. The Bank’s commitment to provide
support to foreign trade was proven once again during the Russian
crisis, when Banco do Brasil – unlike the majority of the other
banks – did not interrupt its operations. In consequence, our market
share rose from an 18% average to 32.2% in October.
45
Government Programs: Competence inManaging Government Resources
Banco do Brasil manages a number of economic and
social development programs throughout the Country on behalf
of the federal, state and municipal Governments while it also
provides other services for them, such as collection of fees and
issuing of payments.
At the federal level, in its function as the agent of the
Brazilian National Treasury, Banco do Brasil manages the Export
Financing Program (Proex) on a commission basis. In 1998, 8,696
operations were approved within the Proex program, representing
exports of US$ 27.4 billion, an increase of 166% over 1997. The
number of exporters who received benefits also grew: from 269
exporters in 1997 to 587 exporting firms in 1998.
In its function as the financial agent for the Fundo de
Amparo ao Trabalhador – FAT, a worker’s relief fund, the Bank is
responsible for the Programa de Geração de Emprego e Renda –
Proger (Job and Income Generation Program). In 1998, we financed
R$ 1.5 billion for micro and small companies, rural producers,
cooperatives and associations, and individuals working in productive
areas of the informal sector. With resources earmarked for urban areas
totaling R$ 128 million, some 69,303 direct and 44,713 indirect jobs
were generated. In the rural sector, with investments of R$ 1.3 billion,
it was possible to generate/maintain a monthly average of 82,786
direct and 237,945 indirect jobs.
Banco do Brasil also is responsible for administration
of the Programa de Formação de Patrimônio do Servidor Público –
Pasep (Public Servant’s Patrimonial Formation Program), which
provides public employees with income deriving from individual
accounts and a bonus. During the 1997/98 period, we processed
payment of 5.5 million Pasep benefits for plan participants, divided
into salary bonus (1.1 million), income (4.1 million) and withdrawal
of principal (300 thousand).
The Bank is the main instrument used by the Government
to carry out land policy. Through the Programa Especial de Crédito
para a Reforma Agrária – Procera (Special Agrarian Reform Credit
Program), for example, we provide credit assistance to families
relocated for land reform purposes, with payment of basic costs and
investment in their activities. In 1998, the amount contracted through
the program was R$ 135.8 million, with 34,914 individual operations.
Banco do Brasil is also present in the field of ecological
preservation. The Bank is the agent for Projetos Demonstrativos A
(PD/A), a sub-program of the Pilot Program for the Protection of
Tropical Forests in Brazil. PD/A resources come from the German
bank KfW (DM 20 million), the European Union and the Tropical
Forests Fiduciary Fund for on-lending by the World Bank (US$ 7.5
million). During 1998, the Bank’s outlay was US$ 2.6 million that
went to 97 subprojects totaling US$ 12 million – 79 in Amazônia
(Amazon Region) and 18 in the Mata Atlântica (Atlantic Forest).
In the field of education, we signed an agreement with
the Fundo Nacional do Desenvolvimento da Educação – FNDE
(The National Education Development Fund), linked to the Ministry
of Education, for the on-lending of resources deriving from a national
payroll tax for educational projects. In 1998, some R$ 1.4 billion
was passed on to projects as part of the program.
47
Also noteworthy has been the Bank’s role as the exclusive financial
agent of the Fundo de Manutenção e Desenvolvimento do Ensino
Fundamental e Valorização do Magistério – Fundef, a fund that
redistributes constitutionally-mandated resources for education
in order to improve basic education and value the teaching profession.
During the year, some R$ 13.2 billion was passed along on behalf
of Fundef.
With respect to health, Banco do Brasil is the exclusive
financial agent of the Reforsus Project, aimed at improving the capacity
and efficiency of the federal Sistema Único de Saúde – SUS (Single
Health System). The project’s resources, from the World Bank and the
Inter-American Development Bank, total US$ 300 million and US$
350 million, respectively, are destined for public and private non-
profit institutions that have agreements with the SUS. During the
year 891 operations were contracted, totaling R$ 479 million.
We also signed agreements with the Ministry of Health
and the Ministry of Social Welfare for the passing along of resources
to states and municipalities. In 1998, this on-lending to duly-registered
municipalities totaled R$ 3 billion to aid cities in assuming control
of public health systems and R$ 338 million went for social
assistance programs in the cities.
The Bank is the main financial agent for the payment
of individual retirement and pension benefits. In 1998, we made
payments on a monthly basis to approximately four million persons,
totaling R$ 858 million. We collected R$ 533 million per month
on behalf of the Instituto Nacional de Seguridade Social – INSS,
the Social Welfare National Institute, corresponding to one million
payment documents per month.
Banco do Brasil is also the agent of the National Treasury
for collections, control and follow-up of credits stemming from
the refinancing of the securities and contractual debts of the states.
The securities and contractual debts of 24 states totaling R$ 88 billion
were refinanced for payment in 30 years.
Banco do Brasil has been selected as the official bank
of the states of Acre, Mato Grosso do Sul, Mato Grosso, Rio Grande
do Norte, Rondônia, Roraima and Tocantins, thus providing service
for some 266 thousand active state employees. And it is the principal
financial agent for hundreds of municipalities, which use the Bank
to pay their employees and suppliers, receive taxes and manage
their cash expenditures.
49
Room in the Technology Center for management of the Bank’s computer network.
Business Reputation: Winning Together
Banco do Brasil received a maximum “AAA” rate from
the Atlantic Rating risk classification agency in the “Domestic Bank”
category. An “AAA” classification means that the Banco do Brasil
is an institution of the highest quality, sufficiently qualified to manage
resources and one that maintains a balanced capital structure and has
well-defined strategies. We also received the “1997 Most Transparent”
award from the same agency in the “State-owned” category.
BB Responde, our customer service help desk, obtained
ISO 9002 certification in November/98 as a result of enhanced
management and centralized telephone operations. In 1998,
we received 887,000 calls through the service, of which 99.6%
were resolved.
The Bank is becoming an important point of reference
in the field of credit. In 1998, ISO 9002 certification was granted
to a number of our branches, including Ana Rosa (SP) – the first
National Financial System bank branch to receive certification in
the corporate credit segment – Brasilia Central (DF), Jundiaí (SP),
Lélio Gama (RJ), Tamoios (MG) and Vitória (ES). The Credit Analysis
Department and its divisions (Belo Horizonte, Brasília, Curitiba,
Recife and São Paulo) also received ISO 9002 certification for its
“risk process and establishment of credit limits” for corporate
clients with gross sales between R$ 250 thousand and R$ 8 million.
We received two other important distinctions during
1998 in the field of quality: the “1998 Banking Quality” award
from the Banco Hoje magazine and organizations representing
bank customers, and the “Federal Government Quality” award.
The Bank also was recognized by the Associação
de Comércio Exterior do Brasil – AEB (Foreign Trade Association
of Brazil) with the “Foreign Trade Distinction – 1998” award.
Banco do Brasil’s Internet web site was selected
as one of the three best in the category of “Financial Services/
Insurance Companies” by IW Best 97/98, a contest run by
Internet World magazine.
Our 1997 Annual Report placed first in the judgment
of the Associação Brasileira de Comunicação Empresarial – Aberje
(Brazilian Business Communication Association), which named it
the best management report for the year.
51
Detail of Technology Center in Brasília – DF, inaugurated in 1998.
Investor Relations: Sharing Information
Aware of the challenges of a globalized economy
in which being competitive is crucial and capital flows are less
constant and more unpredictable every day, Banco do Brasil
is intensifying its efforts to improve relations with its investors.
Besides the traditional contacts we maintain with analysts,
investors, shareholders and the press, in Brazil and abroad, we
sponsored a visit of market analysts to the Bank’s facilities – a first
in the financial industry in Brazil. A growing number of financial
market professionals have been following the Bank’s performance
as a result of these initiatives.
At the last trading session of the São Paulo Stock Exchange
(Bovespa) in 1998, the average quotation of our ON (common) share
was R$ 7.00 per thousand shares, while the PN (preferred) share was
R$ 8.06 per thousand shares. The average prices of Banco do Brasil’s
subscription warrants were R$ 1.24 (Class A), R$ 1.27 (Class B)
and R$ 1.36 (Class C).
53
Detail of Technology Center in Brasília – DF, 1998.
Banco do Brasil: 190 Years of History, 190 Years to Come
Banco do Brasil has undergone wide and profound
change over the past few years in a process in which becoming
more competitive was the greatest gain. A concern about achieving
results was incorporated into all actions taken by the Company,
with employees adhering to the new market challenges. We now
are ready for the XXI century. The change in mentality and the
adoption of competitive paradigms by the employees of our
century-old institution, has been our greatest triumph.
The Bank today is a modern corporation capable
of emphasizing its business-oriented nature without losing sight
of its commitment to the Brazilian society. Our actions in benefit
of the community, published in our Social Report, are closely
linked to the mission of being the best bank in Brazil, assuring
customer satisfaction, satisfying shareholder expectations and
contributing to the development of the Nation.
55Detail of Technology Center in Brasília – DF, 1998.
Banco do Brasil Conglomerate
Overseas Subsidiaries
Brasilveículos100.00%BB PREVIDÊNCIA – Managed Company
BB Cartões COBRABB LeasingBB CorretoraBB DTVMBB Financeira
BrasilsegParticipações
70.00%
Cia. Seg. AliançaBrasil 70.00%
VISANET30.46%
Guaraniana5.23%
UPSICARD49.00%
CIBRASEC10.00%
Seg. Bras. Créd.Exp. 13.75%
Brasilprev46.35%
Brasilcap49.99%
Brasilsaúde49.90%
BAMBGrand Cayman
BB A.G. Vienna
BB EUROPE N.V.Brussels
BB LEASING CO.Grand Cayman
BB SecuritiesLondon 100.00%
BBTUR 99.99%
BB Banco deInvestimento
56
Corporate Structure
Shareholder’s General Meeting
Board of Directors
Board of Officers
Audit Committee
Internal Audit
Advisory Units
Business Development
ExecutiveSecretariat
Controlling Marketing &Communication
Legal
Retail and Services, Technology and Infrastructure Officer
Technology Unit
Infrastructure Unit
Retail and Services Unit
Human Resources and Distribution Officer
Human Resources Unit
Distribution Unit
Rural and Agroindustrial Business and Government Affairs Officer
Rural and Agroindustrial Unit
Government Affairs Unit
Internacional and CommercialBusinesses Officer
Commercial Unit
International Unit
General Credit, Credit Recovery and Insurance Officer
Credit Unit
Insurance Unit
Credit Recovery Unit
Finance, Capital Market and Investor Relations Officer
Finance Unit
Capital Market and Investiments Unit
57
Board of Officers
President and CEO: Paulo Cesar Ximenes Alves Ferreira
Officers: Carlos Gilberto Gonçalves Caetano
Edson Soares Ferreira
Hugo Dantas Pereira
João Batista de Camargo
Ricardo Alves da Conceição
Ricardo Sérgio de Oliveira (up to Nov. 25, 1998)
Rossano Maranhão Pinto (from Nov. 26, 1998)
Board of Directors
Chairman: Pedro Pullen Parente
Vice-Chairman: Paulo Cesar Ximenes Alves Ferreira
David Zylbersztajn
Eduardo Augusto de Almeida Guimarães
Eliseu Martins
Fernando Amaral Baptista Filho
Karlos Heinz Rischbieter
Audit Committee
Chairman: Levy Kaufman
Carlos Alberto de Araújo
Fabio de Oliveira Barbosa
Hugo Rocha Braga
Paulo Oscar França
59
Banco do Brasil – President’s officeSBS – Ed. Sede III – 24º- andar
70089-900 – Brasília (DF) – Brasil
Tel.: (061) 310-3400
Fax: (061) 310-2563
Finance, Capital Market and InvestorRelations Administrative ManagementSBS – Ed. Sede III – 24º- andar
70089-900 – Brasília (DF) – Brasil
Tel.: (061) 310-3406
Fax: (061) 310-2561/2563
International Administrative ManagementSBS – Ed. Sede III – 24º- andar
70089-900 – Brasília (DF) – Brasil
Tel.: (061) 310-3405
Fax: (061) 310-2563
Annual Report 1998
Print Production and Desktop: FischerAmérica Comunicação Total
Photograpy: Acervo Banco do Brasil/Paulinho Silva
Printing: Burti
Text Editor: Banco do Brasil – Comunicação e Marketing
Translation: Dash Consultoria, Promoções (Steve Yolen)
Internet: http://www.bancobrasil.com.br
No part of this report may be reproduced in any form, by photostat, photocopy, microfilm,
xerography, or any other means, or taped, reproduced or incorporated into any retrieval system,
electronic or mechanical, without the written permission of Banco do Brasil.
Infractors will be subject to the penalties of Law.
Index
Education by Machine – Gerd Bornheim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Technologies and Time – Maria Rita Kehl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Technology, Speed, Limits – Renato Ortiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Success and Modernity – Stephen Kanitz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
3
Education by MachineGerd Bornheim*
One could say that civilizations can be measured by their
ability to invent necessities. The improvised technique that led mankind
to discover fire does not even seem to be as important since it turned
out to be a dangerous appearance; but the means that led mankind
to control this his product and unleash everything that could be
invented through fire – this, yes, is the invention of civilizing necessities.
In the beginning, the automobile was nothing more than an ingenuous
and curious kind of toy and its horizons didn’t much go beyond
inconsequential excursions; but then a whole world unfolded with
a growing acceleration of novelties that changes the very physiognomy
of cities: what seemed to be mere idleness suddenly acquires the
airs of necessity.
The gap between these two examples – the fire and the
automobile – is possible to measure in terms of speed: at the beginning
things were repetitive, and metamorphoses were difficult, slow. In
the latter case, everything happened with the support of this greater
commitment that was and continues to be the technological revolution.
Doubtlessly today the profiles of repetition and creation have changed;
repetition attains unimaginable indices, technology reproduces
everything, production occurs on a gigantic scale, assembly line
products wind up showing the essentially democratic character of
technology and comfort becomes generalized. On the other hand,
and contrary to what was seen in the essential repetitiveness of old
techniques (there are no histories of the shovel), from inside of this
technological revolution has sprung the impulse of a brand new
type of creativity, so much so that it changes the very history we are
living into something totally new: and despite the incredible unfurling
of serial repetition, a new element to a certain extent relegates
repetition to the past; that is, by definition modern technology is born
old, it already comes with a desire to be overtaken, and the most
modern equipment, almost a terminal luxury, may never even find
a place in a Lost and Found Museum so intense is the need for speed
in creative renewal. Really, creativity seems to dwell within the essence
of modern technology itself.
The really big news is regarding this rather bizarre object
that provokes enormous curiosity: the machine. At a first instance,
surprise sets in: what is this thing that produces so much more,
and so much better, than does man?
And along with surprise comes certain dizziness in the face
of all that can be done with and earned through these contraptions –
what is the limit of profit and what is its nature? Marx was one of the
first to praise the machine: it makes men sort of bigger, expands their
bodies and thus increases their productivity: and isn’t what is produced
destined to be consumed by man himself? However, the applause
is soon warped by a certain sensation of shallowness, as if man has
begun to lose the roots of his humanity: what has happened is
that the machine has begun to interfere, and profoundly, in the most
commonplace habits of human behavior.
The empire of the machines clanked forward at the
beginning of the XX Century. And it wasn’t long before the greatest
specialists began to see in them nothing less than the imminence
of an unusual danger: the possibility of the transformation of man
himself into machine: from men-body into robot-men, all now was
5
seen through an ineluctable screen of gears that squeezed out
even the core of human reality. The fact is that the belief in a
radical enmity between man and machine is being established at
the rhythm of mechanical jerks and starts. As a result, things have
become ambiguous – exactly now, when man has been reaping
the results of his laborious conquest of autonomy, in which the ever
more universal notion of comfort has guaranteed the definitive
establishment of man on Earth; exactly now, this intruding creature
looms up to de-characterize everything and authorize another type
of inventory taking, the kind that Marcuse during the 1960s called
the unidimensional man.
In those years, Marcuse’s thesis was a clear success; now,
however, three decades later I have the impression that these ideas
have become entirely anachronistic. But it can be seen that this type
of allergy to the machine and what concerns it have come to reside
even to a certain degree in the popular conscience.
It so happens that the world keeps on moving forward
while its language is modified in apparently imperceptible ways.
The fact is that at this end of the millennium things are beginning to
change their shape. Television, for example, is becoming multivalent:
the passivity of the viewer is changing, the selecting mania of the
remote control unit now exists and the audience is maintaining its
distance; video rental stores are rife on any given neighborhood
street. Or take the example of the computer, the extension of the
human brain; the very newest generation takes control of computer
language with a surprising lack of ceremony, something that entangled
previous generations with a certain amount of discomfort. It is because
the world language really is moving forward, and this is something
that affects us all. Certainly the world of technology conceals its
dangers – so many have been discovered and yet we do not perceive
the chances that exist in defeating so many others like them, not to
speak of what is still awaiting us. Regardless of how it may be, decisive
steps are being taken to begin a kind of reconciliation between man
and machine or, better, between the human body and the machine.
It would seem that the reason for fear is beginning to recede, leading
towards the generation of ever-new modes of approximation.
I want to limit myself on these pages to opening up of
spaces. It can be seen that body and technique always belonged to
each other. For a long time it has been seen that between men and
animals an essential distance thrives. Really, technology, which is alien
to animals, is fully concentrated on preparing means, and it is from
this that the possibility of civilization itself derives. The advent of the
technological revolution was so unusual – even if it was inscribed
within the order of things – that it had to provoke discomfort when it
first appeared, causing imbalances of many kinds, and more imagined
than sensible. Because the machines win right from the start: they
are not just comfort generating elements appearing here and there
that are introduced with everybody’s blessing — in truth, what is in
play came about through a philosophy of comfort destined to separate
man from his last feelings about old convictions. It is a generally
transforming vision of society whose roots go back to the propelling
bases of modern science. Mankind generates science, and generates
it for himself, in order to be able to control everything. Also anchored
in science, mankind creates the new version of the machine. The
machine does not simply derive from the invention, or from interest,
or from whim, or from chance; it comes about as a result of a new
7
perception of reality and human destiny. And everything appears to
happen within the rigors of necessity – basically, one cannot get even
a glimpse of a possible way back.
Ever since their discussions, when the new machine
was born, upon its advent its interpreters knew to see it not only
as the prolongation of a simple mechanical progress but also as
an anthropomorphic connection between man and machine.
In fact, the machine “biologically” extends the human body. In its
essence, the machine pertains to the human body; and this thesis
is so radical that only the extreme intention of a universal desire for
suicide could destroy it; on this bias, man himself would have to
take on the role of the evil genius invented by Descartes. It would
do better to accept the idea that such a hypothesis is nothing more
than a methodological resource whose definitive meaning would be
in the elimination of the absurd, regardless of the ongoing presence
projected by the ghost of the evil genius.
But how can one understand how the machine pertains
to man? I delve a little into the theme and put forward that such a
relationship masks an ambiguity (and that is where the theme generates
fear and tremors) that dissimulates or prolongs the ambiguity that is
found in man’s relation, or those of his conscience, with his body.
Look at the ambiguous element: in a certain sense, I am my body,
it belongs to me in an ontologically constituted manner; but in another
sense, I have my body, and can use it in many ways. The ambiguity
surfaces right here: the adherence of the body to subjective reality,
which makes it irreplaceably mine, goes against the fact that I can
consider it to be an objective reality that is within my grasp which
gives it the condition of being a thing. All human behavior, including
relations with others, is seen in this interregnum of intercourse
between subject and object. Now, this is something similar that can
also be seen in the relationship with the machine, to such a point as to
being able to establish something even similar to a sui generis sensual
identity. Or then: the act of using a sewing machine incorporates
manual dexterity so perfectly that a seamstress only really perceives
it is an object at the moment when the machine breaks down. Today
prostheses have become pieces of equipment that are assimilated
by the body as if they were a part of it. I’m not going to touch on
this theme (nor is there space left for it here).
What has been said above was only to provide a small
glimpse of the unbelievable wealth this type of analysis can offer – so
much so that it allows us to glimpse how the machine has, in the deepest
sense, entered definitively into the kingdom of civilizing necessities.
* Full Professor (retired) of the Institute of Philosophy and Social Sciences of the Federal Universityof Rio de Janeiro and of the Department of Philosophy of the State University of Rio de Janeiro.A philosopher, he is one of the most respected Hegel scholars. He has published many books, essaysand articles. He constantly is invited to address the main academic centers of the country and givesinterviews to the main Brazilian newspapers. His most recent work has been: The Pre-SocraticPhilosophers; Pages of Art Philosophy; and The Concept of Discovery.
9
Technologies and Time Maria Rita Kehl*
In periods of crisis and instability, more than ever we tend
to long for the past. Not the well-known past of just a few years ago
but rather of time remote when we did not yet exist, of which we only
know about through the reports – nostalgic and also fanciful – of our
parents and grandparents. Our idea of tranquility always comes to us
from the past, a calm day-to-day existence in a world where people
were more certain about what life had to offer them. The fact is that
we always contemplate the past from a privileged point of view.
When we look backwards, we already know what was the destiny
of those actors – something that they, being their own contemporaries,
themselves ignored. This is sufficient to produce the impression that
back then, “in the old days” as kids vaguely put it, one lived in a more
peaceful way. Safety is perhaps the word that we most associate
with our parents’ childhood, the life projects of our grandparents
and great-grandparents.
Nevertheless, at least since the beginning of the Industrial
Revolution and the period of consolidation of the capitalist societies
such as we know them today (the XIX century, the “golden years”
in the idyllic fantasy which has been built up about the time of our
ancestors), the West was not sailing in calm waters. Instability,
uncertainty, speed, excessive amounts of information, too much
newness, a need to always be alert to understand the changes taking
place in the world – this is the picture of the experience of the
bourgeois during the 1800s, so subjectively similar to our own.
Historian Peter Gay, in doing research about the experience of love
and marriage in Europe in the 1800s, writes: “It is common to say
that history is a record of change, but this never was more true than
during the XIX century. Transition placed pressure on all fronts and
activity… To have lived before the advent of the railroad, Thackeray
once observed, was to have lived before the Deluge. To have lived
before modern contraception, one might add, or before modern
hygiene, is equally antediluvian. Thus the celebrated stolid life of the
bourgeoisie was both a quick defense as well as, in the best of cases,
a goal to be attained. What psychoanalyst Heinz Hartmann called
a half-predictable environment was built, during the XIX century,
upon the quicksand of innovation.” (Text retranslated into English from
the Portuguese version: Peter Gay, A Experiência Burguesa, da Rainha
Vitória a Freud, vol. 2 - São Paulo, Companhia das Letras, 1990,
p. 360). English writer William Thackeray makes us think about the
distance that radically separated two generations: that which came
before and that which appeared after the advent of the railroads,
the Antediluvians and the Moderns. During each generation, men
and women need to make an effort to surpass themselves and adapt
to technological innovations that have changed the face of the world
and directly interfered in personal relations. To attain recognition about
oneself and one’s surroundings through time and with the changes
that have come about seems to be one of the most difficult subjective
tasks of modern life.
What event today could be considered the parting of
the waters of our experience? Is contemporary life divided into the
period before and after man reached the moon? Before and after
computers? Of organ transplants? Of test-tube babies? Of cloning?
Of the Internet? Demarcation is impossible for an evident reason:
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if in the past century technology was capable of making a major
revolution each generation – the trains, electricity, the telephone,
photography, “modern hygiene,” and how many others? – today
we are being constantly interrupted by inventions, living the necessity
each year that passes to surpass ourselves, our habits, our attachments,
our certainties and our own self-image. It is true that the meaning
of life is an invention of mankind that in any society corresponds
to a psychic need. The speed of the contemporary world, fragmenting
experiences, makes this task (one that never was easy) a bit more difficult.
Thus I think that our longing for the past – even a past
where, we know, families were more repressive, sexuality was much
more controlled, the gap between the rich and the poor was more
cruel, life expectancy was lower and some marvels, such as cinema,
hadn’t even been invented! – is in regard for the slower speed with
which technology devastated people’s lives, the lesser need for change
that each individual suffered during the course of his or her existence.
In the film Beyond the Clouds, that Wim Wenders directed
with Antonioni, there is a scene where a young woman wins over
a man by telling the following story: a group of Americans wanted
to cross the Andes and hired some surviving Bolivian (or Peruvian)
Indians to help them. For some reason, or as a force of habit, the
Americans were in a hurry; so they put on as much pressure as possible
to speed up the crossing. Until, one afternoon near the end of the
journey, the Indians stopped to rest and refused to go on. Impatient,
the travelers asked the Indians why they were taking so long.
“It’s because we have been walking too fast,” said one of the guides,
“and our souls got left behind. Now we have to wait for them to
catch up with us.”
I don’t know if time exists. I am neither a philosopher nor
a physicist to linger over considerations about whether the passing
of time as we perceive it is a natural or a subjective phenomenon,
a physical fact or cultural contingency. But I know empirically –
and who doesn’t know this? – that time keeps going by faster and
faster for us. The irony of the situation is that we live being devastated
by small machines built to save us time, yet there’s always less of it.
That is: our notion of time, among other things, depends upon the
quantity of happenings that overload our days, our hours, the years
of our lives. We live longer at this end of the millennium than we
did 50 or 100 years ago. We also remain younger longer, forced by
necessity to accompany the changes – growing old, in part, is to
stop changing – and aided by new health technologies. But when
we look back to our infancy, to the first years of our childhood or
even just the last decade – how far from own selves do we feel!
In fact: does the expression “our own self” still make sense?
When is a person “his own self”? During infancy, when experience
is more intense and leaves deeper marks? During childhood, when the
cultural bases of the adult-in-formation are established? Or maybe in
old age, when one looks backwards and selects that which has remained
after decades and decades of a life in constant transformation?
Perhaps this was not a question for our great-grandparents,
even if accompanying the rhythm of modern life was also difficult for
them. We “long” for the experience, forever lost, of people who little
change during their lifetimes, who know more or less who they are
through family origin, biological sex, profession or marriage they have
chosen “for the rest of their lives.” Today we know (do we know?) that
“nothing is for the rest of our lives”; each time we forget this and bet
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on a certain future we are surprised by evidence to the contrary.
No, I am not nostalgic for the Victorian illusion that it was
possible to always be the same, during decades. As a psychoanalyst,
I have news about how much this intended stability required in terms
of repression, being responsible for the psychic suffering we call
neurosis. But if today everything is forcing us to cross mountains
and oceans at an increasingly faster pace, once in a while it would
be good to learn to stop and wait so that our souls do not become
definitively lost behind us.
* Obtained a doctorate from the Pontificate Catholic University of São Paulo. A psychoanalyst,writer and essayist, her book output includes The Minimum Difference; Primary Processes, Poems;and Feminine Displacement. She conducts presentations in the main academic centers of the country.She participated in the cycle of addresses promoted by Funarte about Looking, Passion, etc.She writes for a number of publications.
15
Technology, Speed, LimitsRenato Ortiz*
The contemporary world is characterized by the
compression of space and time. Social relations, tasks, people’s
day-to-day lives are directed more and more by rules that take their
local space away from them, making them dive almost instantaneously
into interaction not requiring a “face-to-face” dimension. However,
there is a dilation of space and an acceleration of time, redefining
the notions of proximity and distance. Cable TV, virtual money,
production displacement, Internet, banking services and financial
operations transcend places and nations, giving materiality to a society
that is globalizing itself, interconnecting itself. In this context, speed
is an indispensable imperative (that does not mean it is a virtue). Speed
is linked directly to technological advances, fiber optics, computers,
satellites, etc. Without them, much of what we experience would
not exist. One should not think that technology is the “cause” of
the changes under way. This leads us to a reductionist view of reality.
The displacement of production evidently is supported by sophisticated
technical operations (computers, robots, etc.) but it would be a mistake
to reduce it to this size. The world is global because capitalism is
global and technology is one of its expressions.
Current change incurs directly on the idea of borders
(one of them of nations). With the globalization process, a set of
economic, social and political relations no longer can be contained
within the boundaries of a specific territory. That is why the idea of
“no more borders” has become common sense. Things now happen
as if the resistance offered by the materiality of physical space had
been broken. Or, as McLuhan used to say, we live in a global village.
Technology, for him an extension of the human body, would unify
the planet, bringing individuals closer together within a single
“community.” But would this be true? Nowadays the world is defined
as a common space in which people’s lives unfold. This is why we
speak of “a global society,” “world modernity,” and “world system.”
However, contrary to what McLuhan imagined, it is nothing like
a village – the limitations remain, although now they are of a different
kind. We could even add: the new territorial divisions are often (but
not always) the result of technological changes.
All technique implies competence. It is an understanding
that requires an apprenticeship. This means a body of understanding
(the technology), institutions (companies, schools) and individuals who
are capable of coordinating the knowledge that has been acquired.
During the XIX century, many utopias (including the Communist
Manifesto) believed that the advance of technology would eliminate
the division of labor, that is the borders that separated workers and
bosses. In principle, mechanization of tasks would liberate men from
fatiguing work, making everybody equal. Nevertheless, modern society
is moving in a different direction. In fact, society provides incentives
for the specialization of functions, separating tasks according to the
rationality of each one of them. The “third industrial revolution,” based
on the techno-scientific complex, deepens this trend. The world
of technique requires specialists being further and further apart from
the “non-specialists.” In this sense, qualification is simultaneously
necessary and differentiating. This differentiating element can even
be found in technology that is available for the general public. Cable
TV, for example. As long as one has reasonable income (which in
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Brazil is the privilege of a minority), it is possible gain access to a
multiplicity of channels. Access to the menu, however, is selective –
it is not enough for a viewer to have available leisure time. The
diversity of programs runs into the limitation of language (particularly
English, the world language). To enjoy the information that is offered
implies a minimum of linguistic competence that, effectively, is not
possessed by everyone. Stated another way, “literacy” in the
technological world is selective and differentiating. Performance and
access are not equitably distributed qualities.
The idea of “literacy” is suggestive – it contains a bit of
apprenticeship and of socialization. But up to what point can we bring
this idea into the debate we are facing? We cannot forget that to read
and write also are communications techniques; however, in modern
societies their widespread dissemination implied their being
resized. If in traditional societies writing was a rare asset, through
the Industrial Revolution and with the emergence of a system of
elementary education, writing became a fundamental condition for
social organization. Political education took on a fundamental role,
seeking, first of all, to form a citizen; secondly, to integrate him into
a national community. Achieving literacy meant to prepare a citizen
of a nation, training him for work and the exercise of citizenship (in
practice the ideal was rarely attained). The school, the best instrument
for achieving literacy, should have a dual role: to transmit knowledge
and to build the character of each individual. The democratic principle
of “education for all” (either through public or private institutions)
would guarantee equal opportunities.
I believe, however, that the technological world operates
with other parameters, other intentions. Technology means, above all,
performance. To dominate a determined type of knowledge mainly
means to possess a competence that allows one to operate rationality
in one direction or another. What one asks of technology is that it
be efficient. To learn its secrets is only a preliminary action for using
it. In this case, different than education that has wider commitments,
technical knowledge tends to be performance oriented, utilitarian,
unlinked to other ideals (democratic or not). In principle, its “neutrality”
would be self-sufficient.
Is this the end of the borders? Certainly not. It would be
more correct to say their “redefinition.” Evidently the old borders no
longer possess the same validity (from which derives the debate about
the “end of the nation-state”). The uprooting of social relations
effectively pronounces the advent of new occurrences. But it would
be ingenuous to imagine that in a globalized world technology
annuls space. What we are watching is that as some limits decline
others appear. Regarding technology, a first border can be pointed out:
the techno-scientific complex that is asymmetrically distributed
between countries (U.S., Japan, the European Community x emerging
nations). This does not take the African continent into account, which
was practically excluded from the benefits of previous industrial
revolutions and current changes. Another barrier is competence.
There are those who have access to the changes that are taking place
either because of professional reasons (company technicians,
specialized workers, etc.) or through social motives (class origin), and
those who remain apart. This differentiation would not be discriminatory
if the technological world was considered to be one of a number of
dimensions of social life. But that’s not the way things are. Technology
has become a central value in the organization of modern society.
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To understand it, transit it and manipulate it are necessary conditions
for the present, and not just fortuitous alternatives. Technical competence
is thus transformed into being the differentiating “cultural capital”
of an individual. But the world of technology is not homogenous.
Not all who are part of it occupy equivalent positions. The so-called
“information revolution” brought with it the production of a mass
of data that needs to be processed in a way that is as monotonous
as the old assembly line way of work...Thus was created an information
work routine. Counterpoised against this battalion of workers are
those who have the capacity to detect and resolve problems (some
authors call them “symbolic analysts”). Trained within a universe
of wider knowledge they operate with a set of possibilities that does
not exist for the less competent technology operators. Against what
“information era” prophets preached, the new technologies do not
imply surpassing the conflict between the qualified versus unqualified
worker; to the contrary, other contradictions have developed, propelled
by technological advance itself.
Coming back to the topic of globalization, I would say
that yes, we live in the “same world,” but not without adding that
there is nothing harmonious or homogenous about it. Technology,
economy and politics create niches that group together and separate
countries, social classes and individuals. A movement that is not only
differentiating but also segregating. Separation brings with it the potential
for confrontation and conflict, themes that are prudently forgotten
when the technological fascination immobilizes thinking, confining
it to an optimistic and not very convincing idealization or reality.
* Obtained a doctorate degree in Sociology and Anthropology from the École des Hautes Études en Sciences Sociales, Paris. Was a professor at the University of Louvain, of the Minas Gerais FederalUniversity and the Social Science Graduate Program at the University of Campinas. Has carried outresearch at the Latin American Institute of the University of Columbia and the Kellog Institute of theUniversity of Notre-Dame. Also was visiting professor at the School of Anthropology in Mexico. Hehas published numerous articles about popular religions, Brazilian culture and popular culture in anumber of magazines. He is the author of a number of books, including The Fragmented Conscience;Brazilian Culture and National Identity; Modern Brazilian Tradition; and Culture and Modernity.
21
Success and Modernity Stephen Kanitz*
Every American airport has a bookshop, and every airport
bookshop has a section of books about business. Invariably, half of
these books are entitled something like “How To Get Rich,” or “The
Secret of Success.” Normally, the key to it all is through technology,
disguised as innovation, creativity, or research and development. But,
at its core, the recommendation is to discover some new technology
that satisfies some consumer longing.
These books have been published using the same formula
for more than 90 years. In 1910, American author Thomas Bull
became famous for coining the phrase “Build a Better Mousetrap,”
which became a paradigm for the American dream of getting rich.
Build a more modern mousetrap and the market will dig trenches
right up to the door of your factory.
The United States was the champion of this paradigm,
the country that produced the most patents and requisitioned them
from all other nations. The number of patents issued was 100 times
more than the number of products effectively manufactured. There are
thousands of good ideas gathering mold on the Patent Office’s shelves.
Unfortunately, hundreds of these books have been
translated into Portuguese, and the idea that technology could achieve
the same success in Brazil permeated some academic corners even
though an important aspect of this paradigm got lost in the translation.
To build a better mousetrap as a form of success
presupposes a specific stage of economic evolution that does not
necessarily correspond to the current Brazil.
A better mousetrap is a valid industrial policy, even
an indispensable one, in markets where all consumers have solidly
entered the consumer market; that is, all of them already possess
their first mousetrap.
To make another sale to the same consumer just because
the original mousetrap is obsolete – this was the big secret of the
American economy, so criticized for inducing consumerism and
programmed obsolescence, but that in view of the circumstances
was its only way out.
Is this an adequate industrial policy to be followed by
a country where 50, 60, 70 and up to 90% of the population still
haven’t bought their first mousetrap or specific product?
Is our modernity going to take the same route? Towards
constant technological innovation, modern and sophisticated products
and almost instantaneous markets?
The paradigm of modernity in our country is a different one.
This places the technological question at a point that is
curiously different than the usual context to which we attribute this
concept. In 1993, I recommended a new industrial policy for the
country in my book “The Brazil That Works,” centered on what I called
at the time “popular products.” Products that satisfied the 90% of
the population that still had not effectively entered the consumer
market, a market in which the other 50% of our income was poorly
distributed. These would be less sophisticated products with prices
that were more proper and resources that were more compatible
with the consumers’ desires.
The companies that followed this policy had remarkable
rates of growth in 1994, 1995, 1996 and 1997, some of them even
23
quadrupling their production.
I accompanied dozens of these companies and, curiously,
I saw reluctance in some cases to follow this path. It seemed like a
retreat, a return to the past. It was not modern. A policy that would
bring a bit of added value to production, with low nominal margins
and low unit costs.
The error of this type of analysis is to associate a popular
product with a low quality, low technology product, which in no way
is a consequence of the original proposal.
In fact, bicycles are not leading edge technology
products, but they can use new technologies in terms of materials
and production, new design and uses, such as the example of the
Mountain Bike. The product might not be “modern” but the
manufacturing technology, its distribution and its sale via Internet
can utilize the latest developments.
A policy aimed at popular products is curiously much
more modern in the sense that the modernity of the next 50 years
will be the entry into the consumer market of the three-quarters
of the world population that is still excluded.
Through the potential of the Brazilian domestic market
to create the necessary base to sustain economy of scale production,
a policy of popular products has enormous chance to be a strong
export factor. An export policy strongly backed by the domestic market,
an internal synergy undergoing evolution and experimentation,
with scale and internal stability. An export policy that is not aimed
at the First World but, rather, for all the other countries that have
large popular markets. Instead of Alca, why not Brindia, a bilateral
trade pact for low-income products?
In 1980, a new science appeared that is diametrically
opposed to the scientism of cause and effect, action and reaction,
predictability and control, and is revolutionizing the way of thinking
about economic problems. Specialists are creating “virtual life,”
a way of simulating millions of human behavior characteristics
on the computer and assessing their evolution.
No conclusion from such a new science should be
accepted without a certain amount of precaution, but one of the
new concepts this new science has introduced is that of emergence.
In the Brazilian case, and in this particular question,
the way out for the country would be to pay attention to what is
emerging locally. That is, the emerging and prosperous industry
of popular products and the kind of new businessmen this new
industrial policy is creating.
Curiously, this new industry of emergence is not centered
on new sectors of the economy, such as steelmaking or fine chemicals,
nor centered on production factors, but rather it is pure and simply
a segmented industry in market terms.
In 1987, I recommended to the Vice Minister of China,
as a solution at that moment in time to end his country’s stagnation,
that more power be given to the managers of the Bank of China.
It is a suggestion that I regret today because it was utilized.
The thinking was that it was difficult in very large centrally
planned countries to pick up on movements emerging from the private
sector, and that only a decentralized source of information could do
this. In the case of China, and incidentally in the Brazilian case, the
same thinking applied. The organization that could most properly
carry out this function was the Bank of China, through its enormous
25
body of qualified managers who were in privileged locations where
they could take the pulse of the Chinese economy.
Unfortunately for Brazil, the long tradition of the inflationary
process induced the banks, especially the private banks, to reorient
their business more towards taking in deposits than for making loans,
properly speaking. This has led, with a few notable exceptions, to
a constant diminishing of the discretionary power of branch managers
in the majority of the private banks
A bank manager in a developing economy is ideally placed
within the business society to detect, provide incentives, orient and
motivate the community’s emerging businesses. In already developed
countries, bank managers were always prominent citizens within
their communities, positions that were earned not because of their
economic power but rather through the respect and admiration
they attained as de facto small town mentors of business activities.
Summing up, technology is not necessarily created
in the laboratories of large companies. It continues to be created,
in the majority of cases, in garages and back yards, in the shower
or in a student dormitory. It is up to society to discover these talents
and bet on their success. A modern banking system is one that detects
these new ideas, and aids, finances and nurtures the emergence
of its nation.
* Business administrator trained at the Harvard Business School. He is the director of Kanitz eAssociados and a company consultant. Specialized in non-profit entities, he created the Efficient AssetPrize. Author of the book The Brazil that Works – The New Growth Cycle, which won the Jabuti Prizefor best book in 1995, With 120,000 copies sold in Portuguese and 30,000 in English, the bookchanged the image of Brazil from that of a country where nothing goes right to one that is rebuildingitself in a positive fashion.
O banco do Brasil
