November 22, 2018 / 7:01 PM / 22 days ago

UPDATE 2-Brazil's incoming govt names economist to head Banco do Brasil

(Recasts with official announcement, adds details on CEOs, share price, background)

BRASILIA, Nov 22 (Reuters) - University of Chicago-trained economist Rubem Novaes will be the next head of Brazil’s state-owned Banco do Brasil, Brazil’s incoming administration announced on Thursday afternoon.

His appointment had been reported earlier in the day by Reuters and other media, sending the bank’s shares higher. They closed up 2 percent.

Novaes is the latest Chicago-trained economist to be named to a senior position in the incoming administration of far-right President-elect Jair Bolsonaro. The university is known as a bastion of orthodox economics that has exported key policymakers throughout Latin America.

Paulo Guedes, who will head the economy ministry, and Roberto Castello Branco, who takes the helm at state-run Petroleo Brasileiro SA, commonly known as Petrobras, also studied there.

It was Guedes who recommended Novaes for the role, according to a statement sent by his Guedes’ office.

Together, the market-friendly appointments have cheered investors who want to see the next government undertake a meaningful economic policy overhaul and steady Brazil’s rickety public finances.

Brazil’s Itau BBA said in a note to clients that it rated the Banco do Brasil appointment as “neutral.” It said the state-owned bank “is currently on a positive operating momentum, posting sequential gains in profitability.”

Novaes previously served as a board member for Brazil’s development bank BNDES. At Banco do Brasil, he will be under pressure to try and close the gap with Brazil’s largest private lenders in terms of profitability.

Also at the recommendation of Guedes, the incoming government announced that Pedro Guimaraes will lead the Caixa Economica Federal bank.

Guimaraes is a director at Brasil Plural SA, a small bank with 1 billion reais ($262 million) in total assets. He studied economics and attended the University of Rochester in the United States.

In 2000, Guimaraes worked on the privatization of Banco Banespa, at the time controlled by the state of São Paulo, which was later sold to Banco Santander SA.

He also managed the initial public offering of the Brazilian insurance company BB Seguridade Participações SA, controlled by Banco do Brasil, in 2013. A source close to Guimaraes said he supports the privatization of units of state-controlled firms.

Earlier on Thursday, Guimaraes told journalists that he did not support the privatization of Caixa - Brazil’s third-largest bank by assets - but it is unclear if he will seek to privatize any Caixa units.

$1 = 3.8119 reais Reporting by Mateus Maia; Additional reporting by Paula Laier; Writing by Carolina Mandl and Marcelo Rochabrun Editing by Susan Thomas and Rosalba O'Brien

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