Banco Mercantil enters into an agreement worth R$1 billion with the Treasury and will increase its capital up to R$500 million | Finance

According to Mercantil’s financial vice president, Paulino Rodrigues, the deal had been under negotiation since March and the bank still believed in the thesis of its legal defense, but decided to take the opportunity to close the processes. “Some cases are almost 20 years old. We could continue to discuss all the processes, perhaps for decades, with probabilities of success difficult to estimate, possibly exposing the bank to greater contingencies in the future. It is not a simple decision, but strategically, by thinking about the bank and evaluating what we are capable of doing, we decided to eliminate this uncertainty head on. Once this is achieved, our balance sheet is cleaner and we can continue our life.”

He explained that the capital increase of up to R$500 million (with a share price of R$7.70) will be carried out to restore the bank’s Basel index, also thinking about other regulatory changes that will come into force in the coming years, such as operational risk rules and the staggering of the impacts of Resolution CMN 4966. We are continuing our growth, with very attractive yield levels.

According to him, all tax processes were already explained in the balance sheet, but with a potential impact estimated at 402.5 million reais, which was the best estimate at the time. “We had a Basel score of over 16%. We know that rating agencies, for example, have stricter criteria when it comes to capital ratios. We have an AA- rating and we want to keep it.”

Mariana Vieira, general coordinator of negotiations at the PGFN, explains that the agreement with Mercantil was concluded in the form of so-called “individual transaction”, when a taxpayer asks the Treasury to conclude an agreement that resolves practically all its debts. In the case of Mercantil, more than 96% of all liabilities were covered, involving 20 legal proceedings and 10 administrative ones, totaling 33 debts. Much of the financial volume is linked to the dispute over the impact of PIS/Cofins on banks’ financial income, which was determined by the STF in 2023 that there was indeed an impact.

“The main objective of this type of negotiation is the broad regularization of the taxpayer. We have had a lot of dialogue with the bank to determine the payment conditions. It will be a payment of more than a billion reais, in cash, without recourse to tax credits”, he explains. Vieira says that, as part of this type of “one-to-one transaction,” this agreement with Mercantil is one of the largest ever concluded with a financial institution.

She says that at present, the PGFN is not discussing “individual transaction” agreements with any other financial institution, but recalls that there are cases in other modalities, such as the Comprehensive Transaction Program (PTI), where the PGFN can grant discounts based on the prospects of victory or defeat in a legal proceeding; and those focused on topics of relevant and widespread legal controversy, where a notice is open and any taxpayer with disputes related to that topic can join.

“The advantage of the ‘individual transaction’ is that it allows the taxpayer to plan, having predictability on what is going to happen. We create a payment plan adapted to the profile of this taxpayer, to his capacity to pay. For the Treasury, in addition to the revenues, which are obviously important, this allows us to allocate human and financial resources to other areas, to other disputes. So, in the end, we are looking for something that is advantageous for both parties”, explains the representative of the PGFN.