Funding Sources

FAT is a special accounting and financial fund that, according to the Federal Constitution, must allocate 28% of its funds  to BNDES to finance economic development programs. FAT represents the Bank’s main source of funds.

The funds raised through this constitutional provision are identified as “Constitutional FAT” and are remunerated as follows: a) by the long-term interest rate (TJLP) for operations contracted by December 31, 2017; b) the long-term (TLP) (operations as of 2018); or c) international market interest rates for export financing. The funds not invested in credit operations are remunerated by the average market rate (Selic) less 0.09% p.a.

Although FAT resources may be requested by the Fund in case there is insufficient balance to pay mandatory expenses, the principal is not expected to be returned to the FAT. There is only the monthly payment of interest on non-invested funds and the semi-annual payment on invested funds. Due to these characteristics, the Constitutional FAT balance is considered as subordinated debt and part of it is included in the calculation of the BNDES’ Reference Equity. However, through CMN Resolution 4,679, of December 31, 2018, subsequently replaced by CMN Resolution 4,851, of August 27, 2020, the balance related to FAT accounted as Tier II Capital of the Reference Equity was limited to the amount recorded on June 30, 2018, with a schedule of gradual reduction of 10% per year, starting January 1, 2020, until its complete exclusion in 2029.

BNDES has free decision on the application of FAT resources, as long as it is directed to economic development programs, as determined by the Federal Constitution.

In addition to constitutional transfers, BNDES also raises FAT surplus funds in the form of special deposits, called “FAT Special Deposits”.  These funds are currently remunerated by the TLP, once disbursed to the final beneficiaries. The funds not yet disbursed will be remunerated by the market rate (Selic).  In this case, in addition to the remuneration, a monthly amortization is due.

The balance of FAT funds totaled BRL 408,8 billion on March 31, 2024 – BRL 404,3 billion as Constitutional FAT and BRL 4.5 billion as FAT Special Deposits. As of the end of 1Q24, BRL 6.9 billion was raised from Constitutional FAT.

On May 2020, there was a full transfer of resources from the PIS/PASEP Fund, in the amount of BRL 20.7 billion, to Caixa Econômica Federal, according to MP 946/20, of 04/07/2020, which determined the extinction of the PIS-PASEP Fund and the transfer of its resources to the Government Severance Fund (FGTS), as one of the Federal Government’s emergency measures during COVID-19 pandemic.

Since 2021, there has been a significant allocation of FAT resources to the new category of use of the fund’s resources, namely social security expenses, being BRL 9.81 billion in 2021, BRL 17.63 billion in 2022, BRL 20.1 billion in 2023 and a expected BRL 17.4 billion in 2024. Throughout 2023, the relevance of this type of outflow of resources from the FAT motivated discussions both within the scope of Codefat (Deliberative Council of the FAT) and at higher levels of the Federal Government, without, however, any changes or regulations for the new allocation of the fund resources. BNDES continuously monitors the effects of possible reallocations on FAT transfers, whether due to regulatory changes or the possibility of amortizing the liability in the cases demanded by law. The most recent assessments do not indicate a relevant risk of deviations in the forecast for the inflow of resources from this source to BNDES.

For more information, see Notes 11.1 – 11.4 of the BNDES’ Financial Statements in BRGAAP.

Learn more about FAT.

On March 31, 2024, obligations to the National Treasury totaled BRL 42.5 billion, equivalent to 6.1% of BNDES’s funding sources.

BRL 9.1 billion (21.4%) of this balance corresponds to instruments eligible to core capital (Instrumentos Elegíveis a Capital Principal – IECP), which compose the Reference Equity with a remuneration linked to factors such as the existence of accounting profit and the payout amount of dividends to the shareholder. The remaining BRL 33.4 billion (78.6%) corresponds to onlending operations.

Learn more about funding and investment of National Treasury funds.

For more information, see Notes 10.1.c and 19.2 of  BNDES’s Financial Statements in BRGAAP.

To fulfill its role as dealer, BNDES mediates repo operations, raising funds from a financial institution and passing them on to BACEN.

Funding from a financial institution is a securities sale operation with a repurchase commitment (liability). The application of the resource at BACEN is a security purchase operation with a resale commitment.

The balance of repo operations on March 31, 2024 was BRL 29.2 billion.

BNDES has historically raised funds through government funds in the search for alternative sources of funds to support long-term investment projects.

On March 31, 2024, the total balance of Other Government Funds, the main category in “Other Sources of Funding” was BRL 27.9 billion, with its most significant balances being described below.

In addition to diversifying and complementing sources of funding, external funding makes it possible to dilute risks, encourage other Brazilian issuers and strengthen relationships with the international financial community.

Since 1953, BNDES has raised funds on the international capital market through bond issuances and, since 1972, through loans from multilateral agencies and other development institutions.

On March 31, 2024, shareholders equity totaled BRL 155.0 billion, reflecting the net profit of BRL 5.2 billion for the period, offset by a negative equity valuation adjustment of BRL 1.6 billion.

For more information, see Note 18 of the BNDES’s Financial Statements in BRGAAP.