VIII. Trade and Project Financing - Brief Description of Banking System Brazil has a highly-developed, efficient, and extensive banking system offering a wide range of financial services. Brazil's Central Bank regulates banking and financial services, and maintains strict accounting and operation supervision. Private sector banks are often organized as financial conglomerates offering a full range of financial services through subsidiaries and associated companies. Brazil's states have state-owned or controlled banks offering public and private banking services. The following are key governmental financial institutions: National Monetary Council -- monitory policy directed toward economic development; Central Bank -- monitory policy, exchange controls, regulation of banking and financial institutions, foreign investment regulation; Bank of Brazil -- mixed capital corporation, public and private finance, role in foreign trade policy, issues import/export licenses, trade statistics, federal government lending programs; National Economic and Social Development Bank (BNDES) -- government investment and financing programs, involved in privatization; For more information on Brazil's banking system, see Section VII. - Foreign Exchange Controls Affecting Trading Obtaining an import license gives importers access to foreign exchange at the commercial rate through commercial banks to pay for their imports. Individuals may import items via catalogs or phone/mail order, paying with an international credit card. - What is General Financing Availability In view of current high interest rates prevailing in Brazil (213% per year as of July 21, 1994 (in real terms), local demand for loans is very low. The most commonly used financing sources are provided by the Brazilian Government agencies BNDES and FINEP. The Brazilian Bank for Economic and Social Development (BNDES) offers long term financing to small, medium or large Brazilian companies wishing to purchase capital goods and raw materials. These funds are also available to companies investing in infra-structure, energy or technology. These are usually long term financing with repayment period of 60 months. BNDES funds are passed to local firms through banks operating in Brazil. FINEP - The Study and Projects Financing Agency of the Ministry of Science and Technology also offers long term financing (grace period of 2 years and repayment period of 5 years) to Brazilian companies for developing new products, research centers, total quality systems, partnership and joint ventures. FINEP also grants funds to universities and research centers. FINEP's funds are made available to the public through a few GOB owned banks Leasing, lease-back and leasing-import are widely used in Brazil. Leasing is available for both new and used, locally produced and imported equipment. The leasing operation includes financing of installation, transportation, freight, import taxes and all other taxes and fees involved in the importation. - How to Finance Exports/Methods of Payment All the standard methods of export financing are available and used in Brazil. Brazilian commercial banks, and subsidiaries of international banks are active in trade finance. However, letters of credit and other trade finance can be expensive to open in Brazil. As a result, many suppliers extend open account privileges to established reliable clients in Brazil to avoid high financing costs. - Types of Available Export Financing and Insurance Export-Import Bank of the United States The Export-Import Bank of the United States (Eximbank) offers a range of loan and loan guarantee programs to facilitate exports of U.S. goods and services. Eximbank's programs include direct loans, commercial lender working capital loan guarantees, and intermediary loans. Eximbank works in conjunction with the Foreign Credit Insurance Association (FICA) to offer various export insurance programs, including short-and medium-term export insurance, multi-buyer insurance, letter-of-credit insurance, and lease insurance policies. Other Eximbank guaranteed export credits are available from the Private Export Funding Corporation (PEFCO), which borrows in the commercial market and re-lends for exports. Additional information on Eximbank, FICA, and PEFCO programs can be obtained from: Export-Import Bank of the United States 811 Vermont Avenue, N.W. Washington, DC 20571 (202) 566-8990 Eximbank Small Business Hotline: (800) 424-5201 - Project Financing Available, Including Lending from Multilateral Institutions and Types of Projects Supported The Inter-American Development Bank (IDB) is active in project financing in Brazil. Sectors with significant IDB projects underway are pollution control and transportation. World Bank lending is focused on improving social conditions in Brazil (health, education,) and to improve public management, but is also involved in railroad modernization, transportation, and irrigation projects. - List of Banks with Correspondent U.S. Banking Arrangement Brazil has one of the most sophisticated financial systems in Latin America. U.S. commercial banks have been in Brazil since 1915, and numerous American banks have a presence in Brazil today: The First National Bank of Chicago S o Paulo First Interstate Bank of California Rio de Janeiro Banco de Boston The First National Bank of Boston S o Paulo (branch in Bras lia) Citicorp Investment Bank Citibank N.A. S o Paulo (branch in Bras lia) Manufacturers Hanover Trust Company S o Paulo American Express do Brazil American Express S o Paulo (branch in Rio de Janeiro BankCal The Bank of California Banco Chase Manhattan S.A. S o Paulo NorChem Banco Noroeste Chemical de Investimento S.A. S o Paulo Bank of America International S o Paulo Bankers Trust Company Rio de Janeiro (branch in S o Paulo) Chemical Bank Noroeste-Chemical S.A. Leasing (Norchem) S o Paulo Continental Bank International Continental Illinois Bank & Trust Co. of Chicago S o Paulo Crocker National Bank S o Paulo Morgan Guaranty Trust Company of New York S o Paulo Pittsburgh National Corporation S o Paulo T. Henry Schroder Bank & Trust Company Rio de Janeiro (branch in S o Paulo) Security Pacific International Bank S o Paulo Texas Commerce Bank N.A. S o Paulo The Citizens & Southern National Bank Rio de Janeiro The Philadelphia National Bank Ltda. S o Paulo Salomon Brothers, Inc. S o Paulo Standard Chartered Bank Rio de Janeiro