Dear Gentle Reader,
Today I wanted to focus on the first of another series that I`m calling Doing Business in Brazil 101. Hear the words banking and Brazil in the same phrase, and it`s kind of like thinking about getting a cavity filled or finger nails scraped across the chalkboard. I also recognize that chalkboards don’t exist anymore and many of you have never had that experience. But regardless, like anywhere in the world, banking in Brazil is a necessary evil.
Im not going to lie to you – banking in Brazil is about as fun as a sharp stick in the eye. But if you want to do business in Brazil, standup my friend and take it like a (wo)man! Look at it as the challenge that it is, and when the first of the many millions that will flow into your account start pouring in, enjoy a nice dinner and a glass of wine with a deep sense of satisfaction because you earned it.
Like most things here, you have to expect a ton of waiting due to the country’s massive bureaucracy. Banking is no different—partly due to unnecessary complication, poor training, crapola service, and the kilometers of documentation principally required by FATCA.
FATCA, for those of you who aren’t familiar, is the US governments program Foreign Account Tax Compliance Act. This little baby plus the fallout from Sept 11 have changed the way that international banking is done today. Any bank that wants to play in the US, is required to follow these laws and there are no exceptions. Don’t believe me, ask a few of the Swiss Banks and HSBC how that went.
You could write an entire book on the ins and outs of banking in Brazil, from setting up an account to its various paperwork, forms and agencies, payment methods, regulatory bodies, etc. For today, let’s keep it simple and stick to the basics—opening your first bank account in Brazil.
First we’ll go through a quick rundown on the main banks in Brazil. Banks are really divided into two groups: banks that are semi-governmental (i.e. BB & Caixa) and private banks (i.e. Itai Unibanco & Citibank) that aren’t associated with or controlled by the Brazilian government. From a day to day perspective, there is little to no difference in operations for customers, but personally I like to know who is in the driver’s seat when it comes to where I put my money.
In general, banks in Brazil are very solid due to capital requirements, and the largest banks in Brazil is a whos who of the list of largest banks in Latin America. These banks are also truly global institutions, and financial services and banks in particular are some of the most profitable companies in the country, regardless of the political situation or party in power. Year in and year out banks in Brazil make a lot of money. Bank earnings made up more than half of the total profits for companies on the São Paulo stock exchange in both 2013 and 2014, according to Economatica.
As of Dec. 2014, the top 15 banks by assets are as follows:
Thousands of USD
BB, Caixa and BNDES are controlled by the Brazilian government and are used as an operational extension of many of the government’s social and economic development programs. Itau Unibanco and Bradesco are the 900 pound gorillas of the private banks and many of the multi-national banks have found it difficult to compete profitably here. HSBC has been sold to Bradesco, and recently Citibank has announced that it will also sell its operations here. JP Morgan really focuses on Private Clients.
Just a couple things to keep in mind:
I’ll give you a bare bones overview of which documents you’ll need, then go into more detail later—two pieces of the puzzle require a little legwork to acquire.
Bear in mind that many of these documents must be translated using a certified translator: As an individual (Pessoa Física or PF) you will need:
The purpose of these myriad items is to provide the following information, which is taken from HSBC’s website, but is relevant for all banks in Brazil:
These documents are required whether you’re opening a current/checking account (conta corrente), savings account (conta de poupança) or salary payment account (conta salário), the latter of which is useful if you receive a salary in Brazil.
As a company (Pessoa Juridica or PJ) you will need the following in addition to the items listed above for PF:
The RNE and CPF aren’t as self-explanatory, so let’s take a closer look.
For foreigners, the RNE is the primary form of ID in Brazil, unless you also have a drivers license. You are required by law to have some form of ID on your person, and I personally don’t walk around with my RNE because it’s a real pain to replace if you lose that. I have my drivers license and a copy of my RNE in my wallet and leave my original RNE with my passport at home.
To get your RNE, you’ll need to visit a division of Brazil’s Federal Police within 30 days of arriving in Brazil, with several documents in hand:
Alright, take a deep breath. Proof of payment refers to the alien registration fee and the file creation fee, which can be paid at nearly any post office or bank with a GRU form (boleto bancário). Be sure to check with the Federal Police for updated fees.
Make an appointment with the closest Federal Police office, and show up on time with the required documentation. Dress appropriately (not too casual) to avoid problems.
Most Federal Police offices are located near a despachante, a type of administrative service that will help you fill out the necessary forms for a relatively small fee.
You won’t receive your RNE immediately, but you’ll be issued a protocol number, which temporarily serves the same purpose in the meantime. It can take a couple months to receive the original.
Getting a CPF is mercifully easier than obtaining the RNE. You can apply at any Correios, Caixa Federal or Banco do Brasil, who will issue a physical card for a nominal fee.
To apply, you’ll need to do the following:
See? Much easier.
With your stack of papers in hand, it’s time to head down to the bank. Which bank you choose is up to you, but you’re better off picking a major economic player with many branches for your convenience.
For foreigners at least, opening an account requires an actual visit to a branch, and cannot be completed online.
Of the top 10 Brazilian banks by economic influence, the ones with the most offices and ATMs are:
Brazilian banks all offer similar services, and accounts almost always come with a debit card (and sometimes a credit card).
You can see that opening a bank account here is actually very straightforward, but the process looks daunting because of all the necessary steps, paperwork and required visits. And yes, Brazilian bureaucracy is unnecessarily complicated. Doing business here requires a bit of stubbornness on your own part.
I have had accounts at Itau, Bradesco, Santander, HSBC, Citibank, Votorantim and BOA and Ill be honest – they all are the same thing, and it is mediocre at best. The best platform I had for international transactions was HSBC, but now that they are leaving Brazil and have been sold to Bradesco, they will get sucked into the void. Citibank is selling its operations, so the same thing is going to happen. For me, Bradesco and Itau are basically the same thing with a different logo.
Banking bonuses are tied to opening new accounts and increasing invested assets under management. They get no credit for cash sitting there in the account. As a result, there is little incentive to provide good service to existing clients or trying to resolve problems quickly. In my experience, the only time I hear from my banker is when there is a new loan or investment program being offered (which I don’t want) or I have chunk of cash sitting there and they want me to invest it so they can apply it to their loanable assets.
But, it’s so painful to open a new account and if you have foreign shareholders usually takes 4-6 weeks to open, so I don’t switch often unless there is a huge benefit to doing so. Fortunately, 90% of the battle is obtaining the paperwork and getting the account open. Once you get the account open, things should be smooth sailing.
The upside? Once you manage to cut through the red tape and all of the initial startup headaches, the world (or at least Brazil) is your oyster.
As always, thanks for reading and send along any comments or suggestions.
“I cannot teach anybody anything. I can only make them think” – ― Socrates