Brazilian bank backtracks on move to stop financing defense industry

SAO PAULO — A leading Brazilian bank has reversed its decision to cease using its own resources to finance the defense industry, according to the government.

Defense News reported earlier this month that Banco do Brasil declared its intention to stop financing defense companies, citing governance and sustainability policies.

The U-turn follows a meeting held Feb. 26 involving the bank’s president, Tarciana Medeiros; Brazil’s vice president and the minister of development, industry, commerce and services, Geraldo Alckmin; the minister of the civil house, Rui Costa; and the defense minister, José Múcio Monteiro.

“The decision will prevent losses to companies in the sector that were at risk of losing contracts and will contribute to the sustainability and autonomy of the Defense Industrial Base,” the Ministry of Development, Industry, Commerce and Services said in a statement this week.

The ministry noted the latest decision reinforces the importance of structured financial policies that ensure “not only the economic viability of companies but also national security and sovereignty.”

If the bank had gone through with its initial plan, the move would have impacted many Brazilian defense players and the Proex program — a government mechanism, managed by the bank, that provides resources for domestic companies exporting goods and services.

The Brazilian defense contractor Mac Jee has celebrated the decision.

“The Mac Jee Group believes that this measure is a crucial step towards the sustainability and autonomy of our Defense Industrial Base,” the company said in a statement. “The initiative also ensures the preservation of vital contracts for companies in the sector, contributing to the generation of foreign exchange and jobs in the country, in addition to strengthening national security and sovereignty.”

Banco do Brasil declined to comment for this story.