UPDATE 1-Banco do Brasil VP to assume No.2 finance ministry post

Thu Feb 6, 2014 9:12am EST

By Guillermo Parra-Bernal and Aluísio Alves
    SAO PAULO, Feb 6 (Reuters) - Brazil's government tapped
Paulo Rogério Caffarelli, a senior vice president at state-run
Banco do Brasil SA, to assume the finance ministry's
No. 2 post, in a move aimed at shoring up investor confidence in
economic policy.    
    Caffarelli, who is currently the senior vice president in
charge of wholesale, private and international banking at Banco
do Brasil, was nominated to the post by Finance Minister Guido
Mantega, the government said in a statement.
    Reuters had reported late on Wednesday that Caffarelli 
accepted the nomination and was expected to start as soon as
possible. 
    The ministry's No. 2 post - which helps formulate policies
and acts as a bridge between Mantega, lawmakers and investors -
had been vacant since June last year, when economist Nelson
Barbosa left. Dyogo Henrique de Oliveira, a senior official at
the ministry, had occupied the post on an acting basis since
then.
    Two official sources said Caffarelli's appointment aims to
help mend relations between government policymakers and
investors, who have in recent months lashed out at what they see
as erratic policy actions. According to one of the sources,
Caffarelli, a lawyer who began his career in Banco do Brasil as
a trainee, was key behind efforts to lure new investment for
infrastructure projects that the government auctioned off last
year.
    The rapid erosion of Brazil's public finances over the past
two years has triggered alarm bells among investors, raising
fears of a debt rating downgrade in 2014 that could scare off
much-needed investment and undermine a timid recovery in Latin
America's largest economy.
    Standard and Poor's in June placed Brazil on negative
outlook, and Moody's Investors Service reduced its outlook a few
months later to stable, from positive. One of the most pressing
problems Brazil faces, according to Moody's and peers, is that
the nation's total debt is above the median for countries
bearing the same debt ratings and investment is too low as a
percentage of gross domestic output.
    Under Caffarelli, Banco do Brasil's wholesale bank landed
more mandates than ever to underwrite billions of dollars in
bond and stock offerings, according to Thomson Reuters data.
However, his efforts to help build a fully fledged investment
bank within Banco do Brasil through a joint venture and to
expand overseas partially failed in the wake of high valuations.