“Privatisation” of IRB Brasil Re a misnomer

The Brazilian federal government has decided to reduce its control of IRB Brasil Re, the former reinsurance monopoly holder in Brazil, by transferring control over to Banco do Brasil. The decision is being reported as a “privatisation” of the bank. But this term is a misnomer says Machua Millett, an associate at law firm Edwards Angell Palmer & Dodge.

According Millett, by transferring the federal government's majority interest in IRB Re Brasil over to Banco do Brasil, power is simply being moved from one federally-owned entity to another.

Also, while reducing its equity position in the entity to a level below the majority, the government would still maintain a level of control of the entity through a "golden share" arrangement, reports Edwards Angell Palmer & Dodge.

It is not clear that the 41% private interest in the entity, which is split among four private insurance companies, would change...