BMG Bank President Ricardo Guimarães thinks the consigned credit market in Brazil is a growing market. More than R$130 billion in consigned credit loans are initiated by more than 60 banks in Brazil every year, and according to Ricardo Guimarães, BMG holds more than R$23 billion of those consigned credit loans.
The consigned credit loan business has put BMG in the number two position in terms of profit in Brazil, and Guimarães thinks the bank could outperformed the state-owned Banco do Brazil in the future if the demand for consignment loans continues. BMG currently has 18 percent of the consignment credit market, and if Mr. Guimarães has his way that percentage will increase next year.
Consignment credit in Brazil is popular because the interest rates on those loans are lower than other loans, and most banks will not loan money without collateral due to the economic situation in Brazil. Other banks are trying to break into the consignment credit market by offering several perks that can help Brazilians deal with inflation and the recent currency devaluation. But Guimarães and his family are pros when it comes to making consignment credit loans.
BMG bank recently acquired Banco Schahin and GE Money Brazil, and President Guimarães also formed a partnership with Icatu Seguros. BMG Director Alaor and President Guimarães are diversifying to head off the competition in consignment loans. BMG bank is now offering credit cards as well as conventional auto loans to individuals, but those loans are subject to higher interest rates.
Foreigners ask why BMG Bank is so special given the fact that it is a relatively small bank in Brazil when it is compared to the state-owned banks. The main reason for BMG’s appeal is the Guimarães family. A member of the Guimarães has been in charge of the bank for the last 80 years. Another reason for BMG’s success is marketing. Ricardo Guimarães knows Brazilians love football, so the bank is involved with Brazilian football. Bank employees wear football jersey on certain banking days, and BMG supports football financially.
In spite of the economic collapse in Brazil, and a government that is going through a major political crisis, BMG Bank and Ricardo Guimarães are weathering the internal storm just the way the bank has always done in tough times. Thanks to consignment credit and other bank services, BMG bank will continue to stand tall in the Brazilian banking industry, according to Guimarães.