INSS retirees and pensioners, civil servants and no one else. This was the public that BMG decided to prioritize to try to circumvent a competitive market that has threatened small and medium banks in Brazil.

Following a partnership with Good Finance that ended last year, the Minas Gerais family bank Pentagna Guimarães wants to return – now on a solo flight – to payroll-deductible loans, a product in which it has specialized for 20 years, long before the big banks joined. worth in this business.

This time BMG will bet on a different business model

bank

The franchise business, and based on a new product: the payroll-deductible credit card.

The idea of ​​focusing on this type of card, explains President Antonio Hermann, follows the same strategy as when the bank launched its payroll loans: it is a product that, for the time being, does not interest large banks.

The regulation was made at the end of 2015 and, in just one year, BMG reached a portfolio of R $ 5.5 billion.

Just as payroll was initially viewed as a competitor of personal credit, so payroll is regarded as a rival to traditional credit cards.

The great attraction of the card, says Hermann, is that 5% of the customer’s salary is discounted to pay the bill, while the rest is paid normally.

If you do not make the payment

If you do not make the payment

The customer enters the revolving, but a revolving that costs a quarter of the amount charged by traditional credit cards.

Interest on this card is around 3.4% per month, even cheaper than most personal credit offers.

Hermann took over BMG in 2013, when the bank’s shareholders decided to leave the bank in the hands of market executives. This happened after BMG got its name involved in the Mensalão scandal.

In court, one of the main shareholders and former president, Ricardo Guimarães, was convicted in the first and second instances. Today he appeals freely, according to information provided by the institution.

Another measure was to move the bank’s headquarters from Belo Horizonte to São Paulo.

Shortly before, when BMG was about to reach R $ 30 billion in payroll, the association with Itaú was announced. Itaú BMG Consignados was born.

The partnership ended in 2016, when BMG sold its 40% stake to the then partner for R $ 1.4 billion. The partnership between them, however, is not over.

BMG’s franchise network, Help, will exclusively sell Itaú’s payroll loans for ten years. And it is in these franchises that the president of BMG hopes to find the way to the bank’s future.

All other trades are being settled

The corporate credit portfolio, which was R $ 4 billion in 2015, has been reduced to R $ 1.4 billion and will be totally extinguished.

According to data released on Wednesday, 1st, the bank recorded in 2016 an increase in expenses to expand franchises and credit cards.

With this, the profit fell about 30%, to $ 51 million. If on the one hand increased expenses, franchises also began to generate revenue.

In the third quarter, the loss was avoided because the bank received about $ 165 million from Seguradora Generali, which paid to have exclusivity in the sale of insurance by Help network for 20 years.