Petrobras Pension Fund Losses Said to Widen to $1.9 Billion

Petrobras Pension Fund Losses Said to Widen to $1.9 Billion

By Sabrina Valle

7:27 PM BRT
April 1, 2015

Petroleo Brasileiro SA’s employee pension fund, known as Petros, lost more than 6 billion reais ($1.9 billion) last year, according to a person with direct access to the fund’s preliminary results.

The deficit widened from 2.4 billion reais in 2013 partly because of Brazilian share declines, the person said, asking not to be identified before results are released publicly. Petrobras’s balance sheet could be affected when Petros charges the holding company for part of its losses, the person said.

Internal rules would force Petrobras or its employees to allocate more funds to Petros if it registers a third consecutive year of losses. The fund had 158,000 participants at the end of 2013, according to a regulatory filing at the time. Brazil’s benchmark stock index fell 2.9 percent last year as economists forecast the first economic contraction this year since 2009.

Petros is a major driver of investment in Brazil with more than 72 billion reais ($23 billion) in assets under management in 2013, including stakes at hydroelectric plants, oil and telephone companies.

The pension fund can’t comment on financial results that haven’t been formally approved and has until July 31 to file to regulators, it said in an e-mailed response to Bloomberg.

Petros, state development bank BNDES and private-equity firm GP Investimentos Ltd. were among the biggest shareholders in Lupatech SA, the oil services provider that defaulted in 2013. Petros also owns shares on meatpacker JBS SA, Itausa – Investimentos Itau SA and Telemar Participacoes SA.

Results were negative in 2013 for the first time since 2008 and were affected by a poor performance in stocks and fixed-income investments, Petros said. The pension fund accumulated 308 percent profitability in the past 10 years, above an internal target of 241 percent, it said.

Petrobras said in December that two law firms it hired are expanding a probe into Petros after identifying possible linkages with an alleged corruption scheme known as Carwash.

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