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The Evolution Of BMG Banking Practices Since The 1930s

Posted by PhotoPhil on March 9, 2016 in Business Ideas, Business Leaders |

The BMG Bank in Brazil is one of the few privately owned financial systems that is currently directed by Marcio Alaor, the bank’s Vice President, and BMG being a privately owned bank in today’s global economic system is considered unique. Banks are usually owned by corporations, or they are part of larger franchises, but this is not the case with BMG Bank. The bank is run by a family known as the Pentagna Guimaraes family, which has been involved in the structure of finance in Brazil since the early 1930s. The family founded the commercial bank in the 1930s named the Bank of Credit Building S.A., and they went on to rename the bank to Banco de Minas Gerias S.A. After it was renamed, the Pentagna Guimareas family made it into an even more commercialized bank.

It is important to know what a commercial bank is in order to understand the amount of work the Pentagna Guimaraes family had put into BMG. BMG as a commercial bank, is traditionally defined as a banking institution that provides several products, such as business loans, housing loans and vehicle financing. BMG also offered personal services such as CDs, savings accounts and checking accounts. Commercial banks have a traditional physical location for customers and bank employees to interact with one another. There are customer associates and vaults for safety deposit boxes. There are some commercial banks that are not considered brick and mortar banks though. Those types of commercial banks are exclusively electronic, and they do business online or by phone, but many commercial banks are combining physical and electronic banking. BMG uses this style today, and that is because of the advancement of technology and the demand of convenience. This also lowers the overhead that BMG and other banks have to spend. It is a sound business decision that Marco Alaor has helped implement to save money and satisfy customers.

Over the years, BMG has evolved since the 1930s. BMG switched to wholesale banking, and it did away with checkbooks, checking accounts and the ability of customers to make deposits. Marco Alaor and other BMG executives have steered the bank into more of a specialization in payroll loans. This change was implemented in 1998, and in 2012 BMG was becoming famous for its work in the payroll loan arena in Brazil.

Marcio Aloar was at the forefront of a major merger with BMG and Itau Unibanco S.A. in 2012. The two financial institutions signed a cooperative contract that year, and it had a major impact on banking in Brazil. The merger resulted in the two banks collectively controlling nearly all of the major payroll loans for Brazilian businesses, and the two entities nearly split controlling stock in the permanent merger signed in 2014.

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