“The central bank is doing its job by intervening, while the regulators seek to discover the full details and which measures will be taken going forward,” Fitch’s Stoll said. Banco PanAmericano was shuttered in November 2010 and small lender Banco Morada followed suit a few months later. In September, the central bank seized mid-sized Banco Cruzeiro do Sul CZRS4.SA and smaller lender Banco Prosper, the biggest collapse of a financial institution since Banco Santos was shuttered in 2005. The central bank pledged to “continue to take all necessary measures to assess responsibility within its legal power,” according to the statement. Problems have been more evident at lenders specializing in consumer credit such as payroll-deductible and auto loans - markets in which BVA does not operate.īanco BVA’s seizure is the fifth bank intervention in about two years. Years of rapid credit expansion in Brazil have resulted in tougher funding and liquidity conditions, as well as a relaxation of risk assessment and auditing controls among smaller lenders. “As a result, liquidity suffered dramatically - the bank had very few liquid assets to monetize.”Īccording to Robert Stoll, head of the unit that oversees Latin American financial institutions at credit ratings company Fitch Ratings, the Banco BVA episode “should not be viewed as a systematic problem, but as an isolated event from which we expect no ripples.” “The bank’s controlling bloc failed to meet the requirements for a capital injection, sought the deposit guarantee fund for help but didn’t succeed,” the source added. Both the central bank and government policymakers unsuccessfully sought a buyer for the bank or its assets, said the source, who declined to be identified because of the sensitivity of the issue. Banco BVA had control of only 0.17 percent of the nation’s banking assets and 0.24 percent of deposits.Ī senior government source with direct knowledge of the decision told Reuters on Friday that controlling shareholders failed to inject 1 billion reais ($495 million) needed to shore up the bank’s capital base. The episode is unlikely to destabilize Brazil’s banking system as a whole, although it might dent confidence in the soundness of small-sized lenders, analysts said. Banco BVA BNBVA.UL had in recent weeks been at the center of speculation over a potential collapse. SAO PAULO/BRASILIA (Reuters) - Brazil’s central bank seized Banco BVA SA on Friday, the latest sign of strain facing the nation’s small-sized lenders following years of fast credit-fueled growth.ĭeteriorating financing conditions and a breach of regulations at the Rio de Janeiro-based lender were cited as the main reasons behind the decision, the central bank said in a statement. The April meeting of BVA Council had a full agenda, reports Amelia Findon, BVAs head of policy, who highlights some of the topics discussed and decisions made.
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