Brazil Government Takes Steps To Encourage Credit Growth
30 November 2011 - 11:55PM
Dow Jones News
Brazil's government on Wednesday said it is taking measures to
encourage lending in some targeted parts of the economy.
The measures include allowing Brazilian banks to borrow overseas
to help finance the international expansion plans of Brazilian
companies, and make it easier for small and mid-sized banks to sell
their loan portfolios.
The National Monetary Council said Brazilian banks can either
lend directly to companies overseas, or they can buy bonds sold by
Brazilian companies.
"The target of the measure is to use overseas credit to
facilitate the internationalization process of our companies, in a
period that the credit conditions abroad are more competitive than
in Brazil," the monetary council said in a statement.
Borrowing overseas can reduce costs, as interest rates are much
lower than in Brazil, where the benchmark Selic interest rate
stands at a towering 11.5%. Brazil's government recently sold 10
year overseas bonds at a yield of less than 5%.
The measure comes amid growing interest among some local
businesses to acquire companies abroad.
Earlier this week, Brazil's national development bank BNDES said
it is in talks with government-controlled utility Centrais
Eletricas Brasileiras (ELET6.BR) to finance its bid for a stake in
Energias de Portugal (EDP.LB).
Eletrobras, as the utility is known, is one of two Brazilian
companies that have made a bid to buy a 21% stake in the Portuguese
utility. The stake is valued at almost 2 billion euros, but BNDES
Vice President Joao Carlos Ferraz declined to say how much BNDES
would provide.
The purchase, if successful, could pave the way for other buys
by Brazilian companies abroad, as the bank is studying financing
for similar operations.
"The BNDES is in talks with the central bank to see if we can
finance purchases of companies out there by Brazilian companies,"
Ferraz said.
In the meantime, the National Monetary Council allows local
banks to dilute the costs of sales of credit portfolio sales until
2015, in an attempt to reduce expenses for medium and small
banks.
After the global crisis in 2008, the central bank authorized
local medium and small banks to sell their part of their credit
portfolios to bigger players to provide liquidity for the financial
sector.
-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-3544-7071;
rogerio.jelmayer@dowjones.com
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