The Standard & Poor (S&P) rating agency changed the outlook of the five major banks in action in Brazil – Itaú Unibanco, Banco do Brasil, Bradesco, Caixa Econômica Federal and Santander – from positive to stable, in addition to BNDES and others institutions of the national financial system.
The reduction is due to the coronavirus pandemic and its effects on the Brazilian economy, which also underwent the same downgrade by S&P.
"The rating action reflects our view that Brazilian GDP growth and the country's fiscal performance will be affected in 2020 due to the pandemic and extraordinary government spending, until the economy gradually recovers and fiscal consolidation resumes" says the report.
Also according to the agency, the institutions have great exposure to Brazil's risk. "In addition, many of the same factors that cause stress on the sovereign in general also affect financial institutions," he comments.
There is also the possibility of downgrading the perspective of each of the institutions mentioned in the report, in case the S&P projections for the Brazilian economy also worsen.
In addition to the BNDES and the five large banks, S&P also mentions banks in the report ABC Brasil, Citibank, Banco do Nordeste, Safra, BV, B3 S.A, China Construction Bank (Brasil) and Haitong Banco de Investimento do Brasil.
Measures against Covid-19
In order to mitigate the effects of the coronavirus on the economy, the Central Bank announced several measures in recent weeks to ensure a good level of liquidity for the SFN and to make the credit channel flow.
The idea is for banks to have readily available resources in sufficient volume to lend and to refinance debts of the people and companies most affected by the crisis.
According to the BC, the measures already announced so far have the potential to increase the liquidity of the Financial System by R $ 1.2 trillion, equivalent to 16.7% of the national Gross Domestic Product (GDP).
Cash on hand?
These resources, however, would not be flowing to their recipients at the required speed. The criticism was made by the Minister of Economy, Paulo Guedes, who stated last Saturday (4) that the money would be “pooled” in the financial system.
Also on Saturday, in a videoconference promoted by XP Investimentos, BC president Roberto Campos Neto said that banks in Brazil are "afraid" to grant credit.
Febraban (Brazilian Federation of Banks) said in a statement that more than 2 million requests for debt renegotiation are being processed by financial institutions. The total amount, according to the entity, would be R $ 200 billion.
Without mentioning the criticism of the BC minister and president, the federation says in the same note “that we are not seeing a pool of liquidity, but a substantial increase in the need for liquid resources, which makes this crisis very different from the previous one (of 2008) ”.
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