Banco Cruzeiro do Sul SA sank 2.3 percent to 14.75 reais. Moody’s Investors Service cut their outlook on their Ba ratings to negative from stable for four Brazilian banks -- Banco BMG SA, Banco Cruzeiro do Sul, Banco Bonsucesso SA and Banco Schahin SA. Profits may be hurt after capital requirements were increased for long-term vehicle financing and loans deducted from payroll income, Moody’s wrote.
Banco Panamericano SA tumbled for the biggest two-day decline in almost a month on concern central bank measures to tighten liquidity will hurt profits, raise funding costs and slow consumer loan growth.
Panamericano, which focuses on auto, credit-card and payroll lending, sank 4.6 percent to 3.98 reais in the biggest two-day drop since the days after the central bank said last month it is investigating the company for alleged fraud in its accounting practices.
Brazil’s central bank said on Dec. 3 it raised reserve and capital requirements to slow consumer lending that’s growing 20 percent annually and to prevent a credit bubble. Banks also will be required to use more capital to back consumer loans that exceed 24 months.
“It’s a very delicate moment for smaller banks with the central bank being more careful with credit, and it’s just more dramatic with Panamericano because of all the questions regarding the investigation,” said Marco Aurelio Barbosa, an analyst at Coinvalores CCVM in Sao Paulo.
The central bank measures will likely require these banks to increase their costs to raise capital and may slow their loan growth because of “tighter liquidity,” the analysts wrote.
These banks’ “franchises may be negatively affected over the next months by the Brazilian central bank’s recently announced macro-prudential measures,” Moody’s analysts wrote.
Panamericano has plummeted 42 percent since Nov. 9 after regulators found accounting irregularities that sparked a 2.5 billion-real ($1.5 billion) rescue by controlling shareholder Grupo Silvio Santos, which was funded by the nation’s deposit insurance agency.
To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
About Me
- Waldemar Jezler
- For over 30 years, Brazilian-American investment banker Waldemar Jezler has worked in the finance sector. Jezler earned his Bachelor's degree in Civil Engineering from the University of São Paulo in Brazil and then went on to attend Harvard Business School for his MBA. While at Harvard, Jezler was highly involved in extracurricular activities, including a term as President of the Ibero American Club.