Guido Mantega, Brazil's minister of Finance, believes that the merger of Brazilian banks Itaú and Unibanco, is important because it will make the two institutions more solid. According to him, it is normal, at a moment of turbulence and problems in the international financial sector, for a move such as the one made by the two banks to happen.
"These are two traditional, solid banks that contribute to economic activity, therefore I believe that it is important right now for them to join forces, in order to continue making more credit available," he said.
Regarding the concentration in the sector, the minister stated that despite the reduced liquidity and some other problems, the banking sector in Brazil should remain roughly the same – with 10 to 15 relevant banks, and then the minor ones.
"There are going to be a few changes, but not many, because the sector is already concentrated. The most important thing is that this concentration is aimed at strengthening the financial system," he said.
The minister also stated that the merger might lead to a larger volume of credit available in the financial market. One of the complaints of the economic team concerns precisely the retention of funds by banks when faced with the crisis.
"I believe that it is favorable, because it strengthens the institutions. Even though they are already strong, renowned and traditional, they are going to have greater financial power, in addition to becoming one of the largest institutions. The Itaú-Unibanco Holding is going to rank among the world's largest," said Mantega.
With regard to the loss of leadership of the Bank of Brazil within the Brazilian banking system, the minister stated that the change in ranking may be temporary, and that the fact is not important. "That's life. There is nothing like one day after another. The Bank of Brazil will also have a chance to run for its money and re-establish itself," he said.
To the minister, the fact that the state-owned bank has become second in the ranking is not too important, because at a moment in which funds are scarce, the Bank of Brazil has lived up to its role of providing greater liquidity (availability of cash), even more than it normally would. "It is not relevant whether it is the first, the second or the third. But I assure you that it [Bank of Brazil] will continue to grow."