Brazil’s Lula Confesses Obsession: Cutting Bank Spreads

Brazilian real Brazilian Aldemir Bendini is the new chief executive of federally owned Banco do Brasil. His mission is to boost lending in the country's financial system and lower borrowing costs. A Banco do Brasil veteran who was previously in charge of its credit card and new retail business, Bendini succeeds Antônio Francisco de Lima Neto as CEO.

"Public banks have the fundamental task of increasing credit and competition," Finance Minister Guido Mantega said at a news conference. However he denied there was political interference in the CEO decision.

Lima Neto offered his resignation to Finance minister Mantega earlier in the week. His successor is expected to take over on April 29. Under Brazilian law the president, in this case Luiz Inácio Lula da Silva, has the authority to name and remove the bank's administrators.

Since the world economic crisis began to slow Brazil's economy last year, Lula has often mentioned the need for banks to slash commercial lending rates to boost economic activity.

In February, he called for rate cuts to "fit with the new reality" of a credit crunch that had dried up loans and increased commercial interest rates across the world.

Pressure to cut rates has mounted since Brazil's unemployment rate reached 8.5% in February, with labor leaders complaining that high lending rates were causing credit-strapped companies to eliminate jobs.

Analysts are predicting Brazil's economy will contract this year, increasing the likelihood that its central bank will keep cutting its benchmark lending rate. Commercial banks must follow suit, President Lula has repeatedly insisted.

"The reduction of bank spreads at this moment is an obsession," Lula da Silva said, referring to the difference between the interest rates banks charge borrowers and pay out to savers.

Since Banco do Brasil is 66% government owned, it already offers far cheaper loans than most of Brazil's commercial banks, charging an annual rate of 28.2%, compared to 55.9% at Itaú Unibanco Banco Múltiplo S.A., the country's largest bank.

But state-run banks should do more to help get credit flowing again, Finance Minister Guido Mantega said: "In this moment of crisis, public banks have a vital role to fill."

Mercopress

Tags:

Ads

You May Also Like

Brazil Offers World’s First Master’s in Agroenergy Management

The first course specialized in agroenergy in the world is the result of a ...

In Over 50 Countries Brazil’s Simas Spells Sweet Treat

The sweets produced by Simas, company in the city of Macaí­ba, in Brazil’s northeastern state ...

Study Led by Brazilian Probes Behavior of Pathological Gamblers and Alcoholics

There are two types of addiction-related craving: one is physical, which is related to ...

Brazil: Rio Landfill’s Biogas Will Power Petrobras’ Plant

The garbage decomposition’s gas at the Jardim Gramacho landfill, in Duque de Caxias, the ...

Forever Tunes

Producer Ricardo Cravo Alvim thinks that marchinhas resist because they were created with the ...

Despite Weak Dollar Brazil’s Surplus Soars

Brazil’s trade balance achieved a US$ 2.183 billion surplus in January. The most outstanding ...

A Brazilian Slaughterhouse Turned to Europe

Slaughterhouse Mercosul, from the southernmost Brazilian state of Rio Grande do Sul, is one ...

Brazil Alerts That 60% of World’s Natural Resources Are Being Misused

At least 60% of the world’s fresh water, sea life, soil and climate have ...

US Called Immoral Polluter by Protesters in Brazil

Representatives of social movements, unions, and environmental organizations protested in front of the American ...

After Stadium Deaths, FIFA’s Honchos Head to the Beach in Bahia, Brazil

Here we go again. After the deaths, which took place in the São Paulo ...