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."



You May Also Like

Brazil Reduces Ethanol Added to Gas to Force Prices Down

The Brazilian government’s decision to reduce the sugarcane-based ethanol additive it puts in gasoline ...

Brazil’s Timid Interest Rate Cut Doesn’t Please Industry or Workers

Brazil Central Bank’s Monetary Policy Committee (Copom) surprised the market at the end of ...

US dollar falling face the Brazilian real

Dollar in Brazil Falls to Almost 7-Year Low

Foreign investments in Brazilian stocks and bonds keep making Brazil's currency, the real, stronger ...

Brazilian Exports Grow 30%

The Brazilian trade balance registered a positive result of US$ 1.1 billion for Brazil ...

Gol's Boeing 737 fallen in the Amazon, Brazil

Brazil’s Police Rule US Pilots Caused Country’s Worst Air Tragedy

Brazil's federal police has finished its investigation on the causes of the worst Brazilian ...

In Brazil the Arabs Are In and All Seem to Be Cashing In

The growth of exports from Brazil to the Arab countries may exceed 20% this ...

In Brazil, a Husband Can Never Be a Rapist

A study entitled "The Brazilian Women in the Public and Private Spheres" drawn up ...

Brazil Exports US$ 14 Bi and Imports US$ 8 Bi in July. Two Records.

Brazilian exports in the month of July were the greatest in history, registering the ...

Spain to Discuss 30,000 Brazilians Who Live There Illegally

The political reorganization of Haiti and the war on terrorism should be part of ...

Brazil’s CVRD to Invest US$ 400 Million in R&D

Company Vale do Rio Doce, Brazil's mining giant, announced last week a US$ 6.334 ...