Brazilian Banks Look to Pitch In on Infrastructure Lending, Barbosa Says

Brazilian banks are looking for new ways to share the burden of financing infrastructure projects with state development bank BNDES, said Fabio Barbosa, chief executive officer of Banco Santander Brasil SA.

The head of BNDES, Luciano Coutinho, can “have confidence” that the private sector will take on part of the projects currently financed by the state bank, said Barbosa, who is also president of the Brazilian Federation of Banks, in an interview yesterday in Sao Paulo.

“We’re discussing conditions under which banks can raise long-term funding,” Barbosa said. “They won’t be able to make long-term loans if the terms of their borrowing continue to change every day.”

The private sector should “share the burden” of long term infrastructure financing with BNDES, Coutinho said in an interview July 2. The outflow of low-interest BNDES loans may push the benchmark Selic rate higher because it offsets the effectiveness of tighter monetary policy, central bank President Henrique Meirelles said in an interview with Valor Economico newspaper published yesterday.

Barbosa also addressed recent developments in Brazil’s credit-card industry, saying that the July 1 end of Cielo SA’s exclusivity agreement with Visa Inc. will boost competition.

Fees

In December, Cia. Brasileira de Meios de Pagamento, the processor of credit- and debit-card payments known as Cielo, agreed with Brazil’s antitrust regulator to end its exclusive rights to handle Visa-branded card transactions.

Brazil decided to strengthen regulation of credit cards after a central bank report last year pointed out that lack of competition allowed Redecard SA, the Brazilian processor for Mastercard Inc., and Cielo to post profits higher than what can be considered “fair.” The bank is now taking a tougher line with the industry, pressing for lower fees to consumers and greater transparency, Barbosa said.

“The central bank is tightening the rules a lot. The most important measures involve transparency, standardization and comparability” of fees, he added.

Brazilians have increased their use of credit and debit cards while relying less on checkbooks for purchases, a central bank report published yesterday said.

The use of debit cards more than doubled from 2004 to 2009, increasing 153 percent, said the report on the bank’s website. Credit-card transactions rose 122 percent in the period, while the number of checks written fell 37 percent.

The real weakened 0.1 percent to 1.7791 per dollar at 3:43 p.m. New York time from 1.7774 yesterday.

The yield on interest-rate futures contracts due in January 2011 was unchanged at 11.31 percent, while the contract due in January 2012, the most traded on the BM&FBovespa exchange, rose three basis points to 11.94 percent.

To contact the reporter on this story: Iuri Dantas in Brasilia at idantas@bloomberg.net Jose Sergio Osse in Sao Paulo at josse1@bloomberg.net

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