Brazil Central Bank Said to Consider System Well-Provisioned

Brazil’s central bank considers the country’s banking system well provisioned and isn’t requiring lenders to set aside additional funds to cover bad loans, said a member of the government’s economic team with knowledge of the situation.

The increase of provisions by banks isn’t a concern for the central bank as it reflects a rise in loan delinquencies, said the person, who asked not to be identified because the discussions aren’t public.

O Estado de S. Paulo reported today that the central bank is demanding additional provisions from mid-sized banks, a measure that reduced lending and led to losses in the second quarter. The newspaper didn’t name banks or sources.

To contact the reporters on this story: Katerina Petroff in Sao Paulo at kpetroff@bloomberg.net; Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editors responsible for this story: Helder Marinho at hmarinho@bloomberg.net; Joshua Goodman at jgoodman19@bloomberg.net