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Banco do Brasil Leads Banks on Basel III Rules: Sao Paulo Mover

Banco do Brasil SA, Latin America’s largest lender by assets, rose the most in Sao Paulo trading among Brazilian banks after the central bank set new rules regarding implementation of Basel III capital requirements.

The federally controlled bank, based in Brasilia, climbed 2 percent to 26.87 reais at 1:26 p.m., the highest intraday price since Jan. 17. Banco Santander Brasil SA, the local unit of Spain’s largest bank, advanced 0.8 percent, while Banco Bradesco SA (BBDC4) increased 0.8 percent. The benchmark Bovespa index declined 0.9 percent.

Banks will be allowed to use deferred tax assets as capital, Luiz Awazu, a central bank board member, told reporters in Brasilia today. The measure preserves about 60 billion reais ($30.3 billion) in tax credits owned by banks, Sergio Odilon dos Anjos, a central bank official, said at the same conference. Brazil starts implementing the new rules in October, according to a statement posted on the monetary authority’s website.

“Banco do Brasil is rising because the measures help state-controlled banks more than the non-government banks,” Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview. “State-controlled banks need more capital.”

The central bank said no lenders in Brazil will have to raise capital to comply with Basel III rules until 2016. Brazilian lenders will have to raise about 15 billion reais in capital from 2017 to 2019 under the new rules.

Basel III rules were drawn up to prevent a repeat of the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. in 2008.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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