Banco do Brasil to Review 2015 Dividend on Basel Rules

Banco do Brasil SA, Latin America’s biggest bank by assets, will review its dividend as it discusses a budget for next year and complies with new capital requirements. Shares (BBAS3) of the company fell as much as 2.4 percent.

“It’s reasonable that the bank reviews this metric and others that affect performance and capital indicators that must be accomplished under the final Basel III rules,” Ivan Monteiro, the Brasilia-based bank’s chief financial officer, told analysts on a conference call today.

Monteiro was responding to a question about whether the current 40 percent payout is too high given the bank’s estimates for lending growth. Banco do Brasil will maintain its current dividend policy for 2014, Monteiro said. In Brazil, listed companies must pay at least 25 percent of profit in dividends.

Banco do Brasil and the nation’s other state-controlled banks have been lending more to boost a slowing economy at a time regulations require higher capital levels. Banco do Brasil’s core capital ratio dropped to 13.8 percent in the first quarter, down from 16.6 percent a year earlier, the company said yesterday.

Shares of the bank fell 2.1 percent to 24.48 reais in Sao Paulo at 12:32 p.m., compared with a 0.8 percent decline for Brazil’s Ibovespa benchmark index.

Basel rules require banks to maintain higher capital levels to avoid the kind of liquidity crisis that sparked the 2008 credit crunch.

The bank hasn’t made a decision about reducing dividends, which is up to the board, Leonardo Loyola, head of investor relations, said on a separate conference call with analysts. Loyola said Banco do Brasil is comfortable with its capital levels.

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

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steve Dickson, Steven Crabill

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