Brazil’s Superior Court of Justice ruled against banks in a case determining how much delinquent interest can be charged in class-action lawsuits. Banco do Brasil SA (BBAS3) fell the most in more than five years.
STJ, as the court is known, said delinquent interest should be calculated starting when class-action lawsuits are filed, rather than when each plaintiff requests payment.
The ruling may cost companies including Banco do Brasil and Itau Unibanco Holding SA (ITUB4) as much as 341.5 billion reais ($154.6 billion) in a separate lawsuit, according to Isaac Ferreira, the central bank’s attorney general. In that case, depositors sued lenders for savings-account losses stemming from government policies adopted to fight hyperinflation in the 1980s and 1990s. Brazil’s Supreme Federal Tribunal, known as STF, is scheduled to rule on that case May 28.
“This is very negative for the banks and the financial system as a whole,” Joao Pedro Brugger, who helps manage 520 million reais at Leme Investimentos in Florianopolis, Brazil, said in a phone interview.
Banco do Brasil tumbled 7.3 percent to 22.01 reais today in Sao Paulo, its biggest decline since April 2009, while Itau slid 2.1 percent. The court ruling was announced during the 15-minute settlement period after the close of regular trading.
The central bank will review the decision to see what appeal is possible, said Erasto Carvalho, an attorney for the monetary authority. He said the judges signaled today that banks may be able to reimburse depositors in installments to avoid damaging the financial system.
“Each bank will have to make its own calculation now,” Carvalho told reporters in Brasilia.
HSBC Holdings Plc said in February its Brazilian unit may have to pay as much as $600 million if the ruling goes against banks. Today’s decision may still be overturned on appeal.