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Banco do Brasil Says Treasury Injection Will Boost Ratio

Oct. 9 (Bloomberg) -- Banco do Brasil SA, Latin America’s largest lender by assets, said a capital injection from the government will boost its Basel II capital ratio by about 50 basis points.

Brazil gave the federally controlled bank 8.1 billion reais ($4 billion) last month. About 3.2 billion reais of the total counts toward Tier I and Tier II capital ratios as of September, the Brasilia-based company said today in a regulatory filing. The rest can be applied once the company shows it cashed in bonds it received from the government, according to the filing.

The capital injection was part of Brazil President Dilma Rousseff’s effort to get state-controlled banks to reduce fees and interest rates they charge customers to revive growth in Latin America’s biggest economy. Banco do Brasil’s shares fell to a two-month low yesterday after the company cut fees on 24 services.

The bank said its Basel ratio will increase about 50 basis points, or 0.50 percentage point, according to the filing. The bank reported the ratio was at 14.6 percent at the end of the second quarter, which includes $750 million it raised after selling subordinated bonds due in January 2023.

Banco do Brasil fell 0.1 percent to 22.77 reais in Sao Paulo trading, compared with a 0.6 percent decline for the Bovespa benchmark index.

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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