Banco do Brasil SA, Latin America’s biggest lender by assets, jumped to a three-month high as Brazilian banks advanced after policy makers reduced reserve requirements to spur flagging investments.
Shares rose 2.2 percent to 25.60 reais at the close of trading in Sao Paulo, the highest since Sept. 27. The MSCI Brazil/Financials Index advanced 1.3 percent.
Large banks that provide loans for investment in machines, equipment and other capital goods can deduct as much as 20 percent of reserve requirements, the central bank said in a statement yesterday. The change applies to lenders with a minimum of 6 billion reais ($2.9 billion) in total equity, and the monetary authority said it expects the measure to create 15 billion reais in fresh credit.
“It’s very good news for banks,” Sandro Fernandes, a trader at brokerage Corval, said by phone from Belo Horizonte, Brazil. “The Brazilian government has been pressuring banks to lend more, and this measure has the same spirit.”
President Dilma Rousseff’s administration has demanded that banks reduce borrowing costs, ordered power utilities and phone companies to cut prices, capped car imports from Mexico and lowered taxes on consumer goods to boost domestic spending and spur growth in Latin America’s biggest economy.
Banco do Brasil rose 41 percent from this year’s low on July 17. The benchmark Bovespa index increased 13 percent during the same period.