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Santander Brasil Apologizes for Note on Rousseff’s Impact

Banco Santander Brasil SA, the Brazilian unit of Spain’s biggest lender, apologized for a note sent to some of its high-income clients in Brazil saying the economy would worsen if President Dilma Rousseff’s chances of being re-elected stabilized or improved.

The text was part of a monthly statement sent to customers representing about 0.2 percent of the bank’s client base, the lender said on its website today. The note said stocks and the currency could reverse gains if Rousseff stems her drop in voting polls, according to newspaper Folha de Sao Paulo.

The note “in no way reflects the position of the institution,” Santander said on its website today. It violated an internal directive that economic analysis sent to clients shouldn’t contain “political or partisan bias.”

Speculation that Rousseff is losing popularity as the October election approaches amid the slowest economic growth in two decades has helped push the real up 5.9 percent this year, the most among 24 emerging-market currencies tracked by Bloomberg. The Ibovespa benchmark stock gauge has jumped 29 percent from this year’s low in March on bets that a change in government will reduce intervention in state-owned companies.

The Finance Ministry and the Rousseff campaign committee press office declined to comment on Santander’s note, according to separate e-mailed statements. The president’s press office didn’t respond to an e-mail and a telephone call.

‘Interventionist Environment’

“All they said was the consensus. Everyone knows it, everyone has been saying it, trading based on it,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro. “It’s hypocritical to apologize, to not say it openly. We’re in such an interventionist environment that people are afraid of reprisals.”

Since taking office in January 2011, Rousseff stepped up the government’s role in industries such as utilities and energy, changing concession renewal rules to lower electricity rates and forcing Petroleo Brasileiro SA, the state-run oil producer, to charge below-market gasoline prices to tame inflation.

Support for Rousseff among potential candidates for the Oct. 5 election slipped to 38 percent from 39 percent last month, according to an Ibope July 18-21 poll, which has a margin of error of plus or minus two percentage points. Candidate Aecio Neves is running second with 22 percent compared with 21 percent in June.

Recent Datafolha and Sensus polls show Rousseff’s advantage over Neves in the second round falls within the margin of error, making the outcome too close to call.

“I don’t see anything on that note that isn’t absolutely common sense,” Santander’s former chief economist, Alexandre Schwartsman, said by phone. Schwartsman left the bank in March 2011 after criticizing Brazilian budget accounting.

Schwartsman and a press official for Santander declined to comment on his exit from the bank.

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