Brazil Central Bank Says Banks Face $65 Billion LossArnaldo Galvao and Francisco Marcelino
Brazil’s banks may have to spend 149 billion reais ($65 billion) if the Supreme Court supports consumers seeking to recover deposits lost in an economic overhaul more than two decades ago, the central bank said.
“One quarter of the financial-system capital would be impacted,” Isaac Ferreira, the central bank’s prosecutor, told reporters in Brasilia today after meeting with Chief Justice Joaquim Barbosa. Court decisions benefiting depositors would cut about 1 trillion reais in available credit nationwide, Ferreira said.
STF, as the Brasilia-based court is known, is set to starting ruling Nov. 27 on a depositor lawsuits stemming from Brazil’s efforts to stem hyperinflation from 1986 to 1994. The government froze bank deposits, introduced new currency and reduced returns on savings accounts.
Brazil’s bank association, Febraban, said lenders complied with the law that was in effect and shouldn’t be penalized, according to an e-mailed statement. The association declined to comment on the central bank’s estimated losses.