Brazil credit

Earlier this week, Banco do Brasil called a relative of mine to offer her an “opportunity to change her life” – a payroll loan. This is a form of credit whose repayments are cut directly from your pay packet every month.

The only problem was, Banco do Brasil did not do its homework. This would-be borrower is a student and doesn’t earn an income. The anecdote shows the length that banks in Brazil are going to in order to continue the country’s credit-driven economic miracle. Read more

If there is one thing that investors are worried about when it comes to Brazil, it is how far the country’s consumer credit boom of the past decade still has to run.

Not too much further, say critics, who point to a rise in average household expenditure on servicing debt. And indeed, private sector credit has doubled over the past decade.

But Data Popular, a research firm, has come up with a startling finding that could give hope that Brazil’s credit binge can continue – without degenerating into a bubble. Apparently, 55m Brazilians – or 40 per cent of the country’s population – don’t have a bank accountRead more

Spain’s two leading lenders, Banco Santander and Banco Bilbao Vizcaya Argentaria, have long looked to Latin America for growth – and more recently to repair troubled balance sheets at home.

But while Santander has hitched its fortunes on Brazil — now its biggest market, accounting for 26 per cent of group profits last year — BBVA has focused on building up its operations in Mexico. Just last month it announced plans to funnel $3.5bn into its Mexico business over the next three years, and the country last year accounted for more than one-third of its global profits. Read more

On the homepage of Banco do Brasil, Brazil’s largest bank, you can take out a loan to buy a car, renovate your house or buy electronics and home appliances. Indeed, never before in Brazil has it been so easy to borrow money from a bank. Record-low interest rates are expected to make things even more attractive for borrowers.

Tipping things even further in favour of borrowers is a push by President Dilma Rousseff to encourage banks, all of them but especially those controlled by the government like Banco do Brasil, to reduce borrowing costs to further fuel lending and get the economy moving. Read more

How gloomy can you get? The Brazilian central bank’s latest weekly survey of market economists suggests the sky, or rather the ground, is the limit. The survey’s consensus on GDP growth this year is now 3.2 per cent, down from 3.26 per cent a week earlier, 3.3 per cent the week before that, 3.4 before that, 3.5 before that, and so on back in time to late November, when it began falling from the 4 per cent that had been expected for several months.

But while growth is creeping down, inflation is creeping up. The two make a miserable combination. Read more

From the FT’s Lombard column

Experian has struck a creditable deal to buy out minorities in Brazilian subsidiary Serasa, as it bulks up its emerging markets presence. The credit checking agency is paying $1.5bn for the 30 per cent stake, at the top end of City expectations. But at least the deal has a price and timing that suits Experian. The banks who are selling out possess a put option that could have triggered a transaction with neither characteristic. Read more

Brazil’s government, retailers and banks are all interested in reviving the jaded Brazilian consumer, the driver of economic growth in recent years.

But interest rates in the country are phenomenally high, with users of credit cards, for example, paying an average of 238.3 per cent a year, according to Anefac, a financial sector association. Worse, the charges aren’t always as clear as they might be to the shoppers at the tills. Read more

It may be one of the sturdiest in the world, but Brazil’s banking system can still be a rather unpleasant place for investors.

After three months of looking for a buyer for the mid-sized bankrupt lender, Banco Cruzeiro do Sul, the central bank gave up on Friday and announced it would liquidate the bank. It also shut down Banco Prosper, which Cruzeiro do Sul had been in the process of buying. Read more

Brazil bulls. They do exist. Beyondbrics has found one in the form of Caixa Economico, the Brazilian bank wholly owned by the government.

The country’s largest mortgage lender on Thursday said it planned to increase its loan book by a whopping 42 per cent this year as it looks to take advantage of its private sector rivals’ retrenchment. Read more

Brazil is famous for its coffee, but its economy is now seen as overcaffeinated, thanks to falling demand for its metal exports. There are concerns that a domestic credit bubble could be forming. Henry Mance, head of research at the FT’s Brazil Confidential, and Long View columnist John Authers take a look at the numbers.

When payroll lending first came to Brazil in 1990, no one paid that much attention. The loans, which are deducted directly from borrowers’ monthly salaries, were only available to public servants at the time.

Even after a new law in 2003 opened up payroll lending to private-sector employees, only the smallest banks were interested in offering the product.

How times have changed… Read more

Panic set in overnight (okay, yes we are being a bit melodramatic) when Moody’s announced a downgrade of some of the biggest names in Brazilian banking.

Moody’s ratings actions affected the Brazilian subsidiaries of Spain’s Santander, HSBC and ING, as well as the local lenders Bradesco, Banco do Brasil, Itaú-Unibanco, Banco Safra, Votorantim and the exchange operator BM&FBovespa. They were downgraded by one to three notches, mostly to bring them nearer to the sovereign rating as part of a global overhaul of Moody’s view of the financial sector first flagged in February. Read more

In a world obsessed with the European crisis, few might have noticed that today was an historic moment in the history of Brazilian credit.

For the first time, the total stock of Brazilian debt advanced to the equivalent of more than half of gross domestic product, or 50.1 per cent as of end-May, up from 45.7 per cent a year earlier, the central bank said. This is an important moment in a country that was once starved of credit because of its history of runaway inflation. Read more

Sales by Brazilian retailers increased by 0.8 per cent in April over March, much less than the 1.4 per cent predicted by a Bloomberg poll of 31 analysts.

Proof, if any were needed, that the government is right to be worried about a slowdown in the economy. A chart from the national statistics institute after the break shows how different sectors are getting on. Read more

So Brazil reported its biggest incidence of corporate bankruptcy claims in May since 2009, according to Serasa Experian, the credit bureau.

A cause for panic? No. The absolute numbers are small – 203 companies in all during the month compared with 168 a year earlier and 165 in April. What’s more, the figures fluctuate wildly from month to month, with bankruptcies sometimes falling and sometimes rising year-on-year. Read more

When Brazil’s PanAmericano bank came close to collapse in late 2010 following accounting “irregularities”, the central bank swore it was a one-off. And as other smaller banks have run in to difficulties since, the central bank has stuck with its “nothing to see here” line.

However, it was hard to ignore the similarities on Monday when the authorities said they were seizing control of Banco Cruzeiro do Sul following a series of irregularities. Read more

When the Brazilian government was faced with the financial crisis of 2009, it used a potent recipe to reignite the economy, one of whose main ingredients was credit growth. This year, however, credit seems to have gone into hiding. Read more