Banks capitalize to lend more
Folha de S. Paulo
The Brazilian banking sector prepares a general round of capitalization, with an eye on the increase of the credit operations - nearly 25% a year in 2010 and 2011 - and in the growth of the demand for the financing of the infrastructure works. Both the public and the private institutions are already getting close to the limits of credit granting defined by the Central Bank. In order to increase the pace of the loans and not lose businesses, most will have to strengthen their assets, especially as of 2011. To do so, they will seek new money from their shareholders and from the capital market, as it already happened with Santander Brasil, last October, with the share offer in the Stock Exchange.
The main problem of capitalization is faced by the public banks that have worked aggressively to minimize the effects of the crisis last year and consumed a great part of their operational margin. Controlled by the Federal Government, these banks depend upon transfers from the National Treasury. The solution has to be set this year, the last year of President da Silva's administration, in order to prevent that institutions like Banco do Brasil and Caixa Econômica Federal have their work limited.
The movement has already begun among the private banks. Santander and HSBC have already strengthened and increased their capital structure in order to be able to lend more already in 2010. HSBC got R$ 1 billion (US$ 581.4 million) from the British headquarters in order to keep an expansion of at least 20% in the credit portfolio this year. Santander raised R$ 13.2 billion (US$ 7.67 billion) in the Stock Exchange in October and became the most capitalized bank of the country.
According to Pedro Paulo Longuini, Corporate Vice President of Santander Brasil, with that money the bank can easily lend another R$ 100 billion (US$ 58.1 billion) in new loans throughout the next three years. In the case of Bradesco, the recent R$ 2 billion (US$ 1.16 billion) capital increase consumed funds that were already separated as profit reserve, having had only accounting impact. With that, it did not increase its loan capacity. Nonetheless, according to analysts, the bank will have to think about it already in 2010.