Bank Merger in Brazil Should Reduce Credit Shortage, Says Minister

Finance Minister of Brazil Guido Mantega Guido Mantega, Brazil's minister of Finance, believes that the merger of Brazilian banks Itaú and Unibanco, is important because it will make the two institutions more solid. According to him, it is normal, at a moment of turbulence and problems in the international financial sector, for a move such as the one made by the two banks to happen.

"These are two traditional, solid banks that contribute to economic activity, therefore I believe that it is important right now for them to join forces, in order to continue making more credit available," he said.

Regarding the concentration in the sector, the minister stated that despite the reduced liquidity and some other problems, the banking sector in Brazil should remain roughly the same – with 10 to 15 relevant banks, and then the minor ones.

"There are going to be a few changes, but not many, because the sector is already concentrated. The most important thing is that this concentration is aimed at strengthening the financial system," he said.

The minister also stated that the merger might lead to a larger volume of credit available in the financial market. One of the complaints of the economic team concerns precisely the retention of funds by banks when faced with the crisis.

"I believe that it is favorable, because it strengthens the institutions. Even though they are already strong, renowned and traditional, they are going to have greater financial power, in addition to becoming one of the largest institutions. The Itaú-Unibanco Holding is going to rank among the world's largest," said Mantega.

With regard to the loss of leadership of the Bank of Brazil within the Brazilian banking system, the minister stated that the change in ranking may be temporary, and that the fact is not important. "That's life. There is nothing like one day after another. The Bank of Brazil will also have a chance to run for its money and re-establish itself," he said.

To the minister, the fact that the state-owned bank has become second in the ranking is not too important, because at a moment in which funds are scarce, the Bank of Brazil has lived up to its role of providing greater liquidity (availability of cash), even more than it normally would. "It is not relevant whether it is the first, the second or the third. But I assure you that it [Bank of Brazil] will continue to grow."

ABr

Tags:

You May Also Like

Against All Odds Brazilian Indians Defeat Multinational and Get Land Back

Brazilian Indians are celebrating what they consider a historical decision, which was published August ...

2006, the Year Brazil Turns from Oil Importer to Exporter

Brazil’s government owned energy giant Petrobras plans to increase investments by 48% in 2006 ...

Brazil’s Businessmen Urge Congress to Bar Venezuela from Mercosur

Brazilian businessmen requested Brazil's Congress on Thursday, November 29, to freeze plans for Venezuela's ...

Bus Accident Kills 4 Brazilians on Way to Venezuela’s World Social Forum

The Brazilian government is doing what it can from the Venezuelan capital to provide ...

Internal Polls Show Marina Silva Rising with 27% of Votes for Brazil Presidency

Telephone surveys on the Brazil’s presidential elections conducted by the main political parties, for ...

Despite Sales Increase Brazil’s Chicken Exporters Are Losing Money

Brazilian chicken exports yielded US$ 2.145 billion in the first half of this year, ...

Social Activism Makes Brazil’s Petrobras Member of UN Committee

Petrobras, the first and only Latin American company that is a member of the ...

‘Pig-Headed’ Brazil’s Lula Talks to Bush, Says World Will Still Get Trade Accord

The President of Brazil, Luiz Inácio Lula da Silva says that he believes the ...

Greenpeace Prevents Brazil’s Soy from Entering Europe

Sixty Greenpeace activists prevented Saturday, April 29, commodities giant Cargill from unloading a shipment ...

Brazilian Faucet Maker Wants to Expand Its Overseas Reach

Company Docol, from the southern Brazilian state of Santa Catarina, one of the main ...