Brazil’s largest publicly-traded banks have set aside 9.3 billion reais ($1.8 billion) for potential losses tied to the collapse of retailer Americanas SA, which is adding to an increasingly complicated credit environment in the South American nation.
(Bloomberg) — Brazil’s largest publicly-traded banks have set aside 9.3 billion reais ($1.8 billion) for potential losses tied to the collapse of retailer Americanas SA, which is adding to an increasingly complicated credit environment in the South American nation.
While banks didn’t specifically name the retailer as the company responsible for higher provisions in their earnings statements, the impact of the firm’s sudden downfall after uncovering 20 billion reais in accounting “inconsistencies” last month is clear to see in fourth-quarter results.
Banco Bradesco SA was the hardest-hit among local lenders, posting an extraordinary expense for loan losses of 4.9 billion reais linked to “a specific large corporate client,” booking 100% of its exposure. Itau Unibanco Holding SA reported a 1.3 billion-real pre-tax provision for the event, which it also didn’t name, and used complimentary provisions that had already been booked in its balance sheet to cover the remainder of its exposure.
Banco BTG Pactual SA provisioned 1.2 billion reais, or about 63% of its full exposure to the Rio de Janeiro-based retailer. If the scenario deteriorates, BTG could make additional provisions, Chief Financial Officer Renato Cohn said Monday.
At Banco Santander SA, expenses with souring-loan provisions skyrocketed by €257 million ($276 million) “largely” due to a single client, which it didn’t name. Analysts from Citigroup Inc. to JPMorgan Chase & Co. estimate the bank’s Brazilian unit provisioned 1.1 billion reais for losses tied to the retailer, about 30% of its exposure.
State-owned lender Banco do Brasil SA was the latest to report provisions on Monday night, with 788 million reais — or about half of its full exposure — earmarked for losses related to “a company in the large corporate segment that filed for judicial recovery in January.”
Americanas disclosed an updated list of over 9,000 creditors late Friday, with 42.5 billion reais in liabilities. The company filed for bankruptcy protection last month, a week after revealing the accounting scandal that artificially inflated its profits and reduced reported liabilities. Banks including BTG have accused the retailer of fraud, and Americanas’ board nominated an independent committee to investigate whether there was any wrongdoing.
Central bank monitoring
Brazil’s central bank has reached out to domestic lenders and is monitoring the effects of problems tied to finance-supply transactions at Americanas, chief Roberto Campos Neto said during a TV interview late Monday.
So far, bankers have signaled the impact over their credit-origination guidance and willingness to provide loans throughout the year should be limited, according to the policy maker.
“There’s a hiccup in the short term,” Campos Neto said. “But we don’t see it as a structural” issue.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.