Banks avoided economic collapse, Febraban says
Since the beginning of the pandemic in March, Brazilian banks have lent R$2.9 trillion. It was "a great containment wall" to avoid the total collapse of the economy during the health crisis, Brazilian Federation of Banks (Febraban) President Isaac Sidney told Valor. According to him, the banks were "unjustly" accused of damming resources at the beginning of the pandemic, when there was a race for credit.
Of the amount loaned, almost R$1 trillion is renegotiated debts, which prevented delinquency, which is at 2.4%, to rise. But this level will not be permanent, Mr. Sydney warns. He says transactions in arrears are likely to increase next year and banks have already built provisions for that. In Mr. Sydney's view, this ratio should rise to about 4%, close to the level seen in the 2016 recession and the 2009 crisis.
The president of Febraban praised the Central Bank's handling of the crisis and avoided criticism of Economy Minister Paulo Guedes, who called the trade group a "lobby house." But he warned about the lack of symmetry of rules among lenders. He says fintechs are growing, "some are even the size of banks, they work like banks, they charge rates similar to those of banks, but if asked, they prefer to say they are only technology firms." He says banks are modern, sound and secure.
Mr. Sidney says he trusted the Central Bank's assessment that inflation is "a one-off shock" that will cool down in 2021. But noted that it's important to monitor it. "The fight against inflation is an issue that historically concerns all of us, it has demanded a lot of effort from the Central Bank and the real economy. We should not look at inflation in a secondary way. That is the mistake that we cannot make."
Read the main excerpts from the interview below.
Valor: Many people in the market say Paulo Guedes is no longer the government's balance point. Has the minister lost importance?
Isaac Sidney: The vision of the market is of the market. It is not up to Febraban to make considerations about whether the Economy minister is the balance point. The important thing is that we can have a direction from the fiscal and economic growth point of view, and Febraban bets that we have conditions to resume growth and a path of fiscal discipline.
Valor: The criticism of the economic team is that it is not carrying out the promised reforms. Does Febraban agree?
Mr. Sydney: The country needs, no doubt, to resume, including with the participation of Congress, a structural reform agenda. It's not an exclusive agenda of the banking sector, it's what we need. We trust that there are conditions, even politically speaking, so that Congress, driven by proposals from the Executive branch, can resume voting. At the end of the second half, we had a momentary paralysis of Congress due to the elections, which is natural. There is a process of succession in the Chamber of Deputies and Senate underway, which has caused a certain paralysis...
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