Search

 

Cablegate: Mid-Sized Brazilian Banks Experiencing Liquidity Problems,

VZCZCXRO6442
RR RUEHRG
DE RUEHRI #0298 3021015
ZNR UUUUU ZZH
R 281015Z OCT 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4680
INFO RUEHBR/AMEMBASSY BRASILIA 1011
RUEHSO/AMCONSUL SAO PAULO 5202
RUEHRG/AMCONSUL RECIFE 3471
RUCPDOC/USDOC WASHDC

UNCLAS RIO DE JANEIRO 000298

SIPDIS

STATE FOR WHA/BSC, WHA/EPSC

E.O. 12958: N/A
TAGS: ECON EFIN BR
SUBJECT: MID-SIZED BRAZILIAN BANKS EXPERIENCING LIQUIDITY PROBLEMS,
FURTHER VOLATILITY EXPECTED

REFS: A) Brasilia 1299, B) Sao Paulo 486

1. Summary. Mid-sized banks in Brazil are experiencing liquidity
problems since the onset of the global financial crisis, BBM Bank
CEO Pedro Mariani Bittencourt told Amb. Sobel on October 20.
Bittencourt predicted further global market volatility over the next
few months, which will continue to affect the banking sector in
Brazil. End Summary.

2. On October 20, Ambassador Sobel met with Pedro Henrique Mariani
Bittencourt, President and CEO of Rio de Janeiro-based BBM Bank.
BBM is Brazil's oldest private-sector bank and one of Brazil's
leading mid-sized financial institutions. Mid-sized Brazilian banks
play a significant role in making credit, especially structured
credit, available to smaller and mid-sized companies who often
cannot obtain such funding from larger banks or the capital markets.
As such, BBM and other mid-sized banks play an important role in
making additional credit resources available to Brazil's
increasingly vibrant middle-market corporate sector.

3. Bittencourt said that most mid-sized banks in Brazil have been
experiencing liquidity problems as a result of the global financial
crisis. Corporations needing money have begun to exercise the put
option, he said. Liquidity problems were alleviated in the second
and third week of the crisis as money began coming in from the big
banks and the public banks to the mid-sized banks. However, he
said, this money will not be enough to solve the problem.
Bittencourt predicted that the Brazilian banking sector will
continue to be affected by further global market volatility over the
next few months and identified key issues for the industry to
consider, such as how to roll over debt and how to discount new
loans.

4. Ambassador Sobel and Bittencourt also discussed the implications
on the banking sector from the drop in consumer confidence.
Bittencourt indicated that 10 percent of the finance in Brazil comes
from trade finance, which will suffer when people do not want to
spend money. The loss of confidence by consumers is becoming more
evident by the fact that companies and the general public are moving
to have their deposits on demand because of fears of a crash.

5. This message was cleared/coordinated with Embassy Brasilia.

MARTINEZ

© Scoop Media

 
 
 
World Headlines

 

APEC : Leaders Issue Kuala Lumpur Declaration

The leaders of the 21 APEC member economies issued the Kuala Lumpur Declaration following the first-ever virtual 27th APEC Economic Leaders’ Meeting chaired by Malaysian Prime Minister Muhyiddin Yassin. Convening for the first time since the ... More>>

UN: Refugee Resettlement Numbers Fall To Lowest In Two Decades

Refugee resettlement numbers will be at a “record low” this year, the UN refugee agency (UNHCR) said on Wednesday, with only 15,425 people resettled in the first nine months of 2020, compared to more than 50,000 in 2019. In 2016, resettlement ... More>>

OHCHR: UN Committee Issues Recommendations To Combat Racial Profiling

The Committee on the Elimination of Racial Discrimination today published its guidance to combat racial profiling, emphasizing, among other issues, the serious risk of algorithmic bias when artificial intelligence (AI) is used in law enforcement. The ... More>>

G20: Global Co-Operation And Strong Policy Action Needed For A Sustainable Recovery

The COVID-19 crisis has exposed major weaknesses in our economies that can only be fixed through greater global co-operation and strong, targeted policy action, according to a new OECD report presented to the Leaders of the G20 countries at their ... More>>