Brazilian Banks to Form Credit Registry
January 21 2016 - 6:09PM
Dow Jones News
By Luciana Magalhaes
RIO DE JANEIRO--Brazil's five largest banks announced Thursday
that they have joined forces to create a credit intelligence bureau
aimed at reducing bad loans and boosting credit for good
borrowers.
Government-run banks Banco do Brasil SA and Caixa Econômica
Federal and private-sector institutions Banco Bradesco SA, Itaú
Unibanco Holding SA and Banco Santander SA have signed a nonbinding
agreement to form the new credit registry, which will compile data
on individuals and companies.
The new firm will track loan payment information from borrowers
who agree to take part in the registry. The aim, banks say, is
reduce lenders' risks and lower interest rates for borrowers with
solid credit scores.
"It will improve credit conditions, lower default rates and
avoid over-indebtedness," said Murilo Portugal, the president of
Brazil's Federation of Banks, known as Febraban.
At least two local firms already gather credit information to
sell to banks, retailers and other businesses. But the information
they provide is focused largely on identifying borrowers who have
missed payments and are bad risks.
Creating robust credit profiles of good borrowers is more
challenging because Brazilian law requires these consumers to give
their consent to be tracked. The five banks contend that their
customers will be more likely to sign up for the registry because
the institutions have an existing relationship with them.
After several years of economic growth and expanding credit
availability, Brazilians are now being squeezed by a stagnant
economy, sticky inflation and soaring unemployment.
Default rates for Brazilian consumers jumped to 5.8% last
November, and among companies to 4.5%, excluding certain loans that
may be controlled or subsidized, according to Miguel José Ribeiro
de Oliveira, a research director at Anefac, a Brazilian association
of executives in the financial sector. Those rates, he said, are
based on payments which are more than 90 days late.
Meanwhile, the average interest rates on loans to firms and
consumers have skyrocketed over the last 12 months, reaching 30.2%
and 64.8% a year, respectively, last November, Mr. Oliveira
said.
The new credit intelligence firm will operate separately from
the commercial banks, who will each own a 20% stake. The new entity
will provide credit data for its controlling shareholders as well
as sell the data to other financial institutions, according Mr.
Portugal.
The executives involved in the project will likely spend the
next year working on legal and regulatory issues to implement the
new credit registry, which should only be fully operational in the
next four years or so, Mr. Portugal said.
Write to Luciana Magalhaes at Luciana.Magalhaes@dowjones.com
(END) Dow Jones Newswires
January 21, 2016 17:54 ET (22:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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