General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
July 13, 2017

IMF published its staff report and selected issues report in the context of 2017 Article IV consultation with Brazil. These reports assess the Brazilian financial sector in the backdrop of a deep recession. Directors observed that the financial sector has remained sound despite the severe stresses. To make the system more robust, they encouraged actions to further strengthen financial safety nets through enhanced monitoring and an improved crisis management framework.

The staff report highlights that the health of the banking sector has improved. To limit increases in nonperforming loans, banks have continued renegotiating the terms of loans and writing off delinquent loans. Capital ratios have increased on the back of a decline in private banks’ risk-weighted assets and higher unrealized gains on fixed income securities. However, capital ratios of public banks, much lower than those of private banks, continued declining because of higher Basel III deductions. Liquidity has also improved as withdrawals of saving deposits stopped and banks’ holdings of liquid assets increased. A reform of the bankruptcy framework is underway; its early conclusion would help expedite the bankruptcy process and reduce creditors’ default losses, which should in turn facilitate the financing of capital investment. Overall, the banking sector has weathered the recession well and ongoing efforts to bolster its resilience should continue.

 

Banking sector soundness indicators improved in 2016 as shocks to funding dissipated, interest margins rose, and non-performing loans moderated. From a structural perspective, it would be important to conclude actions aimed at strengthening financial safety nets further by enhancing the Central Bank’s ability to provide emergency liquidity assistance and implementing the new resolution regime for banks. These steps would strengthen the authorities’ capacity to deal with liquidity and solvency shocks. As recommended in the previous Financial Sector Assessment Program (FSAP), a committee with an explicit mandate for systemic risk monitoring should be established and a mandate should be given to a separate entity to set up a crisis management framework. Banks that consistently fail the stress tests performed by the Central Bank should be required to raise additional capital or, if they are state-owned, they should be recapitalized or allowed to retain profits to boost their capital.

 

The selected issues report discusses several issues such as the Brazil’s business environment and external competitiveness, distributional effects of the pension reform, regional inequalities, and existing issues related to interest rates and inflation in the country.

 

Related Links

Staff Report (PDF)

Selected Issues Report (PDF)

Keywords: Americas, Brazil, Banking, Article IV, NPL, Basel III, IMF, FSAP

Related Articles
News

EBA Single Rulebook Q&A: Fourth Update for March 2019

EBA published answers to five questions under the Single Rulebook question and answer (Q&A) updates for this week.

March 22, 2019 WebPage Regulatory News
News

ECB Updates Validation Checks and List of Identifiers Under AnaCredit

ECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.

March 21, 2019 WebPage Regulatory News
News

BCBS Publishes Results of the Basel III Monitoring Exercise

BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.

March 20, 2019 WebPage Regulatory News
News

EBA, FCA, and PRA Agree on MoU Template for Supervisory Cooperation

EBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.

March 20, 2019 WebPage Regulatory News
News

HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of Banks

HKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).

March 20, 2019 WebPage Regulatory News
News

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News
News

EBA Updates List of Other Systemically Important Institutions in EU

EBA updated the 2018 list of other systemically important institutions (O-SIIs) in EU. The list also reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs.

March 19, 2019 WebPage Regulatory News
News

HKMA Expects Banks to Manage Risks Related to Crypto-Asset Exposures

HKMA issued a statement announcing that it expects authorized institutions to take note of the BCBS statement on crypto-assets and its prudential expectations.

March 18, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2780