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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Although large financial institutions in Brazil, such as Itau, Unibanco and Bradesco registered billion dollar profits last year, the small and medium sized banks in the country are struggling to stay afloat. These struggling institutions are now being carefully watched and have become attractive as possible acquisitions by the larger banks, especially foreign institutions.

HSBC Branch in Tijuca, Rio de Janeiro, Brazil, Brazil News
HSBC announced plans to close operations in Brazil, photo by Junius/Wikimedia Creative Commons License.

A recent survey conducted by daily O Globo showed that losses of 22 of these small and medium sized financial institutions totaled R$1.5 billion until the third quarter of 2015.

The current economic problems faced by the country has been harder on these institutions which concentrate their credit portfolios in sectors which have been struggling to survive, have little operational flexibility and limited cashflow.

“These banks are more sensitive to risk than the bigger ones because they have high concentration percentages, either with all their credit portfolios on a specific sector or on certain types of operation,” Ceres Lisboa told the press.

“We have been talking with foreign banks and there is an interest in operating in Brazil,” said Fitch director, Claudio Gallina to O Globo. According to Gallina the interest is coming especially from Asian institutions, which have larger capital to invest.

Yet while Asian groups are seeking information about Brazilian financial institutions, European banks have started to reduce their presence in the South American country. Barclays has announced it is closing its branches in Brazil, while HSBC sold its operations to Bradesco and is waiting for CADE (Brazil’s Anti-Trust Agency) approval to leave the country. France’s Société Générale decided to stay in the country, but has shifted its focus to institutional and corporative clients only.

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1 COMMENT

  1. Acquisitions of the smaller banks by the likes of Bradesco is not going to further the cause of banking in Brazil. At he moment we cannot get any money from ATMs in Praia de Pipa, Tibau do Sul, or Goianinha. They simply don’t have any money. These are tourist areas and they and the residence of these cities cannot find an ATM with money. Banco Do Brazil pulled out both of their ATMs in Pipa in October 2015 leaving only Caixa and Bradesco. A number of times I have been forced to drive to Natal to find a bank with money. The town’s people of Praia de Pipa just recently launched a protest movement and petition drive demanding better banking service………….With the big bank attitudes and severe lack of customer service I do not hold out hope that these big banks will do the right thing.

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