Unlike 2008 Crisis, Banks Are Now Part of Solution, Says Itaú CEO

RIO DE JANEIRO, BRAZIL – A consequence of the current novel coronavirus crisis for banks will be a change in the way society looks at these institutions, according to Candido Bracher, the Chief Executive Officer (CEO) of Itaú Unibanco (ITUB4).

In a live broadcast at Credit Suisse conducted by Ilan Goldfajn, chairman of Banco do Brazil’s Board of Directors, the Itaú chief executive stressed that “in the prior crisis, the banks were pointed out as one of the causes of the problem. In this crisis, banks are part of the solution”, emphasizing that they will have to enable financing of companies in the post-crisis period, among other aspects.

“But we won’t be able to do it alone. The massive injection of resources will be important”, explained the executive of the largest private bank in Brazil.

According to him, today there is a supply and demand crisis. “It’s not just a financial [crisis]. It has serious consequences in the financial world, but it is a crisis that starts in health. In this sense, it is like a war,” he said.

On the other hand, he emphasized that the country is in a better position to tackle the challenge, and that two factors favor this: Brazil’s lower external dependence and the interest rate at historical lows.

Regarding the PEC (Proposed Amendment to the Constitution) awarding greater power to the Central Bank, authorizing the monetary authority to buy Treasury bonds, Octavio de Lazari Jr., President of Bradesco Bank, said that the approach is correct and that the institution needs “to have this freedom to act in times of a deeper crisis”.

“This will help […] it is a sound alternative for the Central Bank to be able to regulate the market,” he said.

In terms of credit, Sérgio Rial, CEO of Banco Santander Brazil, said that domestic companies are better off today than they have been in recent years. “Apart from one sector or another, I don’t worry too much about the big companies,” he said.

On the other hand, where small and medium-sized companies are concerned, Rial believes that “clearly they will be hurt this year” and that this is due to the fact that there is no tradition in Brazil for these companies to consider the need to be aware that at some point they will face an unusual scenario.

However, he is optimistic about the terms to help these companies. “With the [low] SELIC [interest rate] today, we are able to discuss extended deadlines, including for small and medium-sized companies, a subject that used to be restricted to large companies”, Rial concludes.

Source: Infomoney