BRASILIA (Reuters) – Brazil’s National Monetary Council on Friday extended caps on banks increasing dividends and senior staff pay through the end of the year, its latest effort to boost the flow of credit in an economy under increasing strain from the coronavirus pandemic.
The CMN, Brazil’s highest economic policy body that includes the economy minister and central bank president, said the measures will also restrict financial institutions’ share buybacks.
The CMN had previously stipulated that these measures would run through to the end of September.
“The objective is to maintain credit in the economy and ensure any future losses can be absorbed (by banks),” the central bank said in a statement, adding that it expects banks to exercise more “conservatism” with regard to dividends and pay.
“Any payments within the established limits must be made with prudence, given the uncertainties of the current situation,” the central bank said.
Economy Ministry officials and central bank president Roberto Campos Neto have said that some parts of the economy are not getting sufficient access to credit, particularly small and medium-sized firms.
Campos Neto said on Thursday this is a major worry for policymakers, adding that further measures to tackle this will be announced soon.
Figures this week showed that 90-day loan default ratios rose in April for the fourth month in a row, something not seen since the 2015-16 recession. The household default ratio of 5.34% was the highest since October 2017.
Fernando Rocha, head of statistics at the central bank, said household defaults will continue to rise as the economy struggles, but companies should be better protected by credit guarantee programs.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.