BB to benefit most from removal of consumer loan measures - Deutsche Bank

Monday, November 14, 2011

The removal of so-called macroprudential measures on consumer loans by Brazilian central bank BCB will benefit most the federally controlled Banco do Brasil (BB), Deutsche Bank (NYSE: DB) said in a research report.

BCB reduced the risk weighting on payroll deductable loans with maturity of less than 60 months and on personal loans with a less than 36-month maturity, to 75-100% from 150%, thus lowering capital requirements for both. Risk weightings for longer-term loans remain unchanged.

BB will benefit most among the country's largest banks from the removal, as some 66% of its consumer portfolio is concentrated in auto and payroll loans, along with its high level of capital constraint, according to the report.

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The BCB move comes as Brazil's economy is slowing down and amid market concerns regarding the possible introduction of more restrictive measures on bank lending to control inflation.