CEF ready to pump up lending if debt crisis hits country's shores

Friday, August 12, 2011

Brazil's Caixa Econômica Federal (CEF) is ready to step in as it did in 2008 and ramp up its lending if the European debt crisis starts to impact the country's financial system.

"This is the role of a public sector bank, but it must be done in a responsible way," local news agency quoted CEF president Jorge Hereda as saying.

During the 2008 global crisis, CEF and fellow federal bank Banco do Brasil played a significant role in ensuring that credit kept flowing to companies and individuals at a time when private banks reduced their lending operations.

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Hereda said that the European debt crisis has yet to have a major impact on the local financial system, but that if private banks start to take a more cautious stance, CEF is ready to step in, and grab market share in the process. The executive added that Brazil's national and foreign private banks made an error in 2008 when they played it safe, as both CEF and BB gained significant market share without putting their asset quality indicators at risk.