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BCB regulation expands scope for local consumer loan product

Bnamericas Published: Wednesday, February 04, 2009
Brazil's central bank BCB has changed regulation on a local consumer loan pool product known as "consórcios", allowing administrators to offer financing of services of any type instead of just real estate and physical goods, BCB said in a statement. Consórcios are lottery-financing businesses where participants pay monthly installments towards a house or a car, for example. Unless the participant who has paid the most into the group opts to buy the month's item, a lottery is held. The new rules, which also establish new fines and punishments for administrators and require better separation of administrators' property from that of their clients, come into effect on February 6. There were 3.6mn members of consórcios in Brazil by end-November 2008, up 4.6% from the same time in 2007, according to the latest figures from the national consórcios administrators association ABAC. Bradesco (NYSE: BBD), Itaú (NYSE: ITU), HSBC (NYSE: HBC), Panamericano, Porto Seguro, Santander (NYSE: STD) and several automaker-connected banks are among the banks and insurers that act as administrators in this segment.

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