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OPINION

Brazil banking: Too much, too late

Brazil’s banks are now an election issue.

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Here’s something interesting: Itaú Unibanco’s Strategy Council now meets much more frequently – the bank says they aren’t periodic, just whenever necessary. 

It’s important, too, for reasons I’ll come back to.

Meanwhile, the biggest issue facing the Brazilian banks is the negative impact of policies being proposed by candidates in the country’s presidential elections. Even those candidates in the centre ground (who unlikely to win) have seen the political expediency in suggesting policies to tackle the high cost of credit in the country.

One of the leading candidates – Jair Bolsonaro – has been adopted as the market favourite because of the credibility of his Chicago-trained economic adviser Paulo Guedes. 

However, in late September, Guedes began ducking public appearances after Bolsonaro shot down Guedes’s proposal for a new financial transaction tax (suggesting the market’s faith in Bolsanaro giving Guedes free reign to pursue liberal economic and financial reforms is little more than wishful thinking).

More specifically, the other of the leading two candidates, the PT’s Fernando Haddad, is proposing a graduated tax rate for financial institutions that charge higher interest rates.