Bank does not need high interest rates to make a profit, says president of Febraban

In the midst of the debate on interest rates in Brazil, the president of Febraban (Brazilian Federation of Banks), Isaac Sidney, said this Saturday (4th) that banking institutions are in favor of lowering rates, but want the cost of credit to be lowered.

“It’s very expensive to take out credit. Banks don’t need high interest rates to make profits. We have to have an agenda to lower the cost of credit. Interest rates need to fall, but credit is highly taxed. Banks defend expanding the supply of credit,” he said at a conference held by Lide, an organization run by former São Paulo governor João Doria, in Lisbon.

Interest rates became the target of President Luiz Inácio Lula da Silva (PT) this week, after the Central Bank maintained the Selic (basic economic index) at 13.75%. The petista questioned not only the rate, but also the legal autonomy of the BC, established in the government of his predecessor, Jair Bolsonaro (PL).

What Lula did not discuss was the fact that the rates reflect the anticipation of inflation, the risk of which is out of control stemming from the Brazilian fiscal situation —delicate given the new government’s willingness to spend more, such as the Gastança PEC during the transition of government and the defense of ending the spending cap suggest.

Sidney, however, said that the banks “will continue to work for governance”, citing support for the manifestos for democracy in 2022 and the condemnation of coup violence by Bolsonarists on January 8.

“When the president [Lula] was elected, we congratulate him. Is this alignment? No, it’s responsibility. I have seen the government’s willingness to dialogue, but dialogue is not enough,” he said.

“We should be tired of so many diagnoses and analyses. It’s embarrassing, we all know what to do and, above all, what not to do. tax and administrative.

Speaking remotely on behalf of the Lula government, Planning Minister Simone Tebet (MDB) said that tax reform, the new fiscal anchor in place of the spending cap and a new multi-year plan are her priorities.

“Brazil has spent the last few years in an institutional, sanitary storm, with a helmsman without a nautical chart,” he said, criticizing former president Jair Bolsonaro (PL). “The electoral process brought back a democrat and, after barbarism, we live in a democracy”, he said, lamenting the coup attacks on January 8th.

Questioned about the differences of opinion with the PT in government, Tebet said: “I will receive yellow cards, when I receive the red, I will speak with the president”. She spoke again about the surprise of Lula’s choice, since she was applying for a portfolio in the social area.

Present in Lisbon, the governor of Rio, Cláudio Castro (PL), re-elected in 2022, defended that “the election is over” and asked for harmony between state and federal governments.

The chairman of the Board of Directors of Península Participações, Abílio Diniz, made an indirect defense of the drop in interest rates. “There is still some fear on the part of the BC to lower interest rates, but inflation is under control,” he said.

Also speaking in Lisbon, the chairman of Bradesco’s Board of Directors, Luiz Carlos Trabuco, stated that “the banking sector is a factor of stability and a solvency bonus” for the country. “We, entrepreneurs, are not mere spectators, we are protagonists, we have a social debt”, he said. He considers that the turmoil in the democratic process and the Yanomami crisis prove that there are “challenges to building Brazil”.

Luiza Trajano, chairman of the Board of Directors of Magazine Luiza, in turn, avoided talking about interest rates that directly affect retail credit —or even about the crisis of its rival Americanas, which threatens the balance sheet of creditor banks, leading to doubts about his loan terms.

Questioned, Sidney repeated a note released this week by Febraban criticizing the willingness of Americanas shareholders to reject lawsuits to try to clarify the R$ 20 billion hole in the company. He recalled that “the creditor banks have an exposure of R$ 25 billion”.

At the opening of the conference, Raimundo Carreiro, Brazil’s ambassador to Portugal, said in a speech that the Mercosur-European Union trade agreement will “take a long time” to be ratified. President Lula had said this week, after a meeting with the German premier, Olaf Scholz, that he hoped to see the agreement this semester.

Journalist Igor Gielow travels at the invitation of Lide