UPDATE 1 -Brazil court delays hearing on landmark deposit-rates case

miércoles 26 de febrero de 2014 19:14 GYT
 

By Aluísio Alves and Guillermo Parra-Bernal

SAO PAULO Feb 26 (Reuters) - Brazil's second-highest court on Wednesday delayed ruling on a landmark case dating back two decades that could significantly reduce the capital of the country's biggest banks and further trip up a flagging economy.

The Supreme Court of Justice (STJ) pushed back to March 12 a hearing on the scope and time frame of lawsuits claiming that banks failed to pay fair interest on deposits between 1987 and 1992, when hyperinflation led the government to peg savings rates to a number of consumer price indexes.

The court had been scheduled to discuss who qualifies for compensation and for which time period the additional interest should be calculated, two issues crucial to estimating potential losses.

Banks could pay up to 341 billion reais ($145 billion) in compensation if Brazil's highest court, the Supreme Federal Court (STF), ultimately rules against them, banking industry group Febraban said.

The case underpins the legal uncertainties that are abound in Brazil, where tax and regulatory disputes with the government can mean years of costly litigation for companies. STJ Justice Sidnei Beneti said on Wednesday that the court needed more time to analyze claims related to the case.

Discussions at the STJ precede hearings at STF, which in November delayed a ruling on the constitutionality of the case. The STF is tasked with assessing the constitutional issues and determining whether banks will have to pay compensation.

"There is no consolidated legal jurisprudence in any of these aspects, which raises uncertainty about the potential outcome," Credit Suisse Securities analyst Marcelo Telles wrote in a recent client note.   Continuación...