UPDATE 1-Itaú may guard against more defaults as Petrobras scandal widens
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By Aluisio Alves
SAO PAULO Jan 9 (Reuters) - Itau Unibanco , Brazil's largest private lender, may increase provisions for company loan defaults in 2015 due to a corruption scandal at state-run oil firm Petrobras that has implicated several major construction firms, the bank's senior vice president for risk and compliance said.
Marcelo Kopel, also head of investor relations with Itau, spoke to Reuters as market concerns mounted that the company known as Petroleo Brasileiro SA will break off deals with contractors accused of defrauding the firm while executives skimmed billions of dollars from major projects.
"There could be a reinforcement of provisions, if needed," said Kopel late on Thursday. "We are watching the possible consequences of this in the supply chain."
Fitch rating agency said on Thursday the risk within oil and construction-related loan portfolios of many Brazilian banks has risen due to the corruption scandals.
Kopel said, however, that the majority of Itau's loans to construction firms are linked to projects and are only disbursed as work advances.
Overall, Itau's expenses for loss provisions related to defaults should grow in line with its credit portfolio in 2015, Kopel said, because its lending to individuals has been focused on lower-risk portfolios like mortgages and payroll loans.
Kopel said the bank would be conservative in granting loans in 2015, given the weak outlook for Brazil's economy. Continuación...