Banks seek relief to meet new Brazil liquidity rules, Valor says

jueves 23 de octubre de 2014 08:42 GYT
 

By Anna Flávia Rochas

SAO PAULO Oct 23 (Reuters) - Commercial banks in Brazil want the central bank to ease a reserve requirement before a plan forcing them to boost the amount of liquid assets on their balance sheets takes effect, daily newspaper Valor Econômico reported on Thursday.

According to Valor, which did not say how it got the information, commercial banks are proposing that 386 billion reais ($155 billion) parked in the central bank's coffers as reserve requirements be used to build up liquidity coverage ratios.

Starting in April, lenders will have to create a minimum reserve of high-liquidity assets to mitigate the risk of a cash crunch during times of stress in financial markets.

The rules will set a minimum 30-day liquidity coverage ratio (LCR), or the relation between liquid assets and cash outflows over that period, of 60 percent. The minimum threshold for the LCR will climb by 10 percentage points each year until reaching 100 percent by April 2019.

According to Valor, policymakers at the central bank say the reserve requirements are a primarily an instrument for monetary policy, rather than a way to help banks create their own individual sources of liquidity. On the other hand, banks say the new rule would make them less competitive than foreign lenders, which face lighter restrictions on the matter, the paper added.

The central bank declined to comment on the report. Febraban, the group representing Brazilian lenders, was unavailable.

The rules would apply to financial institutions with assets above 100 billion reais. Currently, those banks include state-run Banco do Brasil SA, Itaú Unibanco Holding SA, state-run Caixa Econômica Federal, Banco Bradesco SA, Banco Santander Brasil SA, Banco HSBC Brasil SA, Banco Safra SA and Grupo BTG Pactual SA .

($1 = 2.4953 Brazilian reais) (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)