Brazil’s central bank President Alexandre Tombini said smaller lenders are financially solid, profitable and play an important role in reducing the country’s borrowing costs.
His comments, in congressional testimony, appeared to be pushing back against concerns that yesterday’s intervention in Banco Cruzeiro do Sul SA points to bigger, undetected risks in the nation’s banking system.
Tombini said the central bank hasn’t received any offers to buy Cruzeiro do Sul though he said he doesn’t rule out a “market solution” for the Sao Paulo-based lender’s problems.
Brazil’s privately-owned deposit insurance fund, known as FGC, is managing Cruzeiro do Sul after the central bank said yesterday it was intervening in Brazil’s 27th-largest lender for allegedly violating financial regulations.
Cruzeiro do Sul became at least the fifth midsize Brazilian bank to require intervention from regulators since 2010, underscoring strains in the industry as the lenders seek to refinance debt.
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