Brazilian Bank Shares Biggest Losers in Americas this Year -Study
June 20 2012 - 5:36PM
Dow Jones News
Shares of Brazil's largest banks, Banco do Brasil SA (BBAS3.BR,
BDORY) and Itau Unibanco Holding (ITUB, ITUB4.BR), have lost
year-to-date more than other banks in Latin America and the U.S.
with assets above $100 billion, according to financial analysis
firm Economatica.
Government-run Banco do Brasil was the biggest loser in the
region through June 19, down 11%. Brazil's largest private bank,
Itau Unibanco, comes in at No. 2 with a 9% slide in share price
during the period, according to the study. The third-ranking bank
for share-prices losses so far in the year is U.S.-based Morgan
Stanley (MS), down 5%,=.
According to a bank analyst in Brazil, the Brazilian banks'
losses are related to government efforts to reduce bank spreads. To
lower the interest rates charged by local banks on loans, Brazil's
government promoted a wave of reductions in the large public banks,
and the private ones had to follow to remain competitive.
In spite of that, shares of other Brazilian banks, such as Banco
Bradesco SA (BBD, BBDC4.BR) and Banco Santander Brasil SA (BSBR,
SANB3.BR), have so far offered positive returns, of 2.6% and 7.3%,
respectively, year to date.
"Santander had the worst performance among the Brazilian banks
in 2011 as the market was already reacting to the European crisis.
That explains the gains accumulated in 2012," said the bank
analyst, adding that Bradesco was also less affected because it has
a large insurance arm, which potentially can reduce the impact from
falling bank interest rates.
Bradesco, Brazil's second-largest bank, has also the highest
ratio of market value to shareholder equity in the group, at
168.5%, followed by U.S. Bancorp (USB), with 167.6%, according to
the study. The study involved 19 large banks and among them only
six, including Itau Unibanco and Wells Fargo (WFC), have a ratio
above 100%.
Write to Luciana Magalhaes at luciana.magalhaes@dowjones.com
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