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Brazil: Petrobras and VisaNet under investigation

Petrobras Probe Starts as Gabrielli Faces ‘Crisis’

Aug. 6 (Bloomberg) — Petroleo Brasileiro SA, struggling to meet output targets and finance a $174 billion spending plan, faces a new challenge today as Brazil’s Senate probes claims it evaded taxes and funneled cash to government allies.

The investigation, prompted by opponents of Brazilian President Luiz Inacio Lula da Silva, focuses on allegations Rio de Janeiro-based Petrobras evaded 4.4 billion reais ($2.4 billion) of taxes, overpaid for goods and may have favored the president’s supporters when it made charitable donations. Chief Executive Officer Jose Sergio Gabrielli denies the claims.  Read full article by Bloomberg here

VisaNet Faces Antitrust Probe by Brazilian Justice

Aug. 6 (Bloomberg) — Cia. Brasileira de Meios de Pagamento, the credit-card company known as VisaNet, is being investigated for possible anti-competitive practices by the Brazilian Justice Ministry.

The probe also involves Visa do Brasil Empreendimentos Ltda. and Visa International Service Association, the ministry said in an e-mailed statement today. The ministry, through its Economic Law Department, or SDE in the Brazilian acronym, will assess the exclusive right of VisaNet to accredit businesses to accept cards carrying the Visa logo.

This “practice” is against consumer interests and “substantially” reduces competition in the industry, the ministry said in the statement. Read full article by Bloomberg here

Source: Bloomberg, 06.08.2009

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Mexico Central Bank prohibit some Lender/Credit/Banking Fees

July 21 (Bloomberg) — Mexico’s central bank said it will prohibit commercial banks from applying some fees in a bid to make charges more transparent and bolster competition.

Starting Aug. 21, banks won’t be able to charge fees for depositing checks that are returned, for exceeding debit card limits or for canceling deposit accounts, credit cards, debit cards or online banking services, the central bank said today in an e-mailed statement.

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The measures may force Mexican banks to issue more loans to compensate for revenue they currently get from fees, which may open up credit channels that seized up amid the global financial crisis, said Gabriel Casillas at UBS AG in Mexico City. Fees and commissions accounted for 20 percent of the Mexican banking industry’s operating revenue in 2008, Standard & Poor’s says.

“This is an important blow to one of the biggest sources of revenue for Mexican banks,” said Casillas, who is chief economist for Mexico and Chile. “This should give them an incentive to increase credit and obtain revenue from there.”

Banco Bilbao Vizcaya Argentaria SA, which controls Mexico’s largest lender BBVA Bancomer SA, fell 1.4 percent to 9.675 euros at 12:15 p.m. New York time from 9.81 euros at 10 a.m., when the measures were announced.

Banks will also be unable to charge customers for opening or managing accounts that were opened in order to receive a loan, the bank said.

Antitrust Chief

Mexican antitrust chief Eduardo Perez Motta said in a July 17 interview that authorities needed to make it easier for customers to switch banks so they could more easily shop for low-cost services, which would in turn boost competition.

“When you tell your bank you want to leave, they make your life difficult,” Perez Motta said.

Still, Angelica Bala, an S&P credit and banking analyst in Mexico City, said increased regulations won’t improve competition or transparency.

“The central bank is doing this because there has been a big political push against banks charging so much for fees and commissions,” Bala said in a telephone interview. “But putting a cap on fees and commissions is not a good thing. It has to be driven by competition.”

Source: Bloomberg, 21.07.2009 by : Jens Erik Gould in Mexico City at jgould9@bloomberg.net.

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Brazil’s Antitrust Chief says ‘Irrational’ Rate cuts may hurt Brazilian banks

July 21 (Bloomberg) — Brazilian antitrust agency chief Arthur Badin said a move by state-owned banks to cut interest rates in a bid to force others to match lower borrowing costs threatens to hurt the banking industry.

“Public banks fulfill an important role in helping the economy recover,” Badin said in an interview in Brasilia. “It’s also important that, under the pretext of increasing competition, you don’t achieve the opposite in the long term, with irrational pricing of interest rates when there exists the possibility for effective competition.”

Brazilian officials, including President Luiz Inacio Lula da Silva, have urged banks to increase lending and cut borrowing costs after the credit crunch last year. Banco do Brasil SA, the nation’s largest federally controlled bank, Caixa Economica Federal and state development bank BNDES have all slashed borrowing costs over the past year.

“Decisions by public banks to lower rates were mainly political and don’t solve structural problems, such as default rates and future rate expectations,” Andre Perfeito, an economist at brokerage Gradual CCTVM Ltda, said in a telephone interview from Sao Paulo. “It may produce results in the short term, but in the long term it will cost more and won’t be very effective.”

Aldemir Bendine, who was made Banco do Brasil’s president in April, on May 25 announced he expanded credit to individuals by 13 billion reais ($6.8 billion), reduced rates on consumer loans and mortgages and extended the maturity of car loans in a bid to revive consumer spending. The boost to personal loans benefited 10 million clients, about a third of the bank’s total.

Brazil also cut its Long Term Interest Rate, used by state development bank BNDES, to a record 6 percent last month.

The share of outstanding credit from public banks rose to 37.8 percent in June from 34.2 percent in September last year, according to central bank figures.

Source: Bloomberg, 21.07.2009 by Iuri Dantas in Brasilia at idantas@bloomberg.net

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