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Brazil Supreme Court OKs banks' compensation program

Brazil's Supreme Court approved the agreement struck by large local banks to compensate depositors who suffered losses due to the government's anti-inflation plans in the 1980s and 1990s, Valor Econômico reported.

In a decision penned by Deputy Chief Justice José Antonio Dias Toffoli, depositors will have up to two years to file their claims. Those with claims of up to 5,000 Brazilian reais may be paid in one payment. The agreement is expected to settle more than 1 million lawsuits, with the amount to be reimbursed estimated to reach up to 10 billion reais.

Five of the largest Brazilian banks, Itaú Unibanco Holding SA, Banco Bradesco SA, Banco Santander (Brasil) SA, Banco do Brasil SA and Caixa Econômica Federal have already agreed to the proposal, while other banks have up to 90 days to join the deal.

Fitch Ratings and Moody's have both said the agreement is credit positive for the banks, while the government believes the agreement will have positive impacts on the financial system and on the country's economic activity.

As of Dec. 18, US$1 was equivalent to 3.28 Brazilian reais.