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CEO: Caixa looks to shift loan guarantees to Brazil's treasury in capital-freeing effort

Caixa EconômicaFederal is in talks with the Brazilian government to shift state-runcompany loan guarantees to the national treasury, a move that could help the lenderfree up some 900 million Brazilian reais of capital.

In an interview with ValorEconômico, Caixa CEO Gilberto Occhi estimated that the bank has some 20 billionreais worth of such transaction, mostly connected to Petrobras, the troubled government-runoil company.

"We have made some proposals to the Treasury. Some guaranteesgiven by Caixa that currently consume the bank's capital could be given by the Treasury,"Occhi was quoted as saying.

The potential transfer of credit guarantees to the Treasury ispart of a broader package of measuresthat the bank is undertaking in an effort to release capital. Other measures includelowering dividend payments and selling off some of its investment stakes in othercompanies.

"With some of these measures, we won't need a [injection] in 2017, evenwithout relying on resources from the IPO of [insurance arm] Caixa Seguridade andthe sale of a stake in [instant lottery firm] Lotex," Occhi reportedly said.

Meanwhile, Caixa vice president Nelson Antônio de Souza saidthe state-run lender has 34 billion reais available for mortgage loans by year end,though the bank is uncertain if there is enough market demand for the entire amount,Valor reported separately. Caixa aimsto disburse 93 billion reais for mortgage lending through December, the publicationnoted.

As of Oct. 7, US$1 wasequivalent to 3.22 Brazilian reais.