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Brazil central bank seeks changes in Itaú-XP deal; Argentina holds key rate

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Brazil central bank seeks changes in Itaú-XP deal; Argentina holds key rate

* Brazil's central bank is asking for significant changes in Itaú Unibanco Holding SA's purchase agreement to acquire a stake in XP Investimentos SA before it approves the deal, Valor Econômico reported. The central bank wants Itaú to acquire a stake lower than the proposed 49.9% in order to guarantee the investment platform's independence, according to the report.

* Argentina's central bank held its benchmark rate at 40% as the peso gained momentum after two sessions of losses. The central bank said that although inflation in May is likely to be lower than private-sector estimates, it is expected to pick up in June. The peso closed up 1.4% at 25.75 pesos per U.S. dollar on June 12, rallying from a record low of 26.20 pesos the previous day.

MEXICO AND CENTRAL AMERICA

* A new reserving calculation in Mexico helped insurers set aside lower amounts of money to cover catastrophe claims, which led to catastrophe reserves declining by 2.4 billion Mexican pesos in the fourth quarter of 2017 from the linked quarter, Moody's said. Insurers also achieved higher profits and capital levels in the fourth quarter of 2017 due to the new calculation, but the rating agency said this was a one-off event that will not be repeated.

BRAZIL

* Brazilian antitrust watchdog Cade authorized a partnership between 13 international banks to develop technology based on financial intermediation for commodities, Valor Econômico reported. Cade approved the project after identifying it as a greenfield investment and noting that the platform will be open to all eligible participants.

* Brazil's central bank said loan defaults are the main reason local banks have not been able to reduce interest rates for households and companies, Reuters reported. Defaults reached 3.2% at the close of 2017, which meant banks had to maintain rates at high levels to account for possible losses. The central bank also said competition in the local banking sector has increased in the 18 years through 2017, Valor Econômico reported.

* Itaú Unibanco Holding SA CEO Candido Bracher said cryptocurrencies are "eccentric and risky," adding that they are unlikely to gain market share in the short term, Folha de S.Paulo reported.

* Banco Bradesco SA's digital banking arm, Next, reached 150,000 customers in the first seven months after its launch and hopes to grow that number to at least 500,000 by the end of 2018, Valor Econômico reported, citing an executive at the company.

* Rules for open banking in Brazil will only begin to take shape in 2019 as the central bank is still studying proposals to make electronic money transfers happen in real time, Diário Comércio Indústria & Serviços reported. Financial technology firms in the country have been pressuring local banks to make their application programming interfaces simpler and more flexible.

* Banco Bradesco SA said it is not aware of any central bank investigation into a foreign exchange operation Bradesco conducted in 2010. The company was responding to a recent media report which claimed Brazilian authorities believe some financial institutions may be partly responsible for crimes being investigated as part of the Lava Jato corruption scandal.

ANDEAN

* S&P Global Ratings revised its outlook on Corporación Andina de Fomento to negative from stable. The negative outlook reflects the greater than one-in-three chance that Venezuela's worsening economic and liquidity conditions could reduce its capacity to treat the multilateral lender as preferred, leading to a deterioration of the bank's risk-weighted capital adequacy and an impaired business profile.

* Seguros Vida Security Previsión S.A. said it is selling Peruvian unit Inversiones Security Perú SAC to Grupo Security SA's Peruvian affiliate Security Internacional SpA. The move is part of a wider reorganization to consolidate the group's Peru-based investments under Security Internacional.

* Colombia's next government will face challenges as continued moderate growth makes it harder to achieve lower fiscal targets, according to Moody's. A more polarized political environment could make it harder for the next president to reduce spending or raise taxes, but the new administration will need to address fiscal issues to put debt on a downward trajectory, the rating agency said. Center-right candidate Iván Duque and leftist Gustavo Petro are headed for a runoff election June 17.

* Colombian lenders Bancolombia SA, Banco Bilbao Vizcaya Argentaria Colombia SA and Banco Davivienda SA have all closed the accounts of cryptocurrency exchange Buda.com, Bitcoin Magazine reported, citing Buda CEO Alejandro Beltrán. Buda has faced similar problems in Chile, where banks decided to close the accounts of several cryptocurrency traders earlier in 2018.

SOUTHERN CONE

* Argentina's CGT umbrella group of labor organizations, the country's largest labor federation, has called a one-day general strike June 25 in protest against President Mauricio Macri's economic agenda, Reuters reported. The CGT said the government's recent $50 billion financing arrangement with the IMF will "dramatically aggravate an already unsupportable social situation."

* BBVA Banco Francés SA is considered to be the front-runner to acquire Chilean retailer Cencosud SA's credit card operations in Argentina, according to a report in El Cronista. Goldman Sachs, which is managing the potential sale, is reportedly seeking $180 million for the business.

* Argentina's San Cristobal Sociedad Mutual de Seguros Generales SA has launched iúnigo, a fully digital insurance company, La Nacion reported. The new firm will initially focus on auto insurance before expanding into home insurance and micro insurance products.

* Chilean Finance Minister Felipe Larrain said his government and local banks will engage an unnamed international organization to provide advice on cybersecurity protocols following the theft of $10 million from Banco de Chile in a May cyber heist, Reuters reported. The bank said it is not changing its 2018 budget for investments in cybersecurity, Diario Financiero reported.

IN OTHER PARTS OF THE WORLD

* Asia-Pacific: China eases foreign investment rules; Malaysia to review insurer ownership rules

* Middle East & Africa: Abraaj to file for provisional liquidation; Swiss Re snaps up stake in Britam

* Europe: SocGen could sell Belgian, Polish units; Czech banks face tougher capital rules

* Global Markets: New York markets pre-open: Stocks mixed with Fed in focus; dollar strengthens

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.

The Daily Dose has an editorial deadline of 8 a.m. São Paulo time, and scans news sources published in English, Portuguese and Spanish. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.