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Brazil's senate to look into concentration within banking industry

The Brazilian senate will create a group that will assess the banking concentration in the country as it seeks greater efficiency and productivity in the economy, Valor Econômico reported.

Senator Armando Monteiro said that he will coordinate with a group within the committee on economic affairs to discuss the topic of banking concentration as a priority given the belief that it is one of the factors behind the high level of banking spread in the country. The group will present its work plan in coming days.

"Today, the five largest banks have 75% of the assets. The discussion is whether this level of banking concentration contributes to the rigidity of bank spreads," the senator said. He also stressed that mechanisms should be put in place to ignite competition in the system, including a regulatory body aside from antitrust regulator Cade and the central bank which would oversee competition among banks.

Monteiro also points to the role of credit unions in raising competition in the system, as well as the issue of high volumes of compulsory deposits which weigh heavily on bank costs and are passed on to customers.