A proposed agreement in which major Brazilian banks will have to compensate an estimated 10 billion Brazilian reais to clients for losses tied to government economic programs in the 1980s and 1990s would be credit positive to the affected banks, Fitch Ratings said.
The agreement will not pose any material risks for the banks and would mitigate future litigation risk on the matter, Fitch said. In the rating agency's view, most of the banks have already anticipated the civil action-related costs with provisions in excess of the amount agreed to.
Likewise, the benefits of removing related risks and uncertainties outweigh the financial costs from the agreement, Fitch noted.
The most affected institutions should be the largest retail banks that have historically attracted the bulk of Brazil's saving deposits. According to Fitch, the top five banks — Caixa Econômica Federal, Banco do Brasil SA, Itaú Unibanco Holding SA, Banco Bradesco SA and Banco Santander (Brasil) SA — have some of the biggest shares of the system's balance of saving accounts. The expected costs account for only 0.5% of the combined equity bases of the five banks, Fitch added.
The agreement stems from depositors' claims over financial losses resulting from the impact of six economic plans on savings accounts.
