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Febraban foresees gradual decrease of credit spreads for Brazilian banks

Brazilian banking association Febraban expects Brazilian banks' credit spreads to narrow in coming years as a set of measures from the federal government along with the recent decrease of Selic benchmark interest rate are expected to reduce costs for the financial sector, Reuters reported.

The head of the association, Murilo Portugal, praised the new TLP interest rate for state-run development bank BNDES as it was more "aligned with market practices."

"With less subsidized credit, the effectiveness of the monetary policy of the central bank increases," Portugal reportedly said while presenting the findings of a Febraban report on the Brazilian bank spreads, which also found that tax burden and "exaggerated" regulation tend to raise the cost of credit.

Portugal reportedly added that the survey will be presented at government and legislative levels with suggestions for reforms that could help reduce credit costs.