The US scandal won’t affect the financial system even in an “extreme scenario,” BC says

The central bank said on Thursday that the potential impact of the accounting scandal involving retailer Americanas SA on banks would be “insignificant” even in an extreme scenario.

This was stated in the minutes of the meeting of the Financial Stability Committee (COMEF) last week, which decided to maintain a neutral macroprudential policy as it understands that there is no significant accumulation of financial risks.

Americanas filed for bankruptcy in January after revealing “accounting inconsistencies” worth 20 billion reais, prompting banks to increase provisions in their latest earnings release.

Without directly quoting Americanas, the central bank noted that the provisions stem from “a specific event relating to a large company” and have already absorbed much of the risk materialization.

“The Central Bank has estimated the potential residual impact, as well as a contagion scenario throughout the production and supply chain that is highly dependent on the company,” he said.

“In this extreme scenario, the impact to the consolidated SFN is insignificant and there would be no capital non-compliance in any financial institution,” he added.

The Central Bank also specified that “one-off events in large companies” generated a deterioration in asset prices in the private securities market, with an increase in volatility, spreads and risk aversion, as well as an impact on some lines of the credit market.

Comef will continue to monitor developments and is ready to act if there is a malfunction, he said.

In addition to Lojas Americanas, the energy company Light revealed earlier this year that it had hired a firm known for acting in court recovery to advise the company on analyzing financial strategies, raising concerns about it, which the company has later denied.

Both incidents resulted in a drain on credit funds. This came shortly after a new regulation from the Brazilian Securities Commission (CVM) went into effect in January, which implemented mark-to-market in fixed income investments, which ended up helping to make the situation worse. .

Source: Terra

Rose

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