The bank will have to endure the default resulting from two interim measures that sought the vote of the poorest for the former president
Trying to reach the poorest electorate, former president Jair Bolsonaro (PL) created two lines of credit – which released money for people in debt – and delivered loans to the Help Brazil. The generous opening of the cases of Federal Economic Caixa in the re-election bid led to the default of 80% of the beneficiaries which, in turn, may cause Caixa to post a loss of the order of BRL 600 million.
In addition to this damage to the public bank, there is also the question of highly liquid assets — this amount is the minimum amount that the Central Bank obliges banking institutions to always keep available, for avoid a break. At the end of the election year, Caixa had BRL 162 billion, lowest volume in the historical seriessince 2017.
The crisis, however, appears to be confined to the bank’s doors and should not affect the Brazilian financial market or Caixa account holders. This is the analysis of the specialists consulted by Earth.
Credit lines created
• For people with a dirty name – which made Caixa lend BRL 3 billion in the program, called digital SIM. The money, however, has not returned to the state bank: defaults have reached 80% this year, and part of that gap must be covered with funds from the FGTS;
• Loans awarded to Brazil Aid – in which Caixa released R$7.6 billion between the first and second rounds of last year’s elections. In a tight-toothed comb by the new government, more than 100,000 debtors were barred from the Bolsa Família, making payment of installments uncertain.
Although the money released by the two measures has been injected into the Brazilian economy, Caixa will have to deal with the loss of bad debts, who have not paid their mortgage payments.
Who will be interested?
Currently, the expectation is that only borrowers of both programs will be affected. This is because they have a debt to Caixaboth through the payroll loan to Auxílio Brasil (currently Bolsa Família), and with SIM Digital.
Even if those who have taken out a loan via Digital SIM, but are in default, should not be able to escape the debt: the Caixa will confiscate part of the FGTS balance for payment in the birthday retreat, for example.
However, the economist Igor Lucena points out the misrepresentation of the objectives of both programs and their consequences, reducing the values of the benefits to pay off the loans. “It is a complex situation, because it has not solved the financial problems of these people. Caixa will have to take money from the FGTS and part of the Bolsa Família, which decreases the income of these people. With that, you subvert the motto of the program” , he points out.
The most worrying thing is how the state bank will manage the sums that will not be reimbursed by the severance pay, amounting to around R$ 600 million. This concern, however, doesn’t appear to be leaving the bank. “It will focus much more on internal management to solve the problem, despite the political problems, Caixa is a very clean bank with cash resources,” he says.
Marcello Marin, CFO of Spot Finance, a company specializing in accounting and financial management, agrees that the impacts for Caixa’s customers will be “minimal or nil”, but stresses the need to avoid a collective hysteria among account holders.
“What we usually see when it happens [escândalos envolvendo bancos]AND rush for people to withdraw their money. This cannot happen“, alert.
If such a move occurs at some point, the tendency is for the state-owned bank’s problems to be much greater than at present.
Leak in the box
The maneuver made by Pedro Guimaraesthen president of Caixa, to facilitate the flow of funds from the state-owned company to the two credit lines was revealed by journalist Amanda Rossi, in UOL.
The main question about the mechanisms used by Guimarães concerns the reduction of Caixa’s highly liquid assets, i.e. the minimum amount of money that the Central Bank requires banking institutions to always have available, to avoid bankruptcy. This was done so that the bank had at its disposal all the money Bolsonaro needed for the measures to work immediately.
At the end of 2022, this amount reached BRL 162 billion. The recorded value was R$70 billion lower than the previous year and was the lowest volume in the historical series.
Source: Terra
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