Brazil’s banks have reason to feel pleased with themselves. Spanish group Santander’s IPO of its Brazilian business last month was the world’s largest so far this year and destined to fund rapid expansion. It was embraced by investors and the bank offered extra shares to meet demand.
The central bank, once seen as stiflingly over-cautious, is now a model. Tight regulation forces simplicity and caution on banks. Reserve requirements are higher than Basel recommendations and the central bank has control over non-financial subsidiaries of financial institutions while requiring all operations to be kept on balance sheet. The result has been a quicker recovery for the sector than in much of the rest of the world.
