BRASILIA, March 9 (Reuters) – Brazil’s central bank stated on Thursday that the potential impact of the accounting scandal involving retailer Americanas SA on banks would be ‘insignificant’ even in an extreme scenario.
The statement was made in the minutes of last week’s Financial Stability Committee meeting, which had decided to maintain a neutral macroprudential policy due to no significant increase in financial risks.
Americanas (AMER3.SA) filed for bankruptcy in January after disclosing “accounting inconsistencies” worth 20 billion reais ($3.84 billion), leading banks to increase their provisioning in their most recent earnings release.
The central bank noted that the provisions stem from “a specific event related to a large company” and have already absorbed most of the materialization of the risk.
“The central bank estimated the remaining potential impact, plus a contagion scenario over the entire production and supply chain that depends on the company in a relevant way,” it said.
“In this extreme scenario, the impact on the consolidated financial system is insignificant and there would be no capital default in any financial institution,” it added.
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The central bank also stated that “one-off events in large companies” generated a deterioration in asset prices in the private bond market, with increased volatility, spreads and risk aversion, in addition to impact on some lines in the credit market.
Its committee will continue to monitor developments and is ready to act in case of dysfunctionality, it said.
In addition to Lojas Americanas, energy company Light (LIGT3.SA) disclosed earlier this year that it had hired a firm known for acting in bankruptcy protection, raising fears about it, which the company later denied.
The two incidents resulted in a flight of funds from credit funds. This occurred shortly after a new rule from the Brazilian securities industry regulator CVM began to take effect in January, implementing mark-to-market in fixed-income investments, which ended up helping to make the picture worse.
Reporting by Marcela Ayres; Editing by Chizu Nomiyama