Large Brazilian banks may set aside around $890 million for Americanas losses in Q4

Large Brazilian banks may set aside around $890 million for Americanas losses in Q4

By Aluisio Alves

SAO PAULO (Reuters) – Brazilian banks may start setting aside provisions for losses with retailer Americanas already in the fourth quarter of 2022, analysts say.

Banks such as BTG Pactual, Bradesco,Santander Brasil, Itaú Unibanco Holding and Banco do Brasil have around 15 billion reais in loans with Americanas, according to analyst reports.

Analysts estimate the banks may provision around 30% of their loans in the fourth quarter, which would be equivalent to 4.5 billion reais ($890 million), even with bankruptcy protection taking place in January, as a precautionary measure allowed by the Brazilian central bank.

The first Brazilian bank to release fourth quarter earnings, on Thursday, is Banco Santander Brasil. Itau and Bradesco are expected to release earnings next week, on Feb. 7 and 9 respectively, and state-controlled Banco do Brasil and BTG Pactual will release their numbers on Feb. 13.

Renan Manda, XPs chief analyst for financial institutions, said some of the banks may decide to start booking the losses in the fourth quarter to ease the impact, and make new provisions in the first quarter of 2023.

Total loss values also hinge on court decisions in lawsuits where the banks seek to seize Americanas deposits or investments, excluding them from bankruptcy protection, to compensate for part of their loans. The banks declined to comment. Banco do Brasil and Itau said they could not discuss the losses before the release of earnings, and Bradesco, BTG Pactual and Santander did not immediately respond to requests for comment.

($1 = 5.0544 reais)