Banco Bradesco, the second-largest private-sector bank in Brazil, is planning to raise up to $1.52bn with the country’s central bank to counter economic crisis caused by the coronavirus pandemic.
The loans will be raised through a new coronavirus-related central bank program, Reuters reported.
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Banco Bradesco vice president Cassiano Scarpelli told Reuters that the bank does not need the funds right now but it will raise the funds as a way of testing the central bank plan for possible future use.
Scarpelli added: “Banks’ liquidity is doing well so far, but it is tough to know how it will evolve from now on.”
The loan amount will be backed by the bank’s credit portfolio.
The central bank’s Monetary Council approved the liquidity plan at the beginning of this month. It permits banks to issue up to BRL650bn in loans to mitigate the economic downturn caused by the coronavirus outbreak.
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By GlobalDataAs per the policy, banks in the country can raise an amount equivalent to their shareholder’s equity through the subordinated debt program from the central bank.
As of December last year, Bradesco’s shareholder’s equity totalled BRL134bn.
Scarpelli said that the bank is unlikely to issue the full amount permitted by the regulators.
The annual interest rate charged on the loan facility will be equivalent to Brazil’s benchmark interest rate plus 0.6% per year.
