Banking in Brazil

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Chairman’s commentary

There is never any shortage of things to discuss with Brazil, and this call was no exception. As with all areas of treasury in the country, banking relations present challenges, but things work, often well. Of particular interest is the introduction in November 2020 of PIX, an electronic instant payments platform, which can be initiated from smartphones, using QR codes. It is too soon to see what impact this will have, but it has the potential to speed up payments in a country where they are notoriously slow.

https://www.bcb.gov.br/en/financialstability/instantpayments

As elsewhere, most treasurers use international banks, with Citi being the one most mentioned, followed by Santander. Treasurers are able to execute their cash management seamlessly using foreign banks, though there is a lot of use of local banks, especially Bradesco and Itaù, for the following reasons:

• Citi have exited retail banking in Brazil, and payroll typically requires a local bank, as banks typically offer significant advantages to the employees. Citi have partnered with Bradesco, but not every Citi customer uses them.
• The local banks, especially Bradesco and Itaù, often have competitive offerings in terms of technology and cash management. However, they were found to be behind on automating the processing of FX trades.
• In some cases, treasurers preferred to access credit lines from the local banks, thereby freeing up lines from their international banks.

Some participants complained that the level of service received from the Brazilian teams in the international banks was not what they are used to elsewhere. This was attributed to a large degree of autonomy by the local teams (whether in accordance with the banks’ global policies or not….), which means that the local subsidiary of an MNC will be given the attention which is driven by the size of the local business, not the global relationship.

Many participants have made good progress on automating FX, while boletos are increasingly electronic, across all banks. Many banks, including the international ones, are also providing good electronic services for managing the 1,500 or so different types of tax payments.

The consensus was that it is advisable to have a large panel of banks for FX, as rates fluctuate a lot. Also, the view was that trade finance products are not as well developed as participants hoped. (Chairman’s input: local banks usually have limits for these products, and auction them to the highest bidder.)

While the main Brazilian banks behave like international banks within the country, this often does not extend to their operations in the rest of LatAm, where there is little to no attempt to leverage the relationship across borders. 

Amongst the international banks, HSBC received some negative comments for having withdrawn from the country – they are now trying to re-establish a presence.

Bottom line: Brazil will never be the world’s easiest country to work in. But it does function, and is constantly improving.

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