Market Roundup: Effects of Americanas scandal in the rear-view mirror

Central Bank says the effects of Americanas fraud are in the past

When Americanas, one of Brazil’s largest retailers, told the markets that it had found “accounting inconsistencies” in its books (a scandal that would later become arguably the largest corporate fraud case in Brazilian history), several key players in Brazil’s financial system worried about the impact the scandal would have on capital markets and credit lines. 

• These fears were justified not only by the sheer exposure of funds and financial institutions to the company, but also by the size of its chain of suppliers. However, these effects never had a significant impact on the Brazilian financial system.
• In granting bankruptcy protection to Americanas, a judge stated that the collapse of Americanas could lead to “a collapse of Brazil’s supply chains, with significant losses to relevant economic sectors, affecting more than 50 million consumers and putting at risk [45,000] workers.”

Yes, but … In its latest financial stability report, the Central Bank says the retailer’s demise has had no relevant impact on the country’s financial system. “For the system, the Americanas crisis is a thing of the past,” said Ailton Aquino, the bank’s audit director.

Why it matters. The current outlook confirms a reading from the Central Bank in March, when it had carried out a specific stress test considering a possible default of the company and its network of suppliers and reported that even the...