Brazil sees over 2 million debt renegotiation filings

debt renegotiation

Brazil’s top five banks have received over 2 million debt renegotiation demands, according to the Brazilian Federation of Banks (Febraban). The debts amount to BRL 200 billion and are connected to all kinds of credit lines, from personal loans to mortgages and even working capital for companies, with an average grace period of two to three months.  

The bank that registered the highest amount of debt renegotiation requests was state-owned Caixa Econômica Federal, with 1 million mortgage-related fillings. Caixa is the leader in the segment in Brazil. Among private institutions, Bradesco led the way, with 635,000 fillings related to 1.036 million contracts. According to Febraban, the current crisis is substantially different than that of 2008, as there is no liquidity “puddle”, but actually a strong need of liquid resources. 

Febraban also reported that banks are working closely with the Central Bank and shall release payroll loans for small and medium-sized businesses on Monday, even before the federal government transfers the necessary funds. As previously announced, the credit lines are estimated at BRL 40 billion, of which the government will provide 85 percent, leaving the rest to banks.