South America

Global Finance Chiefs at Odds

A weekend gathering of the world's top finance officials deepened conflicts among some of the largest economies, raising fresh doubts about their ability to find big steps quickly to boost the flagging global recovery, The Wall Street Journal reported. At the annual meetings in Tokyo of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece.
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Global Recession Risk Rises

The global economy risks skidding toward recession just three years after pulling out of the previous one, the International Monetary Fund warned, adding that fighting a renewed world-wide downturn will be much more complex than it was in 2009, The Wall Street Journal reported. "Risks for a serious global slowdown are alarmingly high," said the IMF's World Economic Outlook report, which was released here Tuesday ahead of the fund's annual fall meeting. It was its bleakest assessment of global growth prospects since the 2009 recession.
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A decision by Brazil's central bank to reduce reserve requirements for commercial banks was not motivated by the liquidation of troubled consumer lenders Banco Cruzeiro do Sul and Banco Prosper, a senior government official said on Thursday, Reuters reported. The bank lowered some requirements on deposits on Sept. 14, the same day it folded the banks for accounting fraud and losses. "The reserve requirements decision has nothing to do with the troubles facing some small banks.
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Ecuador’s inability to borrow in international markets after its 2008 default is drawing the nation closer to China as the world’s largest commodities consumer grants loans in exchange for access to oil and metals, Bloomberg reported. Home to untapped copper reserves similar to those of Chile and Peru, the world’s top producers, Ecuador has signed loans for $7.3 billion from China since 2009, or about one-third of the Andean country’s annual budget, according to data compiled by Bloomberg based on government announcements.
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Venezuela Risks Default If Chavez Wins

Venezuela could default on its debt as early as the second half of 2013 if President Hugo Chavez wins re-election next month and fails to shore up the oil- producing nation’s “increasingly fragile” balance sheet, Morgan Stanley said, Bloomberg reported. One “tipping point” could be the $4.3 billion in external debt payments that come due between August and November 2013, Morgan Stanley analyst Daniel Volberg wrote in a note to clients today.
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Brazil's central bank ordered the liquidation of Banco Cruzeiro do Sul on Friday after no one stepped up to acquire the troubled lender, raising doubts about government oversight of small- and mid-sized banks, Reuters reported. The central bank also ordered the closure of Banco Prosper, another small bank facing a liquidity crunch that Cruzeiro do Sul had agreed to take over last November. The decision follows three months of talks between Cruzeiro do Sul's creditors, investors and rival banks to cut mounting debts and find a buyer for the São Paulo-based lender.
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The administrator of Brazil's Banco Cruzeiro do Sul gave bondholders a few more hours on Thursday to agree to a debt buyback that is central to saving the lender from bankruptcy, Reuters reported. Privately owned deposit guarantee fund FGC planned to analyze bondholders' responses until 1800 local time (2100 GMT), buying more time to consider takeover bids for the lender, according to a securities filing. The prior deadline on the debt buyback expired at midnight Wednesday.
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Shares of Banco Cruzeiro do Sul, the Brazilian consumer lender seized by the central bank in June, rose nearly 20 percent on Tuesday, one day before deposit guarantee fund FGC is scheduled to decide whether to liquidate the bank or sell it to a rival, Reuters reported. The bank failed to receive firm takeover bids last week as concern over a potential liquidation is scaring clients and potential buyers alike, according to local media reports on Monday. Read more.
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Brazil's banks abruptly slowed the pace of loan disbursements in July as caution took center stage among private sector lenders seeking to protect earnings from near record delinquencies and a drop in borrowing costs, Reuters reported. Outstanding loans in the nation's banking system rose 0.7 percent to 2.183 trillion reais ($1.06 trillion) in July from June, the slowest pace of credit expansion on a monthly basis since February, the central bank said in a report on Thursday. In the 12 months ended in July, credit grew 17.7 percent, the slowest since April 2010.
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Banco BVA, a Brazilian bank specializing in credit for mid-sized companies, will replenish its capital base in coming weeks after incurring a net loss in the first half, a source with direct knowledge of the situation told Reuters on Tuesday. The bank, which is controlled by founder José Augusto dos Santos and financier Ivo Lodo, will soon receive over 300 million reais ($146 million) in fresh money, said the source, who declined to be quoted since the plans remain private. The move should increase the bank's capital base to about 1 billion reais, the source added.
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