STXNEWS LATAM-Banco do Brasil cashes in gov't debt received in capital plan

Fri Oct 26, 2012 8:03am EDT

State-run Banco do Brasil SA said on Friday that a total 8.1 billion reais ($4 billion) worth of government notes received from the federal government as part of a capital injection program have been converted into cash. Of that amount, Brazil's central bank authorized the nation's largest lender to book 3.2 billion reais as Tier I capital, Banco do Brasil said in a regulatory filing.

Tier I capital is composed of core capital, which usually consists primarily of common stock, non-redeemable preferred stock and retained earnings. The capital injection will help increase Banco do Brasil's regulatory capital ratio, based on Basel II guidelines, by 1.26 percentage points.

Banco do Brasil will seek permission to book the rest of those funds, or about 4.9 billion reais, as Tier I and Tier II capital, the filing added.

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