UPDATE 1-Brazil's BNDES needs capital to meet record disbursements
RIO DE JANEIRO Aug 14 (Reuters) - Brazil's state development bank said on Wednesday it needs more capital to fund record loan disbursements this year, a sign the government still favors using state lenders to kick-start economic growth regardless of fiscal consequences.
In order to fund a projected surge of 22 percent in loan disbursements, the Rio de Janeiro-based development bank, BNDES , may ask the national treasury, its largest shareholder, for a capital injection or borrow money in domestic debt markets in the fourth quarter, bank president Luciano Coutinho said.
Disbursements at BNDES are seen between 185 billion reais and 190 billion reais ($80 billion and $82 billion) this year, compared with 156 billion reais in 2012. BNDES, whose loan book is almost three times the size of the World Bank's, could slow disbursements should the Brazilian economy show more robust signs of a recovery in 2014, Coutinho said.
"At this point, financing investment is key to help revive the economy," Coutinho told a news conference.
BNDES is Brazil's main source of long-term corporate credit.
The fresh funds will allow BNDES, under instructions from Brazilian President Dilma Rousseff, to continue boosting credit access for companies while aggressively reducing borrowing costs. At the same time, BNDES has increased dividend payouts to the government, which in turn replenished the bank's capital with Treasury debt instead of cash.
By the end of last year, BNDES' core Tier 1 capital ratio reached 8.4 percent, below the average of 12.4 percent in the Brazilian banking system.
The BNDES loan book has more than quadrupled since 2005.
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