(Adds central bank director's comments and financial report
BRASILIA, March 20 Liquidity risks to Brazilian
banks should remain stable in the first half of 2014 despite a
slight increase in the previous six months, central bank
director Anthero Meirelles said on Thursday.
Liquidity risks to the system increased slightly in the
second half of last year but remain very low, the central bank
said in a semiannual financial report released earlier on
Meirelles, who is the central bank's director of financial
supervision, said the rise in risk was due to a drop in the
value of domestic debt held by banks along with a drop in global
liquidity. Prices of Brazil's domestic debt have fallen due to
an increase in the central bank's benchmark Selic interest rate.
The payment of billions of dollars in back taxes as part of
a government-driven tax settlement program also reduced the
capital levels of banks, he said.
Meirelles said stress tests showed Brazilian banks are solid
and well funded to face changes in global liquidity conditions
stemming from a reduction of monetary stimulus in the United
"The system is well prepared to face this change (in
liquidity)," Meirelles told reporters in Brasilia. "I don't see
anything on the horizon that could mean a structural change in
He said the system is well under way to comply with the
capital requirements of Basel III global banking rules.
Growth in banking credit has continued to slow in Brazil in
the second half of 2013, along with a decrease in loan default
rates, as banks focused on less risky operations, the report
(Reporting by Alonso Soto; Editing by James Dalgleish and W