Brazil to allow c.bank acquire credit portfolios

BRASILIA, Oct 6 (Reuters) - Brazil's government will issue a decree allowing the central bank to acquire loan portfolios of small and mid-sized local banks if needed, Central Bank President Henrique Meirelles said on Monday.

Meirelles said the authority was not needed at the moment but the measure was necessary to ensure that the country has a well-capitalized lender of last resort.

The central bank has taken a series of measures in recent weeks to help alleviate a liquidity crunch in the foreign exchange market and the banking system.

Last month, it resumed selling dollar repurchase agreements for the first time since February 2003. It has also relaxed mandatory reserve requirements for banks twice, and on Monday it sold dollar swap contracts for the first time in more than two years. (Reporting by Isabel Versiani, Writing by Todd Benson; Editing by Gary Hill)