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Brazil prosecutor cuts banks' profits estimate in savings case
July 21, 2014 / 10:02 PM / 3 years ago

Brazil prosecutor cuts banks' profits estimate in savings case

BRASILIA, July 21 (Reuters) - Brazilian prosecutors on Monday potentially reduced the liability of banks in a landmark savings case, slashing its estimate for profits that lenders made from economic plans that changed depositors’ remuneration more than two decades ago.

The attorney general’s office reduced to 21.87 billion reais ($9.85 billion) from 441.7 billion reais its estimate for the gross profits that banks made from the changes imposed by the government at the time.

Millions of depositors claim they were incorrectly remunerated when authorities changed the indexes to which savings rates were pegged between 1989 and 1991.

The government argues that a ruling against the banks could have devastating consequences on the economy. The case is under the review of the country’s Supreme Court, which has not yet set a date to resume deliberations.

A study by consultancy firm LCA on behalf of Brazil’s central bank estimated a victory for depositors could cost banks between 61 billion reais and 346 billion reais ($27 billion and $155 billion).

The attorney general’s office said in a statement that it sent its new calculations to the Supreme Court on Monday. The central bank declined to comment on the new estimate.

Shares of state-run Banco do Brasil, which analysts say would be the most affected in a decision against banks, gained after the news of the new estimate and ended the day trading up 2.30 percent.

Shares of private sector bank peers Itaú Unibanco Holding SA rose 0.85 percent and Banco Bradesco SA gained 0.80 percent. ($1 = 2.2219 Brazilian Reais) (Reporting by Alonso Soto; Editing by Grant McCool)

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