According to a UBS Securities report, the loan exposure of Brazil's two biggest privately owned banks with former billionaire Eike Batista's debt riddled Grupo EBX is declining. This means that the risk of additional bad loans provisions or significant writedowns on the debt is on the decline.
The collateral submitted by Batista and EBX, which is a energy, logistics and mining company, had proven enough value in order to reduce the risk of possible losses for both Itau Unibanco Holding SA and Banco Bradesco SA.
This was confirmed by London based strategic finance planner Philip Finch in a note to his clients. "We do not expect higher provisions on coming quarters while guarantees could reduce potential losses. We think earnings risk for these banks is limited."
In addition, UBS said that the BRL3.5 billion or USD1.5 billion wave of takeover activity targeting Grupo EBX main companies had helped to reduce the bank exposure risk attached to EBX.
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