Brazil has the third highest bank spread in the world

Brazil has the third largest banking spread in the world, behind only Zimbabwe and Madagascar, points out the World Bank. The spread is the difference between the rate the bank pays to withdraw money and the rate it charges the customer. Last year, the Brazilian spread was 27.4 percentage points, according to the survey.

More recent figures from the Central Bank, referring to June, showed that this difference was 22.07 percentage points, the second highest since August 2017. It is higher for individuals (28.23 pp) than for companies (9.75 pp).

The BC’s Banking Economy Report shows that the spread, last year, was composed of bad debt (30%), administrative expenses (26%), taxes and Credit Guarantee Fund (22%) and margins of financial institutions (22% ). “High costs in the recovery of assets and legal uncertainty end up contributing to increase the banking spread”, points out Sílvio Campos Neto, economist and partner at Tendências Consultoria.

Data from 2020 from the “Doing Business” report, also from the World Bank, pointed to a recovery rate of only 18.2% of the assets of an insolvent company within a period of four years. The average recovery in Latin America and the Caribbean was 31.2% over a period of 2.9 years. In Organization for Economic Cooperation and Development (OECD) countries, this rate was an average of 70.2% in just 1.7 years.