Recession increases Caixa's need for resources, says Moody's.
The intensification of the Brazilian recession increases the risks that Caixa Econômica Federal will not be able to make sufficient provisions to cover growing losses from defaults, stated the Moody's rating agency; Caixa is more sensitive to the country's economic crisis than other large banks because it operates with loans to segments whose ability to pay is highly correlated with increased unemployment and high inflation, Moody's justified in a report.
Reuters - The deepening Brazilian recession increases the risk that Caixa Econômica Federal will not be able to make sufficient provisions to cover growing losses from defaults, increasing pressure on the state-owned bank's capitalization ratios, the Moody's rating agency said on Wednesday.
Caixa is more sensitive to the country's economic crisis than other large banks because it operates with loans to segments whose ability to pay is highly correlated with rising unemployment and high inflation, Moody's stated in a report.