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Luiz Carlos Trabuco, president of Brazil´s third largest banking institution Bradesco, recently stated to the press that the country will not be able to avoid some form of contamination via the effects of the ongoing global economic crisis.

However, Trabuco referred to this “benign contagion” positively as he believes that more international investors will be attracted to the positive factors about Brazil – which look firmly set to remain.  Examples referred to include a strong internal market, improving social equality, improved democracy and a more transparent judicial system.

Trabuco viewed the recent drop of the national SELIC interest rate from 12.50 percent to 12 percent as “adequate” and commented at a speech made at the EXAME Forum in São Paulo: “there are many negative indicators in Europe and the US – Brazil therefore needs to have defensive mechanisms in place at a time where most countries are behaving in a protectionist manner.”  He also viewed that, in the medium-long term, the SELIC interest rate should be able to converge in line with average international standards.

With regards to the credit bubble, Trabuco believes that low unemployment and rising incomes will protect the country whilst also pointing to the fact that delinquency levels at Bradesco are under control and practically negligible.  He also stated that Brazilian debt-to-earnings ratios are considerably lower than what was the case in pre-crisis USA, for example.