Brazilian Fintechs ask Central Bank to promote liquidity to speed up lending and Development Bank studies investing in Fintech funds

April 24, 2020
Repórter no jornal Valor Econômico.
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abril.com.br
Institutions work with proposals before the Central Bank, such as for the creation of the digital correspondent. Meanwhile, The development bank is not willing to suffer alone with the first impacts of default.

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The fintechs request measures from the Central Bank to promote liquidity in order to accelerate the granting of credit to their customers, most of them micro and small companies, in the midst of the coronavirus pandemic. Payment institutions, fintechs that offer digital accounts to individuals and companies, are obliged to compulsorily collect 100% of the amounts equivalent to those deposited in the accounts, with the limitation of the application of these resources in National Treasury securities.

"Our request is that this percentage of 100% be made more flexible, similar to what was done with banks, and greater possibility of application, as long as it is without risk," said the legal and government relations director of Mercado Livre, Ricardo Lagreca.

The executive spoke about a live broadcast organized by FAS Advogados, with the participation of Otavio Damaso, Regulation Director of the Central Bank of Brazil. Fintechs still claim greater participation in government programs to distribute credit at this time.

Fintechs work with proposals before the Central Bank, such as the creation of a digital correspondent, which would bring more visibility to the regulator for these businesses and more comfort to include them in the resource distribution process.

In addition, they work with the BNDES on a line of R $ 5 billion that foresees investment by the state bank in funds created by fintechs, allowing them to become resource lenders and allowing fintechs to borrow from banks.

According to Ingrid Barth, president of the Brazilian Association of Fintechs (ABFintechs), an open letter was sent to Caixa Econômica Federal so that payment fintechs can participate in the distribution of the “coronavoucher”, an emergency aid of R $ 600 from the federal government. “The fintech process is 100% digital, so these companies are able to distribute fluidly.”

BNDES studies investing in fintech funds

The BNDES is studying investing resources directly in different investment funds set up by fintechs to lend to small and medium-sized companies in the midst of the crisis caused by the coronavirus pandemic. However, according to Valor, the bank is not willing to suffer alone with the first impacts of default.

This is just one of the ideas being worked out in the BNDES 'aid package via fintechs for smaller businesses, whose estimated value is R $ 5 billion. Direct loans to fintechs and the use of these companies as resource lenders are still on the table.

Valor found that the BNDES has conversations about participating with, at least, R $ 100 million in credit rights investment funds (FIDCs), provided that part of the quotas is acquired by fintech itself or by market investors. The discussions indicate an 80% share of the development bank.

The BNDES is resistant to exposing itself to subordinated quotas, which are the first to suffer default. "There is a regulatory capital challenge for banks to invest in subordinated instruments, because they require a larger capital reserve, which makes the investment economically unfeasible," explained a source who preferred not to be identified.

Conversations move towards investors or fintechs having these subordinated shares or the fund being structured with single shares. At first, the BNDES is talking to managers who already have funds ready, which could bring more speed to the process.

“The market is trying to find the best solution so that credit can reach small and medium-sized companies right now,” said Daniel Gomes, CEO and founding partner of Nexoos, a platform that intermediates loans to individuals and reaches more than 40 thousand small and medium businesses monthly.

One of the challenges of this model is the fact that the fintechs themselves are having difficulties in capturing to face the required share of them in the FIDC, in view of the retraction of investors. Thus, the market expectation is that part of them will not be able to participate in these structures. In the coming weeks, the BNDES may launch a public call to invite interested fintechs to participate in this model.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

The fintechs request measures from the Central Bank to promote liquidity in order to accelerate the granting of credit to their customers, most of them micro and small companies, in the midst of the coronavirus pandemic. Payment institutions, fintechs that offer digital accounts to individuals and companies, are obliged to compulsorily collect 100% of the amounts equivalent to those deposited in the accounts, with the limitation of the application of these resources in National Treasury securities.

"Our request is that this percentage of 100% be made more flexible, similar to what was done with banks, and greater possibility of application, as long as it is without risk," said the legal and government relations director of Mercado Livre, Ricardo Lagreca.

The executive spoke about a live broadcast organized by FAS Advogados, with the participation of Otavio Damaso, Regulation Director of the Central Bank of Brazil. Fintechs still claim greater participation in government programs to distribute credit at this time.

Fintechs work with proposals before the Central Bank, such as the creation of a digital correspondent, which would bring more visibility to the regulator for these businesses and more comfort to include them in the resource distribution process.

In addition, they work with the BNDES on a line of R $ 5 billion that foresees investment by the state bank in funds created by fintechs, allowing them to become resource lenders and allowing fintechs to borrow from banks.

According to Ingrid Barth, president of the Brazilian Association of Fintechs (ABFintechs), an open letter was sent to Caixa Econômica Federal so that payment fintechs can participate in the distribution of the “coronavoucher”, an emergency aid of R $ 600 from the federal government. “The fintech process is 100% digital, so these companies are able to distribute fluidly.”

BNDES studies investing in fintech funds

The BNDES is studying investing resources directly in different investment funds set up by fintechs to lend to small and medium-sized companies in the midst of the crisis caused by the coronavirus pandemic. However, according to Valor, the bank is not willing to suffer alone with the first impacts of default.

This is just one of the ideas being worked out in the BNDES 'aid package via fintechs for smaller businesses, whose estimated value is R $ 5 billion. Direct loans to fintechs and the use of these companies as resource lenders are still on the table.

Valor found that the BNDES has conversations about participating with, at least, R $ 100 million in credit rights investment funds (FIDCs), provided that part of the quotas is acquired by fintech itself or by market investors. The discussions indicate an 80% share of the development bank.

The BNDES is resistant to exposing itself to subordinated quotas, which are the first to suffer default. "There is a regulatory capital challenge for banks to invest in subordinated instruments, because they require a larger capital reserve, which makes the investment economically unfeasible," explained a source who preferred not to be identified.

Conversations move towards investors or fintechs having these subordinated shares or the fund being structured with single shares. At first, the BNDES is talking to managers who already have funds ready, which could bring more speed to the process.

“The market is trying to find the best solution so that credit can reach small and medium-sized companies right now,” said Daniel Gomes, CEO and founding partner of Nexoos, a platform that intermediates loans to individuals and reaches more than 40 thousand small and medium businesses monthly.

One of the challenges of this model is the fact that the fintechs themselves are having difficulties in capturing to face the required share of them in the FIDC, in view of the retraction of investors. Thus, the market expectation is that part of them will not be able to participate in these structures. In the coming weeks, the BNDES may launch a public call to invite interested fintechs to participate in this model.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.