| These are tempestuous times for Brazil's banking system. Over the past few months, the government has agreed an $8 billion rescue package for one institution and a $7.5 billion bail-out for another, while a yawning hole the size of several Barings/Daiwa scandals mysteriously surfaced where the assets of a third bank ought to have been. These are the latest and most dramatic cases in a series of banking catastrophes that have seen at least five of the country's top banks run into serious trouble and 100 financial institutions placed under central bank administration since mid-1994. And yet most analysts still maintain the banking system as a whole remains fairly solid. "I think there is no risk of a crisis of the system," says Paulo Miguel, international analyst with Banco Inter-Atlantico, a private Brazilian investment bank. "The huge retail banks such as Bradesco, Real, Unibanco and Itau have a very solid position and a good balance-sheet structure," he says. But, virtually in the same breath, Miguel speaks disparagingly of the appalling quality of banking supervision that failed to detect $5.6 billion-worth of forged assets on the books of the collapsed Banco Nacional, once Brazil's seventh largest private bank. |