* Hermann Marx

With much propriety, Mr. Jorge Gerdau, in an interview with ao Estado de São Paulo (28 April 07), talked about the difficulty of transferring successful experience in private administration to the public sector. He said that "in private enterprise natural factors exist to stimulate the search for efficiency and productivity. They are the private market mechanisms where success is rewarded in several ways. In the public sector this doesn’t happen. And no government department dies if it fails, different from companies. This stimulates incompetence." 

When we observe the Brazilian banking sector it seems that this logic isn’t valid. The three largest banks of Brazil, through their latest acquisitions, started to concentrate 49% of the deposits (source The State of São Paulo, 28/04/07). For many, this explains the high interest rates and the increasingly larger amount of fees charged. Even the head of the Treasury Department says that they will verify if there is abuse on the part of the institutions in the collection of fees and interest. 

How it must be interesting, minimally different, to live in Brasília, in the verdant fields of the pilot plan and to work in the dependencies of the works projected by Niemeyer. I think there the banks collect European interest. Nothing like living on fantasy island. It is necessary to remember a little of our recent history, with respect to interest rates and what happened with the banks before affirming that the reduction in the number of banks is what carries the swelling of the increase in interest rates. 

I remember well when the government, not nostalgically, of Sarney, decided to freeze our economy. Everyone said that it would be a blow to the banking system. And it was. It was the year that, taking advantage of the situation, the banks dismissed thousands of employees. The result was that the banks presented their historical record of profits, up to that moment. 

The following years passed by and every year that record was broken. And what happened to the open interest rates charged for personal loans, according to the data of PROCON? 

In 2004, inflation measured by IPC DI was 6,23% a year and the medium rate of bank interest was 5,29% a year. In 2005, inflation measured by IPC DI was 4,93% a year and the medium rate of bank interest was 5,39% a year. In 2006, inflation measured by IPC DI was 2,05% a year and the medium rate of bank interest was 5,38%. In 2007 history should repeat itself. 

In conclusion, in spite of inflation having fallen from 6,23% to 2,05% in two years, the interest rate collected by the banks rose slightly. In 2004, the number of banks was greater than now and if we research previous years we will see that the number of banks was still higher and the real interest rates collected much higher still. 

It is easily demonstrated, by any good economy student, that the real bank interest rates fell over time and they have been maintaining their balance in recent years. Further assuming the Procon data (see site) the “tarifas avulsas” and “pacote-cesta” have, on average, grown slightly in the last three years. 

The earnings of Brazilian banks have been showing growth, in the value of their stocks that, after accounting (no pun intended), represents the value of the company, when it is not pure speculation. So as not to point out this or that bank we will show the combined values of the stocks of the largest banks. In the last 18 months the value of the stocks of these banks rose on average about 100%. At the same time the stocks of the European banks rose on average, about 35%. 

Now, there isn’t a banker who says that the European banks are bad, that they don’t know how to administer their assets or that they don’t collect fees. Therefore, there is something strange in this esteemed banking market. Instead of claiming that the banks collect high taxes I ask myself why the institutions like Banco do Brasil or Caixa Econômica Federal are not used to give loans with much lower rates, in such a way that they stimulate competitiveness. 

Why doesn’t BNDES apply effective competitive rates, when compared with rates of developed countries or that want to develop? 

It seems to me to be one more issue of competence. Competence in knowing how to stimulate competitiveness between banks. Competence in not having to compulsively collect so much from the banks. Competence in punishing bad payers. According to recent information the rate of breach of contract is about 4,4%. Competence in creating a more secure environment in the financial system. In this aspect it is necessary to recognize that we have been moving forward a lot.  

While the industrial segment works with great difficulty to survive, and when it succeeds has, at the most, margins similar to those of their competition in developed countries, the same doesn’t occur with the banks. With rare exceptions in the world, it is not from the financial sector that the growth of a nation is achieved, but from the sector called productive, from their industries. 

As inflation has been falling successively, with small variations upward in 2002 and 2001; as the financial environment is more serene, why don’t the bank rates fall; why don’t the banks  offer better services, except those accomplished by their own checking account holders in electronic systems; why don’t they pay their employees better? 

* Hermann Gonçalves Marx graduated in Mechanical Engineering from the Technological Institute of Aeronautics (1972), specialized in Operational Research at the Technical University of Aachen (1976), obtained a master’s degree in Systems and Operational Research Sciences at the Federal University of Rio de Janeiro (1974) and a doctorate in Latin American Integration at the University of São Paulo (2005). He is currently a guest teacher at FIA-USP and a teacher at the Superior School of Publicity and Marketing. He has experience in the area of Administration. He Deals mainly with the following themes: development, internal growth, industrial politics, business society, public administration and public economy.