BTG, Bradesco among most exposed to troubled Brazilian retailer Americanas (updated)

Banco Santander Brasil SA

16/01/2023 14:46

(Recasts with information on exposed banks)
    By Tatiana Bautzer and Gabriel Araujo
       SAO PAULO, Jan 16 (Reuters) - 
    Brazilian lenders BTG Pactual, Bradesco and Santander Brasil
are among those most exposed to debt of Americanas SA
 AMER3.SA , analysts' estimates showed on Monday, after the
troubled retailer obtained an injunction protecting it from
creditors.
  
        Analysts at JPMorgan and Citi said in research notes
that Banco Bradesco SA  BBDC4.SA  had the largest nominal
exposure to the firm, while Banco BTG Pactual SA  BPAC11.SA 
topped exposure as a proportion of loans.
  
        Americanas revealed last week almost $4 billion in
"accounting inconsistencies." Its chief executive and chief
financial officer resigned. Shares of the retailer have plunged
nearly 80% so far this year.
        Americanas could be liable to repay up to 40 billion
reais ($7.81 billion) in debt earlier than planned, and a judge
set a 30-day deadline for it to file for a potential bankruptcy
protection.
    On Saturday, BTG filed an appeal of a decision that
protected Americanas from creditors, attacking the retailer's
shareholders, a trio of Brazilian billionaires and founders of
3G Capital. 
        Considering JPMorgan's and Citi's estimates, BTG had a
1.9 billion-real exposure to Americanas, which was seen
accounting for roughly 1.5% of its loans, while Bradesco had
exposure of 4.7 billion reais, or 0.5% of loans.
  
        Banco Santander Brasil SA  SANB11.SA , the local unit of
Spain's Banco Santander  SAN.MC , had 3.7 billion reais in
exposure, or about 0.6% of loans.
  
        "We find that the impact of our coverage could range
from 1% to 7% in net income and from 0.1% to 1% in terms of
equity," Citi said, noting that Santander Brasil, BTG and
Bradesco would be the most affected in both accounts.
  
        Sergio Rial, the outgoing Americanas chief executive who
uncovered the accounting inconsistencies, is a former head of
Santander Brasil, where he still serves as chairman of the
board.
  
        "Based on past corporate cases in Brazil, we believe
banks should start provisioning for about 30% of it, which may
eventually increase depending on Chapter 11 outcome," JPMorgan
said.
  
        Shares in BTG were down more than 4% on Monday, while
Santander Brasil and Bradesco dropped more than 3% each,
compared with a 1.7% fall in Brazil's benchmark stock index
Bovespa  .BVSP .
  
        Americanas  AMER3.SA  shares plummeted by 41.6% to 1.84
real on Monday, following a 77.33% drop on Thursday.
        Moody's cut the retailer's rating to "Caa3," placing it
under review for a further downgrade, and a second industry
group filed a lawsuit against the firm in Rio de Janeiro.
    The Instituto da Cidadania, which represents citizens and
consumers, said in an initial affidavit that the company acted
in bad faith, "given the defendant's attitude of filing false
financial statements." 
    Americanas declined to comment.
    An industry group representing investors is also suing the
retailer.
    "The scenario remains adverse for the company and we
continue to recommend exiting its assets," Guide Investimentos
analyst Gabriel Araujo Gracia said in a research note, citing
the high level of uncertainty surrounding the case. "The story
seems far from over."
($1 = 5.1248 reais)
 (Reporting by Tatiana Bautzer and Gabriel Araujo; editing by
Jason Neely, Alistair Bell and Leslie Adler)
 ((tatiana.bautzer@tr.com; Tel: +55-11-5644-7756; Mob:
+55-119-4210-4173; Reuters Messaging:
tatiana.bautzer.thomsonreuters.com@reuters.net))