MercoPress. South Atlantic News Agency

Brazilian bank abandons Uruguay

Brazil's most important bank which has been operating in Uruguay since 1945 announced it will be leaving the country because of the low profitability of its Montevideo agency.

The Banco do Brazil decision which came as a surprise to financial circles in Montevideo follows Brazilian government instructions to cut losses and eliminate non profit agencies. Banco do Brazil belongs to the Brazilian government and the Montevideo agency has for decades sponsored Brazilian exports with medium and long term loans.

However the powerful Uruguayan bank employees union claims that the decision has nothing to do with profits and is part of a retaliatory policy by the Brazilian government.

"In the last 55 years, only in four did the bank ever make money or was concerned about making money. The decision is more in line with the specific Brazilian policy of punishing Uruguay for constantly complaining about Brazilian trade procedures concerning Uruguayan exports", said Juan José Ramos, president of the union.

In spite of Mercosur, Uruguay has had ongoing problems with its sales of farm produce to Brazil. Furthermore, trucks bound for Brazil with Uruguayan exports are often detained in the border following legal demands alleging sanitary, customs or dumping practices that are generally accepted by Brazilian courts.

Uruguay last year was described by the Brazilian press as Mercosur's "grumpy dwarf" and "crybaby" for complaining about Brazilian obstacles to Uruguayan exports.

Brazilian businessmen in the border area are also furious with Uruguayan authorities for having effectively clamped smuggling, an "informal" business estimated to involve over 400 million US dollars annually.