MercoPress. South Atlantic News Agency

New Brazilian administration prepared to open concentrated banking to foreign competition

The move could foster competition in a highly concentrated banking system, in which the five largest banks hold 85% of total assets, according to Ilan Goldfajn

The fast pace of Brazilian president Jair Bolsonaro continued on Friday, with current central bank Governor Ilan Goldfajn telling newspaper Valor Economico that the new administration is likely to empower the central bank to approve the entrance of new foreign lenders into Brazil.

The move could foster competition in a highly concentrated banking system, in which the five largest banks hold 85% of total assets. Currently, foreign banks need a presidential decree to operate in Brazil.

Separately, newspaper Folha de S. Paulo reported Bolsonaro is considering a higher tax on personal loans as a way to fund development projects in Brazil's poor north and northeast.

A presidential decree is likely to be issued in the coming days, the paper reported. This measure may displease Brazilian bankers, who favor lower taxation as a way to reduce interest rates for consumers.