{"id":12231,"date":"2015-09-13T19:06:44","date_gmt":"2015-09-14T00:06:44","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12231"},"modified":"2015-09-13T19:06:44","modified_gmt":"2015-09-14T00:06:44","slug":"is-brazil-about-to-drag-down-spains-biggest-bank","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12231","title":{"rendered":"Is Brazil About to Drag Down Spain\u2019s Biggest Bank?"},"content":{"rendered":"

Is Brazil About to Drag Down Spain\u2019s Biggest Bank?<\/a><\/h3>\n

The timing could not have been worse.<\/strong><\/p>\n

<\/i><\/b>In July last year, an analyst working for Banco Santander Brasil did something he shouldn\u2019t have. He warned the firm\u2019s private banking clients about the economic risks posed by the reelection of Brazil\u2019s scandal-tarnished president, Dilma Rousseff. Those risks included a sharply devalued Brazilian real, rising interest rates, runaway inflation and tumbling shares.<\/p>\n

When the analyst\u2019s report went public, it provoked outrage from Rousseff\u2019s party, which saw it as a direct intervention in the country\u2019s general election. Santander\u2019s now-deceased CEO Emilio Botin was given a choice: either he castigated the analyst and rejected his findings, or his bank\u2019s extremely cozy ties with the government of its most profitable market could be in danger.<\/p>\n

It was not a difficult decision. Within days the analyst was fired for \u201cmaking a mistake.\u201d Now, a year and two months later, it\u2019s obvious that the analyst\u2019s warnings were spot-on. Rather than firing him, Santander should have listened to him.<\/p>\n

Instead of reducing its exposure to Brazil\u2019s fragile economy over the last year, as HSBC has done (read:\u00a0Does HSBC Know Something Others Don\u2019t<\/a>), Santander has doubled down on its bet, forking out \u20ac4.7 billion\u00a0on the acquisition of the remaining 25% of its Brazilian unit.<\/p>\n

A Slap in the Face<\/strong><\/h3>\n

The timing could not have been worse. Yesterday, Brazil\u2019s already troubled economy was given another long-expected slap in the face when Standard & Poor downgraded the country\u2019s debt\u00a0from investment-grade to junk status.<\/p>\n

The impact was immediate. Brazil\u2019s currency plunged from 3.78 Real to the dollar to 3.9. It\u2019s currently hovering at 3.88. Just a year ago, when news of the government\u2019s Petrobras scandal began hitting and the economy\u2019s biggest threats \u2013 a weakening China, the abrupt end of the commodity super cycle, a strengthening dollar, and floundering internal demand \u2013 were beginning to surface, the currency was clocking in at 2.35 Real to the dollar.<\/span><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

Is Brazil About to Drag Down Spain\u2019s Biggest Bank? The timing could not have been worse. In July last year, an analyst working for Banco Santander Brasil did something he shouldn\u2019t have. He warned the firm\u2019s private banking clients about the economic risks posed by the reelection of Brazil\u2019s scandal-tarnished president, Dilma Rousseff. Those risks […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9020,90,3052,130,7001,5660,3372,743,839,4255],"class_list":["post-12231","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banco-santander-brasil","tag-brazil","tag-brazilian-real","tag-china","tag-dilma-rousseff","tag-don-quijones","tag-hsbc","tag-spain","tag-us-dollar","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12231"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12231\/revisions"}],"predecessor-version":[{"id":12232,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12231\/revisions\/12232"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}