Latin America Advisor

Financial Services Advisor

A Daily Publication of The Dialogue

How Competitive Is the Banking System in Brazil?

Brazil's banking regulator is investigation banks that have allegedly engaged in anticompetitive practices against digital banking provider Nubank. // File Photo: Nubank.

Brazilian antitrust watchdog agency Cade said April 22 that it is investigation four banks that are alleged to have engaged in anticompetitive practices to hinder digital banking provider Nubank. How robust is the level of competition among Brazilian banks? Do regulators or other government agencies need to do more to protect newcomers? What changes in policy would give entrants in Brazil’s financial services sector fairer access to the market?

Murilo Portugal, president of the Brazilian Federation of Banks (Febraban): “Competition in Brazil’s banking sector is quite robust. Nevertheless, Febraban and its associated banks favor even more intense competition, which drives progress for countries and enterprises. Banking is a capital-intensive industry, as central banks’ prudential regulations require banks to hold large capital levels in order to protect savings. As a consequence of being capital-intensive, banking tends to be a concentrated industry almost everywhere. The market structure of the Brazilian banking sector is moderately concentrated, with a Herfindahl-Hirschman index of 1.413. Compared with other sectors of the Brazilian economy, the credit market is the ninth most concentrated. Part of the concentration of the Brazilian credit market is due to the high market share of state-owned banks, which account for 50 percent of the market. While less concentrated markets tend to be more competitive, there can be competition even in concentrated industries. Academic studies about banking competition in Brazil reject the hypothesis of cartelization and price collusion, even though the credit market may not conform to a model of perfect competition. The Brazilian monetary council and central bank have already established differentiated and lighter regulatory requirements for smaller banks, credit cooperatives and fintechs, as compared with large banks. For instance, the number of fintechs…”

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About the Financial Services Advisor

Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at

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