© Reuters. People walk in front of a Lojas Americanas store in Brasilia, Brazil, January 12, 2023. REUTERS/Ueslei Marcelino
By Tatiana Bautzer and Gabriel Araujo
SAO PAULO (Reuters) – Brazilian lenders BTG Pactual, Bradesco and Santander Brasil are among the most exposed to Americanas SA’s debt, analyst estimates showed on Monday, after the troubled retailer obtained a court order protecting it of the creditors.
Analysts at JPMorgan (NYSE:) and Citi said in research notes that Banco Bradesco SA had the largest nominal exposure to the firm, while Banco BTG Pactual SA had more exposure as a proportion of loans.
Americanas disclosed nearly $4 billion in “accounting inconsistencies” last week. Its CEO and CFO resigned. The retailer’s shares have plunged nearly 80% so far this year.
Americanas could pay off up to 40 billion reais ($7.81 billion) in debt ahead of schedule, and a judge has set a 30-day deadline to file for possible bankruptcy protection.
On Saturday, BTG filed an appeal of a decision protecting Americanas from creditors, attacking the retailer’s shareholders, a trio of Brazilian billionaires and founders of 3G Capital.
Taking into account estimates from JPMorgan and Citi, BTG had an exposure of 1.9 billion reais to Americanas, which represented approximately 1.5% of its loans, while Bradesco had an exposure of 4.7 billion reais, or 0. 5% of the loans.
Santander Bank (BME:) Brasil SA, the local unit of Spain’s Banco Santander, had an exposure of 3.7 billion reais, or about 0.6% of loans.
“We found that the impact of our hedging could range from 1% to 7% on net income and 0.1% to 1% in terms of equity,” Citi said, noting that Santander Brasil, BTG and Bradesco would be the most affected on both accounts.
Sergio Rial, the outgoing Americanas chief executive who discovered the accounting inconsistencies, is a former director of Santander Brazil, where he still serves as chairman.
“Based on previous corporate cases in Brazil, we believe banks should start provisioning around 30%, which could eventually increase based on the Chapter 11 outcome,” JPMorgan said.
Shares of BTG fell more than 4% on Monday, while Santander Brasil and Bradesco each fell more than 3%, compared with a 1.7% drop in Brazil’s benchmark stock index.
Americanas shares plunged 41.6% to 1.84 reais on Monday, after a 77.33% drop on Thursday.
Moody’s (NYSE:) downgraded the retailer’s rating to “Caa3”, placing it under review for a further downgrade, and a second industry group filed suit 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 submitting 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 divesting 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 to be far from over.”
($1 = 5.1248 reais)
