Brazilian banks are adapting themselves to an unusual environment: the prospect of long-run stability. The character of their institutions has to adapt to conditions of sustained growth, rising consumer incomes and corporate plans that extend beyond the next six months.
For years Brazilian banks got fat off lending to the government and conducting treasury operations. Corporate lending was restricted to a handful of top names and mortgage lending was only done to conform to government edicts. Lending to consumers used to be extremely tricky as volatility could easily upset their ability to repay and the legal framework was insufficiently robust to collect on bad debts.
