GlobeBill--Internet Payment Solutions for Credit and Debit Card Processing     Market Environment Analysis and Overview of...
GlobeBill--Internet Payment Solutions for Credit and Debit Card ProcessingInvestments banks- They specialize in medium- an...
GlobeBill--Internet Payment Solutions for Credit and Debit Card ProcessingFinnish Export Credit had loans to Central and L...
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Market environment analysis and overview of brazil

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Market environment analysis and overview of brazil

  1. 1. GlobeBill--Internet Payment Solutions for Credit and Debit Card Processing Market Environment Analysis and Overview of Brazil Part One Foreign Trade While the banking industry, like most others, is better off since the Real Plan went into effect than before, the short-term benefits are not as great. This is because banks tend to do better in periods of high inflation than they do under stable economy. For banks, high inflation generated income from "float" and also large spreads on money market operations. Banks became averse to lending during high inflation, especially as the better commercial risks moved toreduce leverage and stopped borrowing. Stabilization has brought considerabledown-sizing, and banks resumed lending as one way to develop new income sources.Payment gateways are finding alternatives to income generated from float, includinghigher interest rates, higher volumes, and service charges. Some problems still occuras more than 70% of the Brazilians dont have a bank account - a remain from highinflation days when saving wasnt profitable. Another remain of the old days is thefact, that the main competitors for the banks are the stores, giving credit to theconsumer with lower interest rates.Classification of financial Institutions by ActivityThe state or interstate development banks are regional financial institutions controlledby respective state governments, which grant medium or long term loans for fixed orworking capital, according to the economic and social needs of the region of whichthey operate. The principal and activities of these entities are the on lending of loansand providing of loans for the financing of rural and industrial development schemes.Federal and state saving banks are financial institutions which undertake almost thesame types as the commercial banks. They accept savings from individuals, by meansof deposit in current accounts, and make loans.Commercial banks - They engage in both wholesale and retail banking and are themain source of short- and medium-term loans. In addition to making loans, theyprovide other financial services, such as accepting deposits, paying checks, issuingletters of credit, dealing in foreign exchange, cash management services, investmentbanking services and investment management.GlobeBill-http://www.globebill.com
  2. 2. GlobeBill--Internet Payment Solutions for Credit and Debit Card ProcessingInvestments banks- They specialize in medium- and long-term loans finance for thesupply of capital and the investment of third party funds.Credit, finance and investments companies - They specialize in credit openingoperations by acceptance of bills of exchange to finance purchases of goods andservices by consumers or by final users. They include subsidiaries of largemanufacturing or retail companies. Financiers charge higher rates than commercialbanks.Securities dealership and brokers - They function as the securities dealers of theBrazilian financial conglomerates. Through the distribuidora, the other financialinstitutions in the group sell their financial paper to the market.International BanksThe participation in Brazils banking sector is presently frozen at levels set 40 yearsago, but there is a tendency to liberalize the possibilities of foreign participation.Several foreign banks hold minority ownership positions in local banks. A few foreignbanks also have local subsidiaries or branches. As examples Credit CommercialFrance-Brazil, ABN Amor Bank, Bank of Boston and Citibank have subsidiaries inBrazil.In addition many foreign banks have chosen to have representative offices, in themain business areas. For example Merit Bank has a representative office in Sã Paulo. oRepresentative offices can make foreign currency loans to Brazilian banks butaccording to Brazilian law they cannot pursue any banking activities other thanputting potential Brazilian borrowers in touch with the foreign parent bank and act asa local representative.Financing ProjectsIn order to obtain financing for projects, guarantees are needed because the cash flowusually isnt sufficient and additional guarantees are needed to hedge the country risk.Some possible sources of financing may include the following.Commercial BanksFinnish commercial banks as well as foreign banks offer for example servicesincluding Letter of credit confirmations, bank to bank guarantees, and other short- andmedium-term trade finance services with a select number of Brazilian banks.On March 26 1997 the Central Bank of Brazil imposed provisions on import,regulating that only risks with maturities of a minimum 361 days or clear cash ondelivery financing is approved when importing to Brazil. These provisions can,however, be seen as a considerable trade barrier, and thus not consistent with theGATT rules.Finnish Export CreditGlobeBill-http://www.globebill.com
  3. 3. GlobeBill--Internet Payment Solutions for Credit and Debit Card ProcessingFinnish Export Credit had loans to Central and Latin America of up to USD 50million in 1996. The financing was mainly focused on Brazil, Chile and Mexico.Because of the positive development of these countries new projects are going to belaunched especially in the area of telecommunication, wood industry and energy.GlobeBill-http://www.globebill.com

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