In a chat with journalists, Candido Bracher, Chief Executive Officer of Itau Unibanco Holding SA (NYSE:ITUB), said the bank received an order to proceed with credit card payments to its customers.
Cade opens an investigation
Itau processes the payments of clients, who own an account in Itau, through Rede much faster. It has caught the dragon eye of an antitrust agency. Cade, an antitrust agency in Brazil, has opened an investigation into Rede, a credit card processor of Itau, and Itau on suspicion of anti-competitive practices.
The probing agency said Itau should not compel the merchants, who have checking account in that bank, proceeding with credit card payments. In an unprecedented move, the largest private lender in Brazil said in April that payments to the merchants would be made in just two days without any interest than the prevailing thirty days. Small and midsized firms having a checking account with the bank can avail of this facility.
According to Itau, its credit card processor – Rede is helping to reduce business costs. The probing agency argues that it could obstruct the competition. Though Cade has not prevented Itau from releasing payments in two days, it would thoroughly investigate the terms of the offer.
Refocuses on consumers for growth
The recovery in Brazil is sluggish, and the demand for loans from corporate is a little low. Therefore, Itau taps the consumers and small and medium enterprises for growth. The demand for loans from individuals and small/ medium companies is growing at a fast pace. Itau could enjoy double-digit growth of 14% and 19% from these two categories.
The private lender is benefitting from loans to small and medium companies and individuals because state-owned banks are not aggressively pursuing to expand the loans. It gives importance to customer engagement and customer satisfaction to drive growth. Apart from taking steps for long term growth, the private lender is also focusing on downsizing operational costs.
A lot of efforts are needed to revive the economy in Brazil. Itau could enjoy growth if the current government puts in efforts to solve the structural issues and support the economy recovery. The lender enjoyed a better share with credit cards.