SAO PAULO: Brazil's government will pressure the country's private banks to slash management fees on investment funds to prevent an exodus of capital into savings accounts should interest rates continue to fall, a local newspaper reported on Saturday.
Brazil's central bank on Wednesday lowered its benchmark Selic rate by 75 basis points to a near record-low 9 percent and left the door open for more cuts.
Falling interest rates could lead investors to drop Selic-linked bond funds in favor of tax-free savings accounts, which pay a government-mandated 6 percent per year plus a variable rate.
Lowering the management fees on investment funds would give investors a higher rate of return and make savings accounts less attractive, giving the central bank more space to lower Selic rates without requiring changes in savings account policies, Folha said, without naming its sources.
State-controlled lender Caixa Economica Federal took a first step in that direction on Friday, when it announced it was cutting management fees on some long-term fixed-income investment funds.
The Brazilian bank federation Febraban, the Finance Ministry and the central bank were not immediately available for comment.
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