By Jeffrey T. Lewis


SÃO PAULO--Brazilian lenders are likely to boost their provisions for bad loans, hitting their fourth-quarter and first-quarter earnings, because of the bankruptcy process for retailer Americanas SA, according to Moody's Investors Service.

Americanas earlier this month revealed a gap in its accounting related to financing for suppliers, saying the amount came to about 20 billion reais, the equivalent of $3.9 billion. Earlier this week, Americanas released its list of creditors, showing total debt of 41 billion reais. A judge last week granted Americanas protection from creditors while the retailer develops a reorganization plan.

Brazil's biggest banks, including Itaú Unibanco Holding SA, Banco Bradesco SA, Banco Santander (Brasil) SA, Banco do Brasil SA, Banco BTG Pactual SA, Banco ABC Brasil SA and a few others account for 97% of Americanas' debt, Moody's said.

Brazilian banks have been conservative in the past on provisioning for bankruptcies, with some setting aside half or even 100% of their exposures, Moody's said. The banks are likely to include initial provisions for the Americanas debt in their fourth-quarter financial statements, the ratings company said.

Banco Bradesco has the largest exposure in terms of total lending to the retailer, at 4.8 billion reais, but that amount represents only 0.7% of Bradesco's gross loans, according to Moody's. The highest level of exposure as a percentage of gross loans is held by BTG Pactual, at 3.1%, Moody's said.


Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com


(END) Dow Jones Newswires

01-27-23 0937ET