SAO PAULO, Jan 11 (Reuters) - Brazilian state bank Caixa Econômica Federal may reduce mortgage lending if it cannot get approval to use money from a worker severance fund known as FGTS to bolster its capital, the bank’s president said in a newspaper interview published on Thursday.
Gilberto Occhi said Caixa plans to use 15 billion reais ($4.7 billion) in FGTS funds to capitalize the bank if it gets approval from federal audit court TCU, which is expected in February, according to the O Estado de S. Paulo paper.
A press representative for Caixa confirmed the comments attributed to Occhi.
Caixa is the biggest mortgage lender in Brazil and the main driver of the low-income housing segment, where homebuilders such as MRV Engenharia e Participações SA and Construtora Tenda SA focus their activity.
As Caixa is the manager of the FGTS funds, a capitalization of the bank using that money could represent a conflict of interest, prosecutors have argued before the TCU.
Failure to strengthen its capital structure, on the other hand, could reduce Caixa’s ability to finance infrastructure projects, Occhi told the paper.
Brazilian workers are legally required to deposit a share of their wages into the FGTS, which pays a fixed monthly rate. Surpluses are typically invested in infrastructure projects.
$1 = 3.23 reais Reporting by Ana Mano; Editing by Bernadette Baum