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UPDATE 1-Brazil's Pine unveils exposure to troubled sectors; shares soar
February 2, 2015 / 1:01 PM / 3 years ago

UPDATE 1-Brazil's Pine unveils exposure to troubled sectors; shares soar

(Adds share performance, loan exposure to scandal-related sectors, companies in paragraphs 3-4)

SAO PAULO, Feb 2 (Reuters) - Shares of Banco Pine SA had their biggest gain in 3 1/2 years on Monday as the Brazilian mid-sized lender unveiled the exposure of its loan book to troubled sectors and companies linked to a corruption scandal at state-controlled oil producer Petrobras.

In a securities filing, Pine said the equivalent of 14 percent of its loan book is concentrated in the sugar and ethanol industries, while about 12 percent was to commercial and residential real estate development. Loans at those sectors are backed by robust guarantees, the filing added.

About 3 percent of Pine’s outstanding loans are with companies directly or indirectly involved in a graft and money-laundering investigation of Petrobras and its suppliers, the filing added.

Pine rose 9 percent to 4 reais in early São Paulo trading - the biggest intraday jump since Aug. 11, 2011. The stock shed 42 percent in January, as speculation mounted that Pine had stepped up lending to a number of distressed sectors in Brazil in recent years.

“Our conservative and agile management is allowing Pine to build up a robust balance sheet that enjoys positive cash flow equivalent to about 40 percent of deposits,” Chief Executive Officer Norberto Pinheiro Junior was quoted by the filing as saying.

Worries about the extent of the investigations afflicting Petrobras and some contractors, which include some of the nation’s largest engineering firms, are dampening confidence in Brazilian banks. Petrobras is Brazil’s biggest corporate borrower and relies on all major lenders to obtain funding.

Prosecutors allege that Petrobras executives conspired to inflate the price of tens of billions of dollars of contracts for refineries, ships, advertising and other goods and services. The contractors and other suppliers then allegedly kicked back a percentage of the inflated contracts to executives, ruling coalition politicians and political parties in the form of bribes and campaign contributions. (Reporting by Guillermo Parra-Bernal; Editing by Jeffrey Benkoe and Chizu Nomiyama)

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