A Supreme Court justice on Monday approved an agreement to compensate bank depositors for losses caused by government policies several decades ago, settling more than a million legal disputes that have hung over Brazil’s banking system since the 1980s.
Depositors who lost their savings due to economic programs applied in the 1980s and 1990s to tackle hyperinflation will have two years to sign up for the compensation deal, Justice Dias Toffoli ruled.
Those who are owed up to 5,000 reais ($1,520) will be fully reimbursed, while those with larger liabilities will get between 8 percent and 19 percent less.
Around 60 percent of the depositors covered by the agreement are owed up to 5,000 reais, according to the Brazilian Federation of Banks (Febraban). The total value of reimbursements will depend on how many depositors opt in to the scheme.
Reuters had reported in November that banks were likely to agree on reimbursing a total of around 10 billion reais, far below initial central bank estimates of up to 342 billion reais.
Fitch Ratings said earlier this month that such an agreement would be beneficial to the nation’s banks, which have made enough provisions to cover the reimbursements.
Lenders Itaú Unibanco Holding SA, Banco Bradesco SA, Santander Brasil SA, Banco do Brasil SA and Caixa Econômica Federal have signed off on the deal. Other banks can still join.
Under former Presidents José Sarney and Fernando Collor, Brazil pursued several unorthodox policies to fight galloping inflation, such as confiscating investments in savings accounts.
Reimbursements will be paid in up to three years in as many as five installments, adjusted for the official inflation index.
($1 = 3.2922 reais)