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Brazil Bank Workers Reject Latest Offer as Strike Reaches 16 Days -- Update

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10/05/2013 | 01:15am CET

By Rogerio Jelmayer and Jeff Fick

SAO PAULO--Brazil's main banking labor union said late Friday that it would recommend striking workers reject the banks' latest offer and continue a walkout that has reached 16 days.

The National Bank Federation, or Febraban, has offered a 7.1% salary increase, which is above the previous 6.1% offer but still well below the 11.93% pay raise sought by the bank workers.

However, the Contraf-CUT union said in a statement that the offer was "insufficient" and failed to address demands for better working conditions.

The annual battle over wages comes amid weaker-than-expected economic growth and lower interest rates, which have crimped bank profits. Growth is expected to be around 2.5% this year. Yet inflation remains persistently high, and is currently running at around 6%.

"The proposal must be examined considering not just the gains of this year, but also those of recent years, which are fairly significant," said the labor relations director at Febraban, Magnus Ribas Apostolico. The banks' federation said salaries have increased by more than 58% over the last seven years, while inflation has risen 42%.

According to the union, nearly half of Brazil's 20,000 bank branches were closed as of Friday, but so far most of the administrative staff hasn't been affected. They are responsible for maintaining Internet and ATM services, which many Brazilians can use to transfer money and pay bills even if branches are shut down.

The average monthly salary for a bank employee in Brazil is 4,400 Brazilian reais ($2,000), while the average salary in Brazil is around BRL1,848 a month.

Strikes over wages have become a regular occurrence in Brazil's banking sector in recent years as banks' profits have soared amid stable economic growth. Although they can hinder customers, the strikes rarely have a major impact on banks' operations or profits.

According to analysts, strikes in recent years had no effect on banks' results because they continued their normal operations via other tools, such as ATMs and the Internet.

Last year, bank workers went on a strike for nine days. At the time, workers started negotiations demanding a 10.25% pay raise, but eventually accepted a 7.5% increase.

Brazil's biggest banks in terms of assets and clients are state-run Banco do Brasil SA (>> Banco do Brasil SA) and Caixa Economica Federal, and private-sector banks Itau Unibanco Holding SA (ITUB, ITUB4.BR), Banco Bradesco SA (BBD, BBDC4.BR) and Banco Santander Brasil SA (BSBR, SANB11.BR).

Write to Rogerio Jelmayer at [email protected] and Jeff Fick at [email protected]

Stocks mentioned in the article : Banco do Brasil SA
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EBIT 2017 22 918 M
Net income 2017 10 660 M
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Yield 2017 3,58%
P/E ratio 2017 7,82
P/E ratio 2018 6,76
Capi. / Sales 2017 1,06x
Capi. / Sales 2018 1,03x
Capitalization 87 195 M
Duration : Period :
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Average target price 37,9  BRL
Spread / Average Target 25%
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Fabrício da Soller Chairman
Carlos Hamilton Vasconcelos Araujo VP-Services, Infrastructure & Operations
Alberto Monteiro de Queiroz Netto CFO, VP-Finance Management & Investor Relations
Antonio Gustavo Matos do Vale Vice President-Technology
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