Public banks accountable for Brazil's recovery: minister

RIO DE JANEIRO, Aug. 13 (Xinhua) -- Brazilian Finance Minister Guido Mantega said Thursday that the country's state-owned banks are accountable for Brazil's quick recovery from the worst of the international financial crisis.

The public banks' strategy of cutting interest rates and increasing access to credit was fruitful, Mantega said, because it attracted more clients during the crisis. He said private banks should do the same.

"They'd better follow that example or they will eat dust," Mantega said.

The minister cited the state-owned Banco do Brasil as an example.

The bank reported earnings of 2.3 billion reais (1.25 billion U.S. dollars) in the second quarter of 2009, and a total assets of 598.8 billion reais (327.2 billion U.S. dollars).

The results returned Banco do Brasil to the position of being Brazil's largest bank, ahead of private bank Itau Unibanco.

Mantega said the state-owned institution gave private banks a lesson by expanding access to credit while maintaining lower-than-average default levels.

"The expansion of credit is being made with efficiency and responsibility. It is a lesson for the private banks," he said.

Mantega criticized Roberto Setubal, president of Itau Unibanco, who said earlier this week that the lower interest rates offered by the public banks are not sustainable.

The minister said Setubal's statement was a mistake since Bancodo Brasil's good results proved that cutting interest rates was successful.