Branching out to the new middle class.

Author:Downie, Andrew
Position:THE SCENE

SAO PAULO -- Many bankers don't like using words or phrases such as "poor people" or "favelas." Instead, they are more likely to use euphemisms like "the new middle class" and "popular communities."

Nomenclature aside, the booming national economy has resulted in higher employment levels and salaries--and has lifted 31 million Brazilians out of poverty since 2003, an enormous market segment that needs formal banking services.

The country's retail banks have made it simpler to open accounts--and notably easier by opening branches in urban favelas and rural. communities.

"All the principal banks are talking about increasing the number of branches because we know that to be part of these people's daily lives, to generate wealth, we need to be on their radar," said Hideral do Dwight, manager of distribution channels at the Banco do Brasil, which fast year opened branches in favelas in Brasilia, Sao Paulo and Rio de Janeiro.

The bank plans to open more than 2,000 additional. branches in hundreds of cities and towns over the next three years.

Itau, the country's largest bank has followed by installing ATMs in two Rio favelas last year and intends to add more ATMs and open branches in other poor communities this year.

Favela branches tend to be smaller than traditional offices in other neighborhoods, but services are the same.

Although huge improvements in security in the once notoriously violent Complexo de Alemao in Rio de Janeiro led Santander to test the waters there, the bank only did so after consulting with a local NGO that...

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