Risk Factors - Parana Banco

Before making an investment decision, potential investors should carefully consider all information available on this website, in particular the risks mentioned below. Paraná Banco’s business, financial situation and operational results may be adversely and materially affected by any of these risks and, therefore, negatively impact the securities issued by the Company. The risks mentioned below are those known by Paraná Banco and which are believed to have a material impact on the Company. Additional risks not known by Paraná Banco or considered irrelevant may also affect its business.

The granting of payroll-deductible loan, Paraná Banco’s main activity, is subject to changes in legislation and regulations, court interpretations or public entity policies related to payroll deductions.
The increasingly competitive environment of the banking sector in Brazil and the growing competition in the payroll-deductible loan segment may adversely affect the Company’s business outlook.
The granting of payroll-deductible loan through banking correspondents presents risks and may lead the Company to incur losses.
Changes promoted by the Central Bank in the basic interest rate may adversely affect Paraná Banco’s results of transactions.
Changes in legislation and regulations governing banking activities or the imposition of new laws and regulations could adversely affect the Company’s transactions and revenues.
Limitations on maximum interest rates applicable to entities with which Paraná Banco maintains agreements may adversely affect the results of its transactions.
A deterioration in the credit quality of public sector entities, as well as failures in the internal processing of such public sector entities, may result in increased losses on your personal credit portfolio with payroll-deductible loan.
A deterioration in the credit quality of companies with which Paraná Banco has transactions could result in increased losses on its credit portfolio aimed at small and medium-sized companies.
Any mismatch in interest rates and maturity terms between the Company’s credit portfolio and its funding sources could adversely affect its operating results and its ability to expand credit transactions.
The departure of members of its Management, or the inability to attract and retain additional members to integrate it, could have a material adverse effect on Paraná Banco’s financial situation and its operating results.
A deterioration in the Company’s credit rating could increase its funding costs.
Paraná Banco’s liquidity and financial condition could be adversely affected as a result of future Central Bank intervention in another Brazilian financial institution.
Any adverse decision regarding the legal status of its banking correspondents could adversely affect the Company’s operating results.

The Insurance Company’s business is highly concentrated on certain economic sectors, and an economic crisis affecting these sectors may adversely affect the Insurance Company.
The concentration of the Insurance Company’s business on the surety bonds market may increase its vulnerability to any unfavorable conditions in this niche market.
If the number of claims increase significantly or if retained losses exceed the technical provisions of the Insurance Company, it may be adversely and materially affected.
Potential changes in the insurance regulatory environment may materially and adversely affect the Insurance Company.
As a result of the end of the Instituto de Resseguros do Brasil (IRB) monopoly , the lack of access to the customers concentration exposure database may have a material adverse effect on the JMalucelli Seguradora S.A. results and forecasts.

An active and liquid market for the Company’s preferred shares may not develop, and that could limit investor’s ability to resell Paraná Banco’s preferred shares at the price and time they desire.
The Company is controlled by its controlling shareholders whose interests may conflict with the interests of its other shareholders.
Substantial sales of Paraná Banco’s preferred shares could cause the market price of its preferred shares to decline.
The Company may need additional resources in the future, which may be obtained through increases in its capital stock and these increases would dilute investors’ ownership in Paraná Banco.
The Company may not obtain all required authorizations to migrate to the Level 2 of differentiated corporate governance practices of Bovespa, which could cause a negative impact on the trading value of its preferred shares.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence as well as Brazilian political and economic conditions could adversely affect the Company and the market price of its preferred shares.
Developments and the perception of risk in other countries may adversely affect the market price of Brazilian securities, including Paraná Banco’s preferred shares.
Inflation and government efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and could adversely affect Paraná Banco and the market price of its preferred shares.
Exchange rate instability may adversely affect the Company and the market price of its preferred shares.

An active and liquid market for the Company’s preferred shares may not develop, and that could limit investor’s ability to resell Paraná Banco’s preferred shares at the price and time they desire.
The Company is controlled by its controlling shareholders whose interests may conflict with the interests of its other shareholders.
Substantial sales of Paraná Banco’s preferred shares could cause the market price of its preferred shares to decline.
The Company may need additional resources in the future, which may be obtained through increases in its capital stock and these increases would dilute investors’ ownership in Paraná Banco.