New Rules Squeeze Banks’ Capital as Brazil Delinquencies Spike

New regulations are taking a bite out of Brazilian banks’ equity capital, crimping their ability to loan money at a time when many are already hitting the brakes because of rising interest rates and expectations for higher payment delinquencies.

The measures, meant to bring the nation’s banks in line with global standards, are pushing lenders to generate profits quickly to use a record pile of almost 370 billion reais ($64 billion) in tax assets — credits that result from overpayment of taxes — that they’ve accumulated on their balance sheets.

The rule change comes just as a separate law takes ...