A common argument against privatizations of state-owned banks is that it leads to larger interest rates, through the riddance of competitive pressure over private banks. This paper demonstrates that state- owned banks also can prevent a high competition between private-owned banks. The impact of privatizations over oligopolistic credit markets is, therefore, an empirical question. In order to answer this question, we studied the 20 Brazilian banks privatizations during the second half of 90`s using stock returns. We could not identify negative changes in value for the most leveraged public firms. Furthermore, while only one large Brazilian private bank (Banco Real) benefited from the privatizations, other private banks lost market value. These findings are consistent with the hypothesis that privatizations lower spreads by fostering competition in the credit markets.