The Treasury Secretary, Rogerio Ceron, said on Wednesday that BRB currently cannot enter into any credit operations supported by a federal government guarantee. Ceron pointed to "delicate fiscal issues" affecting the regional bank's controlling shareholder - the Federal District government - and said those conditions complicate BRB's ability to obtain loans that do not carry a federal guarantee.
At a press conference, Ceron also stated that Caixa Economica Federal is not engaged in any concrete initiative to acquire BRB, buy a stake in the bank, or take on a loan portfolio related to BRB. Ceron serves as chair of Caixa's board of directors.
When describing potential sources of support for BRB, Ceron said assistance would not necessarily have to originate from another financial institution. He suggested that the FGC private deposit insurance fund or other unspecified alternatives could play a role if BRB requires backing.
The central bank has put forward an estimate that BRB will need to set aside more than 5 billion reais in provisions to bolster its liquidity position. Those provisions follow a series of questionable transactions carried out with Banco Master, a lender that failed and was later liquidated by the regulator.
Banco Master was privately held and was liquidated by the regulator in November. On that same day, federal police launched an operation to investigate the alleged sale of a fraudulent credit portfolio from Banco Master to BRB.
The exchange rate cited in the record is $1 = 5.1359 reais.
Context and immediate implications
Ceron's statements place limits on BRB's ability to tap federally guaranteed funding while leaving open the possibility of alternative support mechanisms. Caixa's lack of concrete action, as described by Ceron, indicates no imminent bank-led rescue or acquisition negotiation is underway, according to his remarks.
The central bank's provision estimate underscores the magnitude of the financial adjustment BRB may have to absorb to address issues tied to its dealings with Banco Master.