BRB, the lender under the control of Brazil's Federal District government, plans to submit a request for a 3.3 billion reais loan from the country's credit guarantee fund, the FGC, before the end of the month, a person familiar with the matter said. The requested amount is equivalent to roughly $637.37 million using the exchange rate provided in the reporting.
The proposed FGC line is intended to support BRB's broader capital reinforcement program. BRB is pursuing a total of 6.6 billion reais in fresh resources to offset losses tied to credit portfolios it purchased from Banco Master - portfolios that authorities allege were fraudulent. Banco Master, whose owner Daniel Vorcaro is in jail, was liquidated in November after severe liquidity problems. Vorcaro, through his lawyers, has denied any wrongdoing.
The credit guarantee fund, a private entity that safeguards depositor and investor funds in Brazil's financial system, has already paid out 38.4 billion reais to creditors of Banco Master. To rebuild its reserves, the FGC is seeking to collect 32.5 billion reais in advance payments from other banks, the person said.
The plan for BRB to formally request the 3.3 billion reais loan must be routed through the Federal District government, the source added. When contacted by email, Federal District Governor Ibaneis Rocha declined to comment, saying such matters should be addressed by BRB itself. BRB and the FGC did not immediately reply to requests for comment.
Federal police investigators have told authorities that Master sold BRB 12.2 billion reais in credit operations that may have been forged. The former head of BRB, who led the negotiations for those purchases, has denied any impropriety, according to the person familiar with the situation.
In parallel with the planned FGC request, BRB has received legislative approval to carry out a range of transactions aimed at stabilizing its balance sheet. The bank is also considering alternative capitalization measures, including the creation of real estate funds and the divestment of a stake in a credit-focused subsidiary, the source said. The 3.3 billion reais facility would act as a credit line to be drawn if needed, rather than an immediate disbursement.
The situation leaves BRB navigating legal, reputational and funding challenges tied to the Master asset purchases while exploring a mix of regulatory, market and structural options to restore its capital position. ($1 = 5.1775 reais)