Brazil's central bank announced on Wednesday that it had placed Banco Pleno into extrajudicial liquidation, citing a deterioration in the lender's financial condition and noncompliance with regulatory rules. The regulator said the bank's liquidity position had worsened and that the institution failed to meet norms governing its activities.
Extrajudicial liquidation in Brazil is a regulatory mechanism that allows the central bank to close a financial institution deemed no longer viable without recourse to the courts. The central bank's statement made clear the decision was driven by what it described as the "compromised economic and financial situation of the bank," along with liquidity shortfalls and breaches of rules.
Banco Pleno is controlled by Augusto Lima, who was until recently a partner at Banco Master. The regulator previously wound down Banco Master in November. The central bank had approved Lima's acquisition of Banco Pleno, which formerly operated as Banco Voiter, last year after Lima sold his stake in Banco Master.
Authorities have also investigated events connected to November's actions against Banco Master. On the same day the regulator shut Banco Master, federal police arrested Lima as part of a probe into the alleged sale of fraudulent loan portfolios by that bank. Lima was subsequently released and the investigation remains ongoing, according to the available statements.
In systemic terms, the regulator noted Banco Pleno represents a small fraction of Brazil's financial system - accounting for 0.04% of total assets and 0.05% of total funding. Nevertheless, the lender has a substantial number of creditors: the private deposit guarantee fund FGC said Banco Pleno has about 160,000 creditors with deposits eligible for guarantee payments totaling 4.9 billion reais. The exchange rate cited in the statements was $1 = 5.2228 reais.
The central bank's extrajudicial liquidation halts the bank's operations under the regulator's statutory authority and sets in motion procedures to address creditor claims and guarantee payments as applicable. Statements from the regulator and the private guarantee fund provided the principal details on the scope of deposits covered and the justification for the closure.
Contextual note: The information in this report is drawn from the regulator's and the private guarantee fund's statements and reflects the status of the bank, the ownership background, the cited reasons for the closure, and the scale of deposits eligible for guarantee payments.