Banco Master Leaves R$57 Billion Bill for Brazil’s Deposit Guarantee Fund

FGC ends 2025 with a R$17.1 billion deficit after the collapse of Banco Master, exposing the cost of aggressive funding models backed by guaranteed deposits.

Apr 28, 2026 4:57 PM

By Brazil Stock Guide – Brazil’s deposit guarantee fund ended 2025 with a R$17.1 billion deficit after the collapse of Banco Master, turning the failure of a mid-sized lender into one of the largest recent stress tests of the country’s financial safety net.

The Credit Guarantee Fund, known locally as FGC, closed last year with R$123.2 billion in net equity and R$123.4 billion in liquid assets. But the liquidation of Banco Master and related institutions forced the fund to absorb an estimated R$57.4 billion hit, according to its annual report.

That bill included R$51.7 billion in guarantee payments and the combined effect of liquidation and assistance operations. The figure shows how a bank that had grown aggressively through high-yielding products protected by FGC coverage ended up shifting part of its risk to the broader financial system.

A Costly Failure

The liquidation of Banco Master, Master de Investimentos and Letsbank alone required R$41 billion in guarantee payments to nearly 800,000 creditors. Subsequent liquidations of Will Financeira in January and Banco Pleno in February added another R$11.2 billion in provisions.

In total, the FGC has already returned R$49 billion to 870,000 creditors, covering 94.5% of beneficiaries. That is the good news: the protection mechanism worked quickly and at scale for depositors. The less comfortable conclusion is that it worked because the bill was enormous.

The FGC is not a government agency. It is funded by financial institutions and exists to protect depositors and prevent bank runs. But its credibility has a public dimension. When it absorbs a shock of this size, the episode becomes less about one failed bank and more about the incentives created by guaranteed funding.

Liquidity Cushion

To protect its cash position, the FGC brought forward about R$32 billion in contributions from member institutions in March 2026. Those payments had originally been scheduled over the next five years.

After the measure, the fund’s net equity stood at R$118.5 billion, while liquidity reached R$110.9 billion. That means the system still has a sizable buffer. It also means the Banco Master case consumed a meaningful share of the fund’s firepower.