By Brazil Stock Guide – Banco de Brasília, known as BRB, is negotiating the sale of a loan portfolio worth close to R$ 1 billion to Itaú Unibanco and Bradesco as the state-controlled lender seeks to shore up liquidity and rebuild capital following losses linked to its exposure to Banco Master. According to Estadão, the discussions involve loans granted to states and municipalities that carry a federal guarantee, a structure that significantly reduces credit risk and makes the assets attractive to larger private banks
The transaction would likely split the portfolio evenly between Itaú and Bradesco, each acquiring roughly half of the assets. The loans under negotiation total about R$ 900 million and were extended to the governments of Pernambuco and Pará, as well as the city of Maceió. Because the contracts are backed by the federal government, any default by the subnational entities would trigger payment by Brazil’s National Treasury, lowering risk but also requiring federal authorization for the transfer
BRB has about R$ 940 million in loans with federal guarantees on its balance sheet and is pursuing the sale as a way to generate cash more quickly than through organic balance-sheet management. The bank formally consulted the Treasury earlier this month to seek approval for the transaction, a necessary step because the federal government acts as guarantor of the credits.
The move is part of a broader effort to recompute capital after BRB suffered losses related to its dealings with Banco Master. The lender had attempted to acquire Master last year, a transaction blocked by Brazil’s central bank and later scrutinized by federal investigators. Authorities are probing alleged irregularities involving more than R$ 12 billion in credit portfolios tied to Master that BRB had acquired during negotiations. Former BRB executives have said the bank managed to unwind part of the exposure but failed to recover close to R$ 2 billion.
In a statement to Estadão, BRB said portfolio transfers are common in the financial system and are used to optimize capital, reduce risk and strengthen liquidity, stressing that all measures under consideration comply with central bank regulations and market best practices. Itaú, Bradesco and the National Treasury declined to comment on the talks.
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