By Brazil Stock Guide – Banco de Brasília SA (BRB) approved a potential share issuance of up to 8.8 billion reais ($1.5 billion) during an extraordinary shareholders’ meeting on Wednesday (22), as the state-controlled lender seeks to shore up its capital base following mounting liquidity pressures. The measure allows the funds to be booked as a capital increase, marking a key step in efforts to stabilize the bank’s financial position.
The approval comes despite a previously announced 15 billion reais deal between the Federal District government and asset manager Quadra Gestora, underscoring the severity of BRB’s liquidity constraints. The bank has been grappling with financial strain tied to its involvement in transactions under investigation by federal police with Banco Master, an institution placed into extrajudicial liquidation by Brazil’s central bank late last year.
The capital raising initiative is seen as an initial move to reinforce BRB’s balance sheet, which has been weakened by those developments. The Federal District government has until May 29 to inject funds and complete the capitalization process authorized by shareholders.
Efforts to secure additional funding have faced hurdles. The government has been seeking loans from the Credit Guarantee Fund (FGC) and a consortium of banks, but negotiations have shown little progress in recent weeks.
Beyond liquidity concerns, BRB is also dealing with capital adequacy challenges under close scrutiny from Brazil’s central bank. The lender has already missed a regulatory deadline to submit its financial statements, adding pressure from supervisors.
The shareholders’ meeting was led by newly appointed Chief Executive Officer Nelson Antônio de Souza, who took over after former CEO Paulo Henrique Costa was arrested in Brasília as part of the federal investigation linked to Banco Master.
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