By Brazil Stock Guide – Brazil’s Fundo Garantidor de Créditos (FGC) — the country’s private-sector deposit insurance fund — is set to disburse more than R$ 50 billion to cover losses tied to institutions linked to Banco Master, including Banco Pleno (formerly Voiter) and will bank. The scale of the intervention marks one of the largest activations of Brazil’s deposit protection mechanism in recent years.
The FGC functions as Brazil’s equivalent of the U.S. Federal Deposit Insurance Corporation (FDIC). It is a privately funded safety net, maintained through mandatory contributions from banks, designed to protect retail depositors and certain bank-issued instruments. It guarantees up to R$ 250,000 per individual or company (CPF or CNPJ) per financial conglomerate, covering principal and accrued interest on products such as CDBs (bank certificates of deposit), savings accounts and certain other deposits.
The estimated R$ 51.8 billion shortfall tied to the Master-related cases corresponds to 48.1% of the combined recurring net income generated in 2025 by Brazil’s four largest listed lenders — Banco do Brasil, Bradesco, Itaú Unibanco and Santander Brasil — which together posted R$ 107.7 billion in profits last year. In relative terms, the cost of stabilizing a mid-sized financial conglomerate amounts to nearly half a year of earnings from the country’s banking heavyweights.
Banco Master’s conglomerate was liquidated on November 18, 2025. Three months later, Brazil’s central bank ordered the extrajudicial liquidation of Banco Pleno, expanding the liabilities covered by the FGC. In the case of will bank — which was still part of the Master group at the time — investors holding eligible deposits in more than one affiliated institution were subject to the aggregate R$ 250,000 coverage cap for the entire conglomerate.
Who rebuilds the fund
Unlike a taxpayer-funded bailout, the FGC is financed by the banking system itself. Contributions are calculated largely based on the size of each institution’s deposit base. As a result, large commercial banks are expected to shoulder most of the effort to rebuild the fund’s reserves over time.
Investment platforms such as XP Inc., BTG Pactual and Nubank, which distributed Master-issued CDBs to retail clients, are likely to have proportionally smaller contributions to the FGC because they do not hold comparable volumes of traditional insured deposits. While these platforms benefited from distributing high-yield bank instruments, the primary burden of replenishing the guarantee fund will fall on deposit-heavy lenders.
Systemic implications
Analysts broadly assess the systemic impact as contained. The FGC’s design aims to prevent bank runs and maintain confidence in the retail funding base, acting as a shock absorber when smaller or mid-sized institutions fail. Still, the magnitude of the Master-related payouts raises questions about supervisory timing, conglomerate structures and incentive alignment across the distribution chain.
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