By Brazil Stock Guide – Brazil’s finance minister Fernando Haddad told the management of Banco de Brasília (BRB) that the Federal District government must inject R$4 billion into the lender or risk regulatory intervention, according to Estadão. The warning follows the identification of a capital shortfall at the state-owned bank linked to transactions carried out during the attempted acquisition of Banco Master, which is now under extrajudicial liquidation.
Investigations by federal police and federal prosecutors have pointed to evidence that Banco Master sold R$12.2 billion in non-existent credit portfolios to BRB. During a confrontation hearing at Brazil’s Supreme Court late last year, the former chief executive of the state lender said BRB was unable to recover roughly R$2 billion invested in Master before the Central Bank ordered the private lender into liquidation in November.
In light of the potential losses, the federal government argues that restoring capital ratios is the responsibility of the controlling shareholder — the Federal District government, led by Governor Ibaneis Rocha. Without a capital injection, authorities could escalate supervisory measures to protect the financial system. Brazil’s finance ministry declined to comment when contacted by Estadão.
In a statement cited by the newspaper, BRB said it continues to operate normally and that the final size of any losses remains under review by the Central Bank and an independent forensic audit. The bank added that it already has a capital plan in place, using multiple instruments to rebuild equity if necessary. BRB reported shareholders’ equity of R$4.5 billion and regulatory capital of R$6.5 billion, reaffirming its commitment to transparency and governance. Even so, the ultimatum intensifies political and fiscal pressure on the Federal District as regulators assess whether current capital buffers are sufficient to absorb potential losses.
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