By Brazil Stock Guide — Daniel Vorcaro told federal police that the collapse of Banco Master resulted from a sudden loss of funding rather than fraud or asset-quality problems. According to his testimony, the bank remained solvent until regulatory pressure and a loss of market confidence sharply curtailed liquidity.
Vorcaro said Banco Master’s business model relied heavily on Brazil’s deposit guarantee fund, the FGC, a mechanism commonly used by smaller banks to attract retail deposits by offering higher interest rates. He argued that regulatory changes and increased scrutiny weakened this funding channel, triggering a liquidity squeeze despite what he described as a positive asset position.
Authorities are also investigating transactions involving loan portfolios originated by Tirreno, a third-party credit originator, and later transferred to Banco de Brasília (BRB). Vorcaro said the deals marked the bank’s first large-scale move into purchasing pre-originated loans and that documentation issues — rather than credit losses — led to efforts to unwind the transactions.
He told police that contractual safeguards were used to reverse the deals and said borrowers were not charged during the process. Vorcaro added that BRB recovered funds through repayments and asset substitutions, denying that clients or counterparties suffered losses.
Vorcaro also said Brazil’s central bank closely monitored Banco Master’s operations and that enforcement actions intensified after a proposed acquisition by BRB failed. He denied any political interference in the transactions.
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