Brazil's Banco Central Halts BRB-Banco Master Deal To Shield System From Hidden Risks

2025-09-04 05:00:28

(MENAFN- The Rio Times) Brazil's Central Bank stopped Banco de Brasília (BRB), a state-owned bank, from buying Banco Master, a risky private lender.

Banco Master reported assets of R$63 billion ($11.5 billion) and profits of R$1 billion ($180 million) in 2024. But audits found the bank built its growth on dangerous bets, using customer deposits to buy legal claims and failing company shares.

These assets are hard to turn into cash during trouble. BRB tried to buy a controlling share of Banco Master for about R$2 billion ($360 million).

Detailed checks led BRB to reject many of Master's assets, cutting the deal's scale in half. The Central Bank intervened because BRB is government-owned; moving risky private assets to a public bank could push losses onto taxpayers.

Brazil's regulators and prosecutors opened investigations into Banco Master. The securities authority found R$2.1 billion ($380 million) in questionable deals, including transfers to companies linked to the bank owner's family.

Authorities began a criminal probe, worried about the impact if Master's problems hit the wider system. After the blocked deal, Banco Master must show how it will repair its finances. If it fails, the Central Bank could force out managers to protect depositors.

This episode shows why rapid growth without safety checks can endanger more than one bank. Regulators acted to prevent public money from covering private risk.

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