(MENAFN- The Rio Times) Brazil's central bank has ordered the extrajudicial liquidation of Banco Master, shutting down a lender that had expanded by selling high-yield products to savers.

The decision came hours after a consortium led by Brazil's Fictor group and investors from the UAE announced plans to inject about R$3 billion ($556 million) and take control of the bank.

Master grew by funding a credit book with CDBs and similar instruments that often paid far above the CDI benchmark and what large banks offer.

These products were sold on investment platforms as covered by Brazil 's deposit insurance scheme, the FGC, which guarantees up to R$250,000 ($46,300) per person. The mix of high coupons and a state-backed safety net allowed Master to grow faster than its peers.

But the model brought rising doubts. Early in 2025, state-controlled Banco de Brasília (BRB ) agreed to buy 58% of Master for roughly R$2 billion ($370 million).



Audit bodies and prosecutors questioned the quality of Master's assets and the price, and after months of review the central bank vetoed the deal in September, saying the state bank could not safely absorb Master's risks.
Master liquidation tests Brazil's resolve on risky banks
The endgame followed quickly. Federal Police launched Operation Compliance Zero, investigating fabricated credit portfolios used to back Master's instruments, and arrested controlling shareholder Daniel Vorcaro at São Paulo's main airport.

With confidence shattered and a criminal probe under way, the central bank chose liquidation over another complex rescue built around a politically connected bank.

For savers, the key issue is recovery: once a court-appointed liquidator compiles the list of creditors, the FGC will reimburse eligible investors within its limits, while bigger positions are pushed into a slow, uncertain asset-sale process.

The broader lesson is that regulators may stop socializing the cost of risky yield-chasing, and that outsized returns at smaller banks usually signal outsized risk.

After the liquidation, Fictor confirmed it had suspended its purchase plan, said it learned of the decision from the press, and stressed its respect for the central bank and willingness to cooperate with investigators.

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