(Bloomberg) – Brazil’s Central Bank President Gabriel Galipolo met with top bankers on the weekend as they tried to mitigate the impact of the sale of Banco Master SA, a smaller bank that grew rapidly with the support of the U.S. Financial Security Network.
Officials discussed the governance of deposit insurance funds, also known as FGC and the fate of Banco Master, according to those who understand the issue.
According to a statement from the Central Bank, the leaders of Itau Unibanco SA, Banco Bradesco SA, Banco Santander Brasil SA and Banco BTG Pactual SA were present. FGC head Daniel Lima was also at a meeting in Sao Paulo on Saturday.
The central bank said in a statement that “convene meetings with members of the national financial system to deal with issues related to financial stability to discuss “current issues, especially timetables for reconciling participants.”
This will also be heard from executives of smaller private banks in the next few days, one of the people said.
Executives left the meeting without talking to reporters. The bank’s representative did not return the email immediately, which made the outsider’s normal working hours discussion meeting on Sunday.
Last week, small public sector bank Brb-Banco de Brasilia SA reached an agreement to combine with the owner, although some assets will be engraved before the acquisition. This raises questions about the fate of the rest of the bank, which includes riskier assets such as equity equity in small and medium-sized companies and bond portfolios related to court payment disputes.
Financial companies and regulators want to avoid Banco Master’s hypothetical liquidation or intervention, as it may involve a large portion of FGC resources.
Banco Master has driven strong growth over the years by paying individual investors’ deposits exceeding the market rate. It attracts customers by marketing the proceeds of FGC, which is funded by the bank’s reserve requirements and owned by the largest lenders. The fund ensures that each bank has a Brazilian deposit of up to 250,000 reas ($42,788).
The bank’s financial report shows that at the end of December, the master’s degree had about 16 billion reais ($2.7 billion) in debt.
– Assisted with Dayanne Sousa, Peter Frontini and Cristiane Lucchesi.
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