The Master Bank is seeking a new R$12 billion credit line from the Credit Guarantee Fund (FGC) in order to continue its operations as it works on selling assets, as informed by sources familiar with the matter.
The request is in addition to the existing R $ 4 billion liquidity credit line offered by the FGC.
The bank has limited options as investors are no longer interested in purchasing their securities. This is increasing the cost of funding, according to sources who requested anonymity due to the confidential nature of the negotiations.
The sale of a portion of the Master’s assets to the Bank of Brasília, as previously reported, has been delayed due to thorough scrutiny by the Central Bank. Regulators are assessing the actual value of certain assets held by the Master and looking into potential irregularities, according to undisclosed sources.
Master Bank, the FGC, and the BRB did not provide an immediate response to a comment request.
Master’s decaying investments
The Central Bank is split over whether to approve the agreement with the BRB, according to some individuals.
Many bankers are currently wondering about the ownership of the bad assets of Master if the BRB acquires the good ones. Financial institutions backing the FGC are hesitant to let the fund hold all the high-risk assets, as Master is attempting to sell them to other funds, according to a source.
The Central Bank did not provide an immediate response to a comment request.
The deal with BRB now involves assets worth around R $ 25 billion, which is less than the roughly R $ 40 billion that was originally intended, according to sources.
The amount that the BRB will give to the Master Bank is expected to be approximately R$ 2 billion, according to one source.
The FGC, which obtains its funds from bank deposits, held approximately R$ 152 billion in May, as per its financial documents.
The Securities Commission (CVM) is investigating certain transactions conducted by the Master for possible irregularities, as reported by The State of S.Paulo newspaper on Wednesday (20).
Several challenges have been resolved as the Federal District Legislature passed a bill permitting the transaction, with Cade also granting approval.
