Brazil’s central bank has halted operations of mid-sized lender Banco Master and placed it into extrajudicial liquidation after a “severe liquidity crisis,” sharp financial deterioration, and “serious rule violations.” Police simultaneously arrested controlling shareholder Daniel Vorcaro, freezing 12.2 billion reais ($2.28B) in a fraud probe.
Master grew rapidly via high-yield debt, marketed as covered by Brazil’s deposit insurance fund FGC, which now faces a major hit:
- 1.6 million creditors eligible for reimbursement
- 41 billion reais ($7.7B) insured—about one-third of FGC’s liquid resources
FGC President Daniel Lima said all eligible clients will be reimbursed, with payments starting in ~30 days.
The investigation also involves Master’s loan portfolio sales to state-run BRB, whose CEO was suspended for 60 days as police executed search warrants. BRB insists it has acted “within transparency and compliance standards.”
A proposed sale of Master to investor Fictor and partners from the UAE—which included a planned 3 billion reais capital injection—was suspended after the liquidation order.
Master’s collapse is already hitting major creditors:
- Oncoclinicas shares fell 13%, with 216 million reais in exposure
- Pension funds Rioprevidencia (960M reais) and Amprev (426M reais) hold large positions not covered by the FGC
An administrator will now take over Master’s assets, liabilities, and creditor list as Brazil’s financial system absorbs one of its most significant bank failures in years.