🤔 To bail or not to bail

Celina Leão, the governor of Brasília, has requested a meeting with President Luiz Inácio Lula da Silva, hoping that the National Treasury will back a BRL 6.6 billion (USD 1.32 billion) loan requested from the FGC deposit insurance fund (equivalent to the US Federal Deposit Insurance Corporation) to keep the Banco de Brasília (BRB) solvent.

BRB is a publicly traded bank controlled by the Brasília government, which holds 53.7% of shares. Its troubles date back to last year’s doomed attempt to take over Banco Master — a deal blocked by the Central Bank, which later liquidated Master after uncovering widespread fraud.

Along the way, BRB bought BRL 21.9 billion in credit portfolios from Master. Investigators believe that a substantial portion was fraudulent — the Federal Police initially flagged at least BRL 12.2 billion in suspect credits, though the final figure is still being audited.

The purchases made little financial sense, but were greenlit after…

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