A Federal District court blocked state-owned Banco de Braslia (BRB) from finalizing its R$2 billion ($360 million) acquisition of Banco Master, citing violations of legal protocols.The ruling followed a request by local prosecutors who argued BRB failed to secure mandatory shareholder and legislative approvals before advancing the deal.While BRB claims compliance with internal statutes, the judge emphasized that skipping these steps risked public harm, allowing only preparatory actions to continue.The proposed acquisition, announced in March 2025, would grant BRB 58% of Banco Masters capital-49% of its common shares and all preferred shares-leaving founder Daniel Vorcaro with 51% voting control.Regulatory approvals from Brazils Central Bank and antitrust authorities remain pending, with due diligence still underway.
BRB CEO Paulo Henrique Costa confirmed that the final price could drop below R$2 billion, depending on the outcome of audits.Brazilian Court Blocks BRBs $360 Million Acquisition of Banco Master Over Legal Concerns.
(Photo Internet reproduction)These audits exclude R$23 billion of Masters high-risk assets, such as speculative government debt claims.
Banco Masters rapid growth-tenfold since 2017-relied on offering retail investors returns up to 140% of Brazils benchmark CDI rate, far above the 110120% industry average.Master-BRB Deal Sparks Scrutiny Amid Liquidity StrainsThis strategy, funded by certificates of deposit (CDBs) backed by Brazils Credit Guarantee Fund (FGC), drew scrutiny as Masters liquidity tightened and it struggled to offload precatrios (court-ordered government debts).Critics argue the BRB deal shifts risks to public coffers, with the FGC potentially liable for R$50 billion of Masters deposits if the bank fails.
Parallel investigations by federal and district prosecutors examine possible financial crimes and irregularities in the acquisition process.The Federal Public Prosecutors Office (MPF) is probing whether BRBs board omitted key details about the transaction, bypassing shareholder oversight.Meanwhile, Banco Master negotiates asset sales with BTG Pactual, J&F, and others, aiming to divest R$1015 billion in precatrios and equity stakes not included in the BRB deal.BRB, backed by the Federal Districts governor, insists the deal aligns with its expansion strategy and denies political influence.
Yet rivals question the logic of a state bank absorbing a private lender with aggressive risk exposure.Central Bank reforms in 2023-tightening capital rules for precatrio holdings and capping FGC coverage-were partly a response to Masters practices.The courts intervention delays a transaction that would create Brazils ninth-largest bank by loans.
With BRBs audit results expected by Mays end, regulators now face pressure to address systemic risks while balancing regional economic ambitions.