The extrajudicial liquidation of Banco Master, decreed today (18) by the Central Bank in the midst of the Federal Police’s Operation Compliance Zero, generated apprehension in the financial market. This was one of the largest banking interventions in the history of the Brazilian financial system, but it should not trigger a systemic crisis in the sector.
The assessment was made by economist Gesner Oliveira, in an interview with Tarde BandNews, with Lenny Leone. For the economist, the Central Bank’s action was already expected by the market and there is no room for a domino effect in the banking system.
“I believe it is something specific. I don’t believe it will generate a major crisis. And, in fact, the Brazilian financial system is quite solid. I don’t believe there will be a crisis as a result of this”, he explains.
Meanwhile, Banco Master’s creditors can use the Credit Guarantee Fund to pay for investments.
It only covers some types of investments, including Bank Deposit Certificates, the famous CDBs, which were Banco Master’s main bait to seduce people and companies by offering returns above the market standard.
The Guarantee Fund has some rules. The most basic of them is that the agency will only pay 250 thousand reais per CPF or CNPJ and per financial conglomerate. For example, if the person has 250 thousand in total in different companies within the same conglomerate, they will receive the amount, but if there are 250 thousand in each of the companies within the same conglomerate they will not receive 500 or 750 thousand reais, but rather 250 thousand reais.
Additionally, there is a limit imposed over a four-year period. In this range, the creditor can have access to a maximum of one million reais, even if it respects the previous rule of 250 thousand.
For Gesner Oliveira, strengthening the Guarantee Fund eliminates the chances of major losses for investors.
“This allows you to guarantee that there will not be a major loss. There will possibly be a loss of this or that investor, it is possible, but it is not something that will have a major repercussion. Furthermore, the National Monetary Council has taken previous measures to strengthen the FGC”,
The crisis involving the bank was triggered after a Federal Police operation that arrested seven people suspected of involvement in a billion-dollar scheme of issuing and trading fake credit titles involving the master bank and BRB, Banco de Brasília.
Among those arrested are the president of Master, Daniel Vorcaro and four executives linked to Master. The operation was brought forward because the PF suspected that Vorcaro was trying to flee the country… He was arrested on a private jet at Guarulhos airport, in Greater São Paulo.
The president of BRB was also the target of the operation. Paulo Henrique Costa, who is in the United States, was removed from his position for 60 days. For the vacancy, the governor of the DF, Ibaneis Rocha, nominated Celso Eloi de Souza Cavalhero.
Celso Eloi has been a member of the federal bank since 1990. He works as superintendent of the bank in Brasília. To assume the position, the nominee must be examined by the legislative chamber of the federal district, as established by the organic law of the DF…
The president’s removal comes in the wake of BRB’s frustrated attempt to acquire Banco Master at the beginning of the year. The plan was for Banco de Brasília to assume 58 percent of the institution’s capital.
The operation also revealed a millionaire hole. The director general of the Federal Police, Andrei Rodrigues, estimates that the fraud against the financial system investigated in Operation Compliance Zero may have generated around R$12 billion. In a statement to the INSS CPMI, Andrei reflected on the operation:
“We are carrying out an important operation, jointly with the Central Bank and Coaf, to [investigar] a crime against the financial system that amounts to around R$12 billion.”
In the political world, the Minister of Finance, Fernando Haddad, avoided commenting on the operation, but classified the investigations into Banco Master as very robust. He also said that the portfolio is available to the Central Bank
“I think that the Central Bank will provide information as far as it is able, as the settlement process progresses. What is up to the Treasury is to provide support for the consequences of this act; if there are any, we are here ready to collaborate”, stated Minister Haddad.
What will the payment process be like?
One of the first steps is to send the consolidated list of depositors and investors to the FGC.
The procedure follows three phases:
- Sending the list of creditors: the liquidator gathers and forwards the data to the FGC. This step can take up to 30 business days;
- Release of the reimbursement request: after validating the information, the FGC enables the “Request payment” button in the application. Release usually occurs within 48 hours after validation;
- Payment: after the order and digital signature, the amount is transferred to a bank account with the same ownership.
Step by step to receive the FGC – Individual
Reimbursement is not automatic. The investor must place the order, following the following steps:
- Download the FGC app (available for Android and iOS);
Complete the registration, inserting documents and personal data; - Register the bank account with the same ownership;
- Wait for the request option to be released;
- Request payment and complete with a digital signature;
- Wait for the transfer to the indicated account.
- During the process, additional documents and biometric validation may be requested.
Step by step to receive the FGC – Legal Entity
- Lending companies must use the FGC Investor Portal;
- The legal representative accesses the portal and fills in the company information;
- The FGC sends instructions for sending documents by email;
- After validation, payment is made to a current or savings account with the same CNPJ.
What is covered by the FGC?
- Current and savings accounts;
- CBD and RDB;
- Financial letters (LCIs, LCAs, LCs, LHs, LCDs);
- Time deposits;
- Repurchase operations with eligible securities.
