Brazilian authorities are preparing a financial rescue after the collapse of a small private bank due to alleged fraud that could reach 2.2 billion dollars.
The Central Bank of Brazil ordered on Tuesday the liquidation of the Master Bank due to a “serious liquidity crisis” and regulatory violations.
In parallel, the police arrested the owner of that investment bank, Daniel Vorcaro, and other executives, during an investigation into alleged unsupported credit portfolios.
Vorcaro was arrested on Tuesday at a Sao Paulo airport, when he was preparing to take an international flight.
Police confiscated luxury cars and works of art, among other assets.
The operation also targeted executives of the BRB state bankof Brasilia, amid fears that that institution has acquired fraudulent Master’s credits.
The BRB reported this Wednesday that it “initiated an investigation” and that it “continues to operate normally.”
The director of the Federal Police, Andrei Rodrigues, informed legislators that fraud at Banco Master could be around 12,000 million reais (about 2.2 billion dollars).
Master Bank has less than 1% of total assets and deposits from the Brazilian financial system, according to the Central Bank.
The collapse of the institution activated the Credit Guarantee Fund, an independent entity to protect depositors and investors.
The fund announced that it will begin the “guarantee payment” process.
Brazilian media estimate the amounts eligible for these payments at 41 billion reais (almost 7.7 billion dollars).
