Ibaneis proposes investment in BRB with the use of 12 properties after Banco Master’s failure

The governor of the Federal District, Ibaneis Rocha (MDB), sent a bill to the Legislative Chamber asking for authorization to make a contribution from Banco de Brasília (BRB) after the hole left by Banco Master and offered 12 properties in the DF to raise the necessary resources.

The decision to submit the project was anticipated by the Estadão. The governor’s allies expected the text to be sent next week, but the order was brought forward on Friday night, the 20th. The content of the proposal was revealed by the Metrópoles website. THE Estadão also had access to the document.

The project authorizes the government of the Federal District, as BRB’s controlling shareholder, to reinforce the bank’s capital. The capital increase may occur through equity contributions, the sale of public assets with the proceeds allocated to the BRB and “other legally permitted measures that meet the standards of the national financial system.”

The government listed 12 properties in the project that could be sold to generate immediate cash for the contribution; transferred to BRB so that the bank can carry out economic operations with them; transformed into negotiable securities on the financial market; used to create a real estate investment fund; and also presented as a guarantee option for loans. Solutions may be isolated or combined.

Offering the properties as collateral for a loan, without immediately selling any public assets or taking money from the budget, is the option presented by Ibaneis allies as least damaging to the district coffers.

The Ibaneis government assesses that BRB is going through a financial crisis after the hole left by Master. The state bank bought bad portfolios from Daniel Vorcaro’s bank and has not yet calculated the total size of the hole, which could reach R$9 billion, according to people familiar with ongoing financial analyzes and audits.

The government did not present an estimate of how much it should raise from the exploration of these properties. There are 12 properties in various locations in the federal capital, including the North Isolated Areas Sector (SAIN), the Industry and Supply Sector (SIA), Taguatinga and Guará. The properties are owned by Terracap and Novacap, two companies from the Federal District.

The project establishes that the use of properties will be subject to prior assessment, compatibility with the public interest and respect for governance and transparency standards.

The need for a contribution has increased, in the opinion of members of the state bank and the district government. According to the Estadão showed, the Central Bank can apply a kind of “yellow card” to BRB if the Ibaneis government does not make contributions to the bank by March 31st – the deadline for publishing the financial institution’s balance sheet.

The Central Bank may adopt Resolution 4019, of 2011, the same one that fell to the Master, and which imposes a series of restrictions on the financial institution, such as preventing it from opening new branches and exploring new businesses, in addition to imposing operational limits on the bank.

The president of the Legislative Chamber of the DF, deputy Wellington Luiz (MDB), told Estadão that the project will not be processed easily in the House, but there is a willingness on the part of parliamentarians to save the Brasília bank.

BRB began selling its own assets to recover liquidity after the hole left by Banco Master. The sale of portfolios, however, is not enough, as it exchanges assets for money, without increasing the bank’s equity. A contribution is seen as the only way to recover BRB’s capital and restore the Basel index – a thermometer that indicates the financial health of a bank to function.

BRB sold assets considered to be of quality by the financial market, such as portfolios of payroll-deductible loans, FGTS withdrawal advances and loans to States and municipalities with Union endorsement. But so far, it has not been able to sell portfolios that it purchased from Banco Master.

The report found that Ibaneis began to make personal efforts so that BRB could sell the assets that came from Daniel Vorcaro’s bank. According to allies, the governor believed that this would reduce the need for a guaranteed contribution from the DF government, which did not happen.

Capitalization worries the DF, which is out of cash, like the Estadão showed, and even lost the payment capacity rating (Capag) with the Union. Therefore, offering properties as collateral, without immediate sale of assets or use of budget resources, is the option most favored by the district Executive.