Deputies approve contribution to BRB to cover Master’s deficit; opposition will appeal

The Legislative Chamber of the Federal District approved this Tuesday, 3rd, the authorization for the DF government to make a contribution to Banco de Brasília (BRB) in order to cover the hole left in the institution by operations with Banco Master. In the two rounds of voting, the score was 14 to 10.

The project, forwarded by governor Ibaneis Rocha (MDB) last week, authorizes the Federal District to capitalize the BRB and offers nine public properties to be sold, transferred to the bank, structured in a real estate fund and offered as guarantee in a loan limited to R$6.6 billion with the Credit Guarantee Fund (FGC) or other banks.

Deputies had shown resistance to Ibaneis’ plan for fear of wear and tear in an election year, even more so after having approved the offer to purchase Master by BRB last year – later blocked by the Central Bank. The government appointed representatives from the Executive and the state bank to convince parliamentarians in intense negotiations over the last 24 hours.

The president of the BRB, Nelson Antônio de Souza, met with district deputies on the eve of the vote, in a meeting that lasted almost 12 hours. Souza stated that, if the project was not approved, the bank would cease to exist and a series of social programs, public transport, medicine distribution and loans to civil servants – programs operated by BRB – would be paralyzed.

Despite the approval of the project, the use of the properties is not automatic and will have to be subject to evaluation, pricing and proof of public interest, according to government and legislative technicians. The use of the land faces legal obstacles and was questioned by legislative consultants from the DF Chamber.

The project could cause negative side effects on the bank, by incorporating risky assets into the balance sheet, violating the Fiscal Responsibility Law (LRF) and compromising the budget of the Federal District government, according to two opinions from Chamber consultants, to which Estadão had access.

Opposition parliamentarians are preparing to file a lawsuit to overturn the approved law. The petition must be presented by politicians or entities linked to employees of the Federal District.

Among the questions are permission to offer properties without a prior public hearing, proof of public interest, specific law for each property and prior evaluation of the assets.

“We are warning, we are warning. Any entity that goes to court will overturn this rubbish law”, said PT leader, Chico Vigilante (PT), who presented a separate vote pointing out the project’s illegalities.

Ibaneis took the field to approve the contribution as he prepares to leave the government and run for the Senate in the October elections. Allies still doubt whether he will really be a candidate, due to the wear and tear with the Master case – the government committed itself and publicly defended the purchase of Daniel Vorcaro’s bank by BRB.

The project was sent to the Chamber after the Central Bank warned members of the Federal District government that, if there was no capitalization, Banco de Brasília was at risk of falling outside the Basel Index and ceasing to exist. As Estadão showed, the BC could apply a “yellow card” in the short term and prevent BRB from opening new branches and expanding business.

In the same session, deputies rejected the call from the president of the BRB and the Secretary of Economy of the Federal District, Daniel Izaias de Carvalho, to speak about the project at a public hearing in the Chamber.

Why the contribution to BRB became necessary

The Bank of Brasília purchased R$12.2 billion in bad credits from Daniel Vorcaro’s bank and needs a provision of approximately R$8 billion on its balance sheet to cover the deficit and remain operational, as stated on Monday, 2, the president of BRB, Nelson Antônio de Souza.

BRB asked shareholders for a contribution of up to R$8.86 billion to reinforce the institution’s capital. The meeting to discuss the plan is scheduled for March 18th. The bank wants to have the solution by March 31st, when it presents the 2025 balance sheet and intends to detail the hole left by the Master.

This Tuesday, hours before the vote, the Ibaneis government sent a new calculation on the value of the properties offered. The land totals R$6.586 billion, according to an estimate from Terracap (Companhia Imobiliária de Brasília). The previous day, the survey showed an amount R$100 million lower, as shown in Estadão Column.

Parliamentarians asked the government to send detailed assessment reports on property prices on the market. In the document, Terracap informed that the reports “are being finalized by the Terracap technical team” and only forwarded the estimates for each property.

Supportive deputies talk about saving BRB; Opponents point out ‘blank check’

Supporting deputies argued that the project is the only way to save BRB and keep the bank under the control of the Federal District government. “Whoever led BRB to this situation must respond, whoever bought a bad bond may rot in jail. Now, we are not going to penalize the bank”, stated the government leader in the House, Hermeto Neto (MDB). “I’m not afraid to put my CPF in to save the bank.”

Opposing parliamentarians, on the other hand, criticized the lack of detailed assessment of properties and authorization for commercial operations not disclosed in the project. Representative Paula Belmonte (PSDB) took a replica of a blank signed check to Governor Ibaneis Rocha.

“This is a blank check and we were not the ones who did this (the fraud with Master). Whoever puts their finger on this blank check will show the decadence of the seriousness of DF politics”, said the parliamentarian.

Changes to the project include reversion of values ​​to the DF and compensation to public companies

The deputies maintained the central points of the project and made some changes that include the possibility of the amounts being reverted to the Federal District and public companies affected by the sale or use of properties being reimbursed.

According to the changes, if the value of the properties exceeds the amount necessary for the BRB to remain within the Basel limits, with current revaluation of assets or recovery of portfolios, the surplus must be returned to the Federal District.

The Bank of Brasília must publish, every three months, a detailed report with a list of the properties sold or paid into funds, the appraised value, the effective value of the sale or financial transaction, the identification of who purchased it and the statement of the application of the resources in restoring the solvency limits required by the Central Bank.

Furthermore, the Federal District must compensate, through properties of equivalent value, CEB (Companhia Energética de Brasília (CEB), Companhia de Saneamento Ambiental do Distrito Federal (Caesb) and Terracap for the use of land and buildings belonging to these companies.

The Federal District Civil Servants’ Pension Institute (Iprev-DF), in turn, will keep 20% of the amount collected from the transfer or sale of the properties. This portion must be used to issue BRB shares or participate in operations structured by the bank. Today, Iprev is BRB’s second largest shareholder, with a total capital of 12.33%.

Another change establishes that Real Estate Investment Funds (FII) will be structured through a closed condominium. In this model, the number of shares is defined at the time of issuance and investors cannot redeem their shares before the fund’s closing date. The Federal District will be the initial shareholder of the fund and Banco de Brasília will be responsible for structuring the FII.

SEE HOW EACH DEPUTY VOTED

Favorable:

1.Daniel Donizete (MDB)

2.Doctor Jane (Republicans)

3.Eduardo Pedrosa (União Brasil)

4.Hermeto (MDB)

5.Iolando (MDB)

6.Jaqueline Silva (MDB)

7.Joaquim Roriz Neto (PL)

8.Jorge Vianna (PSD)

9.Martins Machado (Republicans)

10.Pastor Daniel de Castro (PP)

11.Pepa (PP)

12.Robério Negreiros (PSD)

13.Roosevelt Vilela (PL)

14.Wellington Luiz (MDB)

Cons:

1.Chico Vigilante (PT)

2.Dayse Amarílio (PSB)

3.Fábio Felix (PSOL)

4.Gabriel Magno (PT)

5.João Cardoso (Avante)

6.Max Maciel (PSOL)

7.Paula Belmonte (PSDB)

8.Ricardo Vale (PT)

9.Rogério Morro da Cruz (PRD)

10.Thiago Manzoni (PL)