Brazilian state-controlled Banco de Brasília (BRB) may be compelled to book provisions exceeding 5 billion reais to cover exposures tied to transactions with the now-liquidated Banco Master, a central bank director said in sworn testimony seen by authorities.
Ailton Aquino, the central bank director who oversees supervision, told federal police in late-December testimony that the amount of potential provisioning on BRB's books would be "very large. More than 4 billion reais, more than 5 billion. The likelihood is that it exceeds 5 billion reais." That estimate is nearly double the roughly 2.6 billion reais provision the central bank had previously required BRB to set aside to cover potential shortfalls related to Master, which entered liquidation in November.
The comments were made as part of a Supreme Court-led investigation into alleged fraudulent activity connected to transactions between BRB and Banco Master. According to a court ruling in November, transfers between the two institutions totaled 16.7 billion reais from July 2024 through October 2025.
BRB, which is controlled by the government of Brazil's Federal District, had announced plans to acquire Master, but the central bank blocked that transaction in September as the privately owned lender confronted a severe liquidity crisis. Investigators say BRB had also been purchasing securities from Master, and some of those instruments may have been linked to assets that did not exist.
In his testimony, Aquino said the central bank had raised concerns about BRB's dealings with Master as early as March 2025, issuing a sequence of formal notices. Master was placed into liquidation on the same day federal police launched an operation aimed at alleged fraud at the bank. Its owner, Daniel Vorcaro, was detained in connection with the probe and subsequently released under an ankle-monitoring condition.
BRB replied in a public statement that any calculation of capital needs will rely on central bank figures and the outcome of an independent inquiry. The bank also said it has drawn up a capitalization plan to respond to potential shortfalls. The central bank did not immediately answer a request for comment on the testimony.
Representatives for Vorcaro argued that the credit portfolios at the center of the BRB transactions were swapped for assets that were regularly recorded, audited and priced according to formal risk-classification methods. They added that BRB approved those asset purchases in line with technical and accounting standards.
The currency conversion used in official reporting is $1 = 5.18 reais.
Context and next steps
The witness statement from the head of supervision at the central bank underscores the size of the potential hit to BRB's balance sheet should the central bank's assessment hold. With transfers of 16.7 billion reais between the two banks identified in court documents, investigators and regulators will weigh asset quality, transaction documentation and any shortfalls that may emerge from the liquidation of Master.
BRB has signaled readiness to rely on central bank estimates and independent examination to determine capital needs and said it already has a plan to recapitalize if necessary. The Supreme Court-led investigation and related police actions remain ongoing, leaving the ultimate fiscal impact on BRB subject to the outcomes of those processes.