Banco Master's Meteoric Rise and Collapse Linked to XP Inc.'s Investment Platform

Banco Master SA's meteoric rise and collapse in Brazil was largely due to its ties with XP Inc., whose platform allowed the bank's loan portfolio to nearly double annually. XP sold its clients more Master bonds than any other financial institution, placing 26 billion reais ($4.9 billion) of debt that fueled an average annual growth rate of 86% in Master's loan portfolio. The relationship between the two companies was key, with the country's deposit insurance fund (FGC) guaranteeing Master's bonds, making them secure investments for XP's clients. However, critics argue that the system creates perverse incentives for financial advisors to promote lucrative investments, and that the high commission rates can lead to conflicts of interest.