Ceron: Brazil government seeks solution not cede bank's control

Ceron: Brazil government seeks solution not cede bank's control

Brazil Government Pursues Legal and Regulatory Solutions Amid Banking Sector Turmoil

The Brazilian government has emphasized its commitment to resolving the fallout from the collapse of Banco Master and its affiliated entities without ceding control to external judicial interventions, according to recent developments. This approach aligns with efforts to stabilize the financial system while managing the fallout from a liquidity crisis and alleged fraud.

In February 2026, Brazil's federal audit court (TCU) concluded a technical review of the central bank's handling of Banco Master's liquidation in November 2024, finding no fault with the regulator's actions. The TCU's findings, though confidential, were shared with central bank staff, reinforcing the regulator's authority in the process. However, Judge Jhonatan de Jesus, overseeing the case, imposed strict confidentiality measures to prevent leaks of sensitive information, including restricting the central bank's access to proceedings. This move has drawn attention as an unusual step in Brazil's banking sector wind-downs.

The government's strategy also involves addressing interconnected entities. In February 2026, the central bank liquidated Banco Pleno SA, a firm linked to Banco Master, citing liquidity issues and regulatory violations. Pleno's liquidation, along with its subsidiary Pleno Distribuidora, adds to the financial burden on Brazil's deposit insurance fund (FGC), which is projected to cover up to 55 billion reais ($10.5 billion) in losses from Banco Master-related cases.

The government's actions reflect a focus on legal and regulatory frameworks to manage the crisis. While federal authorities have arrested key figures, including Banco Master's controlling shareholder Daniel Vorcaro, they have also sought to balance accountability with systemic stability. The central bank's role in overseeing liquidations and the TCU's validation of its actions underscore this approach.

As the TCU prepares a final ruling on Banco Master's case, the government's emphasis remains on maintaining control over the resolution process while mitigating broader financial risks.