Brazilian state-run bank BRB may need to allocate over 5 billion reais to cover transactions with failed lender Banco Master, double the initial provision of 2.6 billion reais, according to central bank director Ailton Aquino. Aquino testified in a Supreme Court investigation into alleged fraud involving BRB and Master.

BRB stated that any capital needs estimate will be based on central bank estimates and an independent investigation. A capitalization plan has been developed to address potential shortfalls. The central bank did not immediately comment on the matter. BRB had planned to acquire Master, but the deal was blocked due to a liquidity crisis.

Transfers between BRB and Master reached 16.7 billion reais from July 2024 to October 2025, as per a November court ruling. Brazil’s central bank had raised concerns about BRB’s transactions since March 2025. Master was liquidated on the same day as a federal police operation targeting alleged fraud at the bank.

Daniel Vorcaro, owner of Master, was arrested in connection with the alleged fraud but later released with an ankle monitor. Vorcaro’s lawyers stated that the credit portfolios involved in BRB deals were swapped for assets that were regularly recorded and approved by BRB. The lawyers emphasized compliance with technical and accounting standards.

Read more at Yahoo Finance: Brazil’s BRB may book nearly $1 billion loss from Banco Master deals, central banker says