BRB and Master negotiation allegedly driven by camaraderie and attempt to evade scrutiny, reveals investigation

Documents gathered by the Federal Police reveal how the Central Bank identified discrepancies in credit portfolios*pictures: Federal Police operation confiscates luxury cars, artwork, watches, and R$1.6 million in cash Withdrawals blocked, assets sold off, and the Deposit Insurance Fund activated: understand the liquidation process of Master and what happens next Lawyer Roberto Podval, representing Daniel Vorcaro, dismissed the court-ordered detention as unnecessary and unlawful, stating that the banker was on his way to the United Arab Emirates when he was apprehended at Guarulhos International Airport to finalize the sale of the financial institution to a group of investors led by Grupo Fictor, announced yesterday. In a statement, BRB stated that it ‘has always acted in accordance with compliance and transparency standards, regularly providing information to the Federal Public Ministry and the Central Bank of Brazil on all operations related to Master Bank.’ BRB is a public bank controlled by the government of the Federal District. Paulo Henrique Costa, the bank’s president, was suspended from his position.*Master crisis: analysts see ‘credit stress’ for smaller banks, but rule out systemic risk The Federal Police investigation revealed that BRB conducted operations that were inconsistent with Master in an attempt to give the financial institution of Daniel Vorcaro a lifeline while the Central Bank was analyzing the bank’s sale proposal. In March of this year, BRB proposed to buy Master, but the deal was vetoed by the BC. Needing resources while the BC evaluated the operation, Master negotiated with BRB to sell credit portfolios (rights to loans) to raise funds – and gain an extra edge in the market. However, authorities viewed this transaction as a way to circumvent the Central Bank.*In its statement on the case, the Federal Public Ministry stated that Master ‘acquired credit portfolios’ from a company headed by a former employee ‘without making any payments’ and then resold these securities to BRB, receiving immediate payment, ‘resulting in the transfer of R$12.2 billion from January to May 2025.’ Justifying this operation to the BC, Master informed on March 25 of this year that the credit portfolio originated from two state employee associations in Bahia, created by a director of the private bank. A BC audit, however, found that ‘credit assignments began to involve CPFs from various locations across the country’ and that the financial transactions were incompatible with the two associations involved in the transaction.*Faced with this suspicion, the Central Bank began a meticulous examination of a sample of 30 alleged credit-taking clients of the operations assigned by Master to BRB in January 2025. The institution found that it was not possible to establish any correspondence for the transactions with the financial flow, which ‘supports the evidence of inconsistency.’ The term means inconsistency or lack of evidence to prove the existence of something. ‘Stranger’ on Faria Lima: Vorcaro’s banking sector adventure concludes with intervention in Master Seeing this, BRB presented the BC with a new sample containing information on 100 credit contracts acquired from Master. After analyzing the documents, the monetary authority reinforced that there were ‘indications of inconsistency, signaling the possible existence of accounting and financial engineering to enable fundraising.’*After BC’s query, the ownership of these securities was attributed to Tirreno, created in late 2024 by an individual who registered other similar companies. According to investigators, this indicates that it was a ‘shelf company’ to facilitate the rescue operation for Master. Shortly after its market launch, Tirreno increased its capital to R$30 million, appointed a former Master employee as director, and made changes in its ownership – formalized only after the start of the financial operation involving BRB. A life of luxury and a middle-class upbringing in Minas Gerais: who is Daniel Vorcaro, Master bank owner, arrested by the Federal Police The Federal Public Ministry emphasizes that the initial partnership contract between Master and Tirreno and one of the credit assignment instruments ‘are not even notarized,’ while the other operation documents were formally registered only a few months after the transaction. ‘It is unusual and unreasonable that only after the Central Bank demanded information, BRB started to require additional documents, a very suspicious situation for someone conducting an operation of this magnitude (R$12.2 billion) and should take minimal and objective precautions for the success of such a transaction,’ state the investigators. Change of course To correct the flaws identified by the Central Bank, BRB decided to directly interrupt the operation with Tirreno, responsible for issuing the securities passed on by Master. The government of the Federal District’s financial institution opted to replace the purchased portfolios with other assets held by Daniel Vorcaro. The aim was to reduce the balance of the operation, which totaled R$12.2 billion. However, according to the investigation, this move exceeded the legal limit of exposure to a single client, estimated at R$1.1 billion.For the investigation, between July 2024 and October 2025, BRB and Master conducted operations totaling R$16.7 billion. These transactions took place ‘despite reservations expressed by the Central Bank.’ In a statement, BRB said that it ‘reaffirms its commitment to ethics, responsibility, and integrity in conducting its activities.’ Operation thwarts Vorcaro’s trip abroad Following the evidence found during the investigation, the Federal Police launched an operation on Tuesday to investigate an alleged scheme involving the creation and trading of fake credit titles between Master and BRB. On the eve of the police action, Daniel Vorcaro was arrested while attempting to board a flight to Dubai on a private jet at Guarulhos Airport, São Paulo. Besides the banker, six other individuals were detained. As the operation unfolded, the BC announced this morning the extrajudicial liquidation of Banco Master, the largest ever recorded in the country, halting the activities of the financial institution. According to the BC, the measure was taken in a situation of irrecoverable insolvency – when there is an inability to meet financial obligations – or ‘when serious violations of the norms regulating the financial institution’s activities are committed, among other legal provisions.’