Government-controlled Banco de Brasilia (BRB) agreed to acquire only the healthiest and most strategically relevant assets from fellow lender Banco Master after months of negotiations, BRB CEO Paulo Henrique Costa stated in a recent interview.
This agreement is subject to review by the central bank and is under due diligence, which may lead to a reduction in the negotiated price of 2 billion reais ($350 million), to be paid over a period of up to six years.
BRB's shares, controlled by the government of Brazil's Federal District, have nearly doubled since news of the deal broke. However, the absence of prior regulatory approval has raised concerns regarding the future of Banco Master's remaining assets.
Banco Master pursued an aggressive growth strategy funded by high-yield certificates of deposit and significant investment in assets backed by court-ordered government payments known as "precatorios."
Costa noted that BRB has selected only those assets that align with its current strategy of expanding its client base and core business, excluding any involving court-ordered payments or investment funds with company shares.
As a result, approximately 23 billion reais of assets remain outside the deal, which has been under negotiation since January.
"This was one of the conditions of our contract," Costa explained in a telephone interview.
BTG Pactual, a prominent Brazilian investment bank, has expressed interest in some of the Banco Master assets that BRB chose not to acquire, according to sources familiar with the situation.
Costa mentioned he had not participated in any discussions regarding the future plans of Banco Master's controlling shareholder, Daniel Vorcaro, for the leftover assets following BRB's acquisition of 58% of the capital.
"The other 42% belongs to Daniel, of course. Whether he will carry this in the future or not, these are elements that I don't have," said Costa.
He confirmed that BRB informed the central bank of the agreed transaction and submitted related documents during a meeting in Brasilia.
The regulator now has 360 days to make a decision, but Costa anticipates that approval will likely come sooner.