Largest private banks want Caixa and BB to provide guarantee for loan to BRB

The legal areas of these financial institutions assess that the solution that is on the negotiation table, a loan with a term of 15 years, is unconstitutional and poses risks to them, according to people familiar with the negotiations heard by Folha over the last three days. The grace period must be 18 months, and rates are still being negotiated.

The governor of the DF, Celina Leão (PP), is expected to meet in the coming days with bank representatives at Febraban (Brazilian Federation of Banks) in São Paulo to discuss solutions.

The relief plan was drawn up after the governor appealed to Minister Luiz Fux, of the STF (Supreme Federal Court), asking for mediation with the federal government.

The initial design of the operation involved the granting of the full loan amount of R$6.6 billion by the FGC (Credit Guarantee Fund) to the government of the Federal District, controlling shareholder of BRB. A pool of banks - made up of the largest institutions in the country, members of the so-called S1 - would grant a bank guarantee for the FGC loan.

The operation would be guaranteed by resources from the Federal District in the FPE (State Participation Fund) and the FPM (Municipal Participation Fund). The transfers to the DF from these two funds would be used as counter-guarantees to reimburse financial institutions in the event of default.

The FPE and FPM are constitutional funds formed with the collection of federal taxes. Part of the resources is transferred by the Union to states and municipalities.

But, in negotiations, private banks have argued that according to the Constitution, states and the Federal District cannot use money from these funds to obtain credit from private banks.

They mention that article 167, paragraph 4, only allows revenues from the states and the DF to be given as guarantee for the payment of debts with the Union.

A state bank can lend resources to a federative entity (Union, State, Federal District or Municipality) as long as this credit is not used to pay current expenses, in accordance with an article in the LRF (Fiscal Responsibility Law).

According to a member of one of the largest private banks, with the initial proposal designed, private institutions would participate in the operation, in practice, without guarantee. He reinforces that financial institutions have not left the negotiating table.

Another participant in the negotiations explained that the private banks' understanding is that the DF government's resources are stamped and could not be used for other purposes.

The group of private banks that make up S1 include Itaú Unibanco, Bradesco, Santander and BTG. When contacted, Itaú, Bradesco and BTG informed that they would not comment. Santander did not respond to the request for information. On the public banks side, BB said it would not comment and Caixa did not respond.

Two solutions have been highlighted by private banks. The DF government would take out the loan from BB and Caixa, and the two public banks would act as guarantors for the private banks with the FGC.

The other is for the National Treasury itself to make an exception and grant the guarantee, a measure that was already rejected by the Minister of Finance, Dario Durigan, during the negotiations of the agreement with the STF.

Another concern for banks is the lack of information about BRB's balance sheet, which would show BRB's real situation after recording losses with the purchase of credit portfolios and other assets not backed by Master.

With operational reports suppressed since the Banco Master scandal came to light, BRB has not released its financial results for a year. The banks have doubts whether the R$6.6 billion loan requested from the FGC will be enough to adjust the BRB.

A representative highlighted that the loan has a term of 15 years and it is necessary to have legal security for the operation.

Negotiations for the loan from the consortium of banks are under the coordination of BB, and there are complaints about the way the process has been conducted. The CEO of a bank said that the progress of negotiations looked like a Tower of Babel, which signals that the agreement could take time. The bank was approached to comment on these criticisms and did not comment.

Governor Celina Leão's office also did not respond to the request for information about the impasse with private banks and the schedule of the meeting at Febraban. In response, the government's communications department replicated an official note on another subject, which was not the subject of the report's demand.

The governor was also contacted directly by the report at around 2:50 pm via her cell phone.

Without obtaining the loan, BRB cannot make the capital increase required by the Central Bank. Last week, the bank had another setback: negotiations with the management company Quadra Capital, which involved the sale of assets purchased from Master to an investment fund, were terminated.

The agreement had been announced in April this year and provided for the transfer of assets that originated in Master, worth R$15 billion, to a fund managed by Quadra Capital. The transaction provided for the payment in cash of R$3 billion to R$4 billion, which, according to the DF institution, were not transferred.

The negotiations came to an end due to "divergences in relation to the economic and financial parameters considered appropriate by the bank for the operation", says the BRB note.

BRB did not receive anything from Quadra, and manages liquidity problems on a daily basis. A member of the bank says that all commitments are being honored, even without having fat in the cash register. When contacted, BRB also did not respond.

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