Brazil central bank shuts Banco Master as police detain top investor

By Marcela Ayres and Ricardo Brito

BRASILIA (Reuters) -Brazil's cardinal slope efficaciously halted operations of mid-sized lender Banco Master, which had struggled successful caller months with mounting liquidity pressures, connected Tuesday arsenic constabulary arrested ​its controlling shareholder.

The regulator named a liquidator to grip creditor claims and merchantability assets, closing a turbulent section for Master,‌ which had grown rapidly done an assertive strategy built connected high-yield indebtedness sold done concern platforms.

"The cardinal slope is the regulatory authorization of the fiscal system, ‌and I'm definite that, to person reached this point, the process indispensable beryllium precise robust," Brazil's Finance Minister Fernando Haddad told reporters aft the announcement.

Separately, Brazil's national constabulary said they had launched an cognition against "the issuance of fraudulent recognition securities by fiscal institutions".

They did not sanction the targets of the raid, which sought to frost 12.2 cardinal reais ($2.28 billion), ⁠but 2 sources with nonstop cognition of the ‌situation said that Master's controlling shareholder Daniel Vorcaro had been arrested.

Master, Vorcaro and Vorcaro's lawyer did not instantly respond to requests for remark connected Tuesday.

BRB CEO REMOVED FROM OFFICE

The constabulary probe involves the merchantability of ‍assets of Master's indebtedness portfolio to BRB since past year, a 3rd root with nonstop cognition said. The state-run slope had planned to get Master, but the woody was blocked by the cardinal slope successful September.

The monetary authorization spent months assessing whether BRB, which is controlled by the authorities ​of Brazil's Federal District, had capable capableness to enactment the caller superior operation earlier deciding to artifact the sale.

BRB said successful ‌a connection connected Tuesday that a section tribunal had ordered the suspension of its CEO Paulo Henrique Costa from his presumption for 60 days. Costa did not instantly respond to a petition for comment.

A 4th root said that the national constabulary had served hunt and seizure warrants astatine BRB's headquarters.

"BRB emphasizes that it has ever acted wrong transparency and compliance standards. ... The slope continues to run normally," BRB added successful its statement.

MASTER'S LIQUIDITY ISSUES

The cardinal bank's bid of a alleged extrajudicial liquidation came conscionable ⁠hours aft a consortium led by Brazilian concern radical Fictor and unnamed investors from ​the United Arab Emirates said they had agreed to bargain Master.

Fictor did not instantly ​respond to a petition for comment.