BRASILIA, May 28 (Reuters) – Brazil’s government and the Federal District have reached a deal for a loan to support struggling state-run lender BRB, a court document showed on Thursday.
• Deal allows the Federal District to contract a loan of approximately 6 billion reais ($1.19 billion) from credit-guarantee fund FGC to support BRB
• Guarantees secured from a bank syndicate using the district’s revenue flows from state and municipal participation funds as collateral
• Lenders Bradesco, Itau Unibanco, BTG Pactual, and state-run banks Caixa Economica Federal and Banco do Brasil part of the syndicate, sources said
• No federal guarantee will be provided
• Brazil’s Treasury considers the Federal District lacking adequate payment capacity, preventing it from taking loans with federal backing
• As part of the deal, the Federal District commits to adopting fiscal adjustment measures
• BRB has been trying to address losses tied to allegedly fraudulent credit portfolios bought from Banco Master
• Banco Master was liquidated by Brazil’s central bank in November amid severe liquidity challenges
($1 = 5.0421 reais)
(Reporting by Bernardo Caram and Ricardo Brito in Brasilia; Paula Arend Laier and Luciana Magalhaes in Sao Paulo; Writing by Isabel Teles; Editing by Rod Nickel and Gabriel Araujo)
