Nearly 50 days after brazil’s central bank intervened and liquidated Master Bank on November 18th, approximately 1.6 million depositors are still awaiting reimbursement from the Credit Guarantee Fund (FGC). The delay is drawing scrutiny as it exceeds typical payout timelines following brazilian bank failures, though it remains shorter than historical precedents. The scale of the Master Bank collapse-with roughly R$41 billion (approximately $8.2 billion USD) in possibly guaranteed deposits-is presenting logistical challenges for the FGC, wich is a non-profit association funded by member financial institutions [[1]].
Nearly 50 days after Brazil’s central bank ordered the liquidation of Master Bank, investors are still awaiting reimbursement from the Credit Guarantee Fund (FGC). The delay surpasses timelines seen in recent bank failures, though it remains shorter than the longest wait on record – a situation complicated by the significantly larger potential payout volume compared to previous collapses.
When Master Bank was liquidated on November 18, the FGC estimated approximately 1.6 million creditors held eligible deposits within the financial group, totaling around R$41 billion (approximately $8.2 billion USD based on current exchange rates).
The fund guarantees balances held in current accounts, savings accounts, and salary accounts, as well as investments such as Bank Deposit Receipts (RDB), Certificates of Deposit (CDB), Real Estate Credit Letters (LCI), Development Credit Letters (LCD), Agribusiness Credit Letters (LCA), Mortgage Letters (LH), Letters of Exchange (LC), and committed operations.
Coverage is capped at R$250,000 (approximately $50,000 USD) per CPF or CNPJ (individual or corporate tax identification number) per financial institution or conglomerate, with a global ceiling of R$1 million (approximately $200,000 USD) per investor over a four-year period.
There is no legally defined timeframe for initiating payments, as the schedule depends on the specifics of each liquidation process. Recent cases have averaged around 30 days, but the scale of the Master Bank failure is unprecedented.
Sources familiar with the matter attribute the longer-than-usual delay to the sheer size of Master Bank. “Previous liquidations were much smaller; you can’t use historical averages for the Master case, which is far more substantial,” one source commented.
Historically, the largest FGC guarantee was for Bamerindus deposits, costing the fund R$3.744 billion (approximately $750 million USD at the 1997 exchange rate) in 1997. Adjusted for inflation, that figure would be roughly R$19.6 billion (approximately $3.9 billion USD) today. In that instance, guarantee payments began on the same day the central bank’s intervention was decreed, according to information on the FGC website.
Following Bamerindus, the largest guarantees were for Cruzeiro do Sul in 2012 (R$1.960 billion historically, or R$4.0 billion adjusted for inflation), with a 69-day payout delay; BVA in 2013 (R$1.309 billion, or R$2.6 billion adjusted), taking 136 days; and Banco Rural in 2013 (R$974 million, or R$1.9 billion adjusted), with payments starting after 98 days.
To initiate payments, the liquidator appointed by the central bank must submit a creditor list to the FGC, prepared in conjunction with the fund itself. In a statement released on December 29, the Master Bank liquidator, EFB Regimes Especiais de Empresas, informed that the list is still in the process of “consolidation and validation.”
“This process involves technical analyses and cross-referencing of information resulting from the operational model of the aforementioned institutions under special regimes, with a view to making payments by the aforementioned Fund,” the statement read.
Once the FGC receives the creditor list, individual investors will request reimbursement through the fund’s application. Legal entities will submit their requests through the fund’s website. Funds will be credited to the bank account registered on the respective channels.
