Cruzeiro Planned to Increase Executives’ Payment 30% in 2012

Banco Cruzeiro do Sul SA, the lender seized by Brazil’s central bank this month amid “serious financial violations,” planned to increase pay for top executives by 30 percent this year.

Cruzeiro said in a May 30 regulatory filing that top company officials would receive as much as 49 million reais ($23.9 million), up from 37.8 million reais in 2011. The central bank took control of the company June 4 and put it under the administration of the country’s privately owned deposit- insurance fund, known as FGC, for about 180 days.

The central bank alerted Cruzeiro’s controlling shareholder and Chief Executive Officer Luis Octavio Indio da Costa that the bank didn’t have proper documentation for one of its portfolio of loans about 15 days before seizing the bank, Antonio Carlos Bueno, head of FGC, told reporters June 4. The portfolio has about 1.3 billion reais, he said.

Cruzeiro is conducting an internal audit and won’t be able to comment until that’s completed, according to an e-mail from a bank official, who asked not to be identified in accordance with company policy.

Shares of the lender plunged 60 percent to 3.05 reais since the seizure, compared with a 1.1 percent gain for the benchmark Bovespa index in the same period.

Banco Panamericano SA, the lender bailed out by FGC in 2010 amid a central bank investigation of fraud, plans to pay 8.31 million reais to its top executives, up from 5.37 million reais last year, according to a May 30 regulatory filing.

Banco do Brasil SA, Latin America’s largest bank by assets, expects to pay top executives 40.85 million reais this year, up from 30 million reais last year, according to a May 30 filing.

Cruzeiro reported a loss of 57.9 million reais in the first quarter, compared with net income of 31.7 million reais in the last quarter of 2011 and 41 million reais a year earlier.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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