Banco Cruzeiro do Sul SA, the Brazilian bank seized by the central bank, needs 800 million reais ($397 million) in capital from a possible buyer, according to a person with direct knowledge of the lender’s finances.
An audit of the bank’s books shows it may take writedowns of about 2.5 billion reais, said the person, who asked not to be named because the information hasn’t yet been released.
Cruzeiro was placed under the administration of the privately owned deposit-insurance fund known as FGC on June 4 amid an investigation into possible accounting fraud. The fund requested the audit and announced that it would seek a buyer for the Sao Paulo-based company.
Negotiations with potential acquirers will begin only after the fund releases audit results on Aug. 14, the person said. The FGC would consider providing liquidity to the acquiring bank once the transaction is complete, and won’t provide capital, the person said.
Cruzeiro has declined about 77 percent since Brazil’s central bank ordered the takeover on June 4, closing at 1.77 reais yesterday in Sao Paulo.
The FGC audit found assets listed on Cruzeiro’s balance sheet, valued at about 1.3 billion reais, that didn’t exist, the person said. It also found improperly priced assets and the lack of a provision for loan losses, the person said.
Officials at the bank and the FGC declined to comment.