BTG's Partners Said to Plan Buying Esteves's Stake After Arrest

  • Supreme Court decides to extend banker's arrest, lawyer says
  • BTG saw $1.1 billion in fund withdrawals after arrest

BTG Pactual’s partners are in talks to buy former Chief Executive Officer Andre Esteves’s controlling stake in the bank after his arrest last week, said a person with knowledge of the matter. Brazil’s Supreme Court extended the billionaire’s arrest on Sunday, his lawyer said.

The partners are still trying to work out details for the purchase as they seek to insulate the bank from Esteves and stem fund withdrawals if he remains in jail, the person said, asking not to be identified because discussions are private. BTG has 64 partners, according to its website.

Regulatory filings this year show he owns a 22 percent to 24 percent stake in the bank. The company had a total stock-market value of about 21.4 billion reais ($5.6 billion) on Friday. His holding also includes a so-called golden share at BTG that gives him the effective control of the firm, the person said.

A BTG Pactual official declined to comment, while Esteves’s lawyer directed questions on the matter to BTG.

Esteves was arrested Nov. 25 on allegations he and Senator Delcidio Amaral tried to interfere with the testimony of a former Petroleo Brasileiro SA executive who was jailed in January in the nation’s biggest corruption scandal. Esteves has denied the accusations through his lawyer. His defense team had petitioned Brazil’s Supreme Court to free the banker Sunday, when the five-day period of his arrest warrant expired, one of the billionaire’s attorneys said.

Public prosecutor Rodrigo Janot asked for the extension of the arrest based on objects seized Wednesday and depositions given by those being investigated, according to a note e-mailed by his office Sunday. The office sees "an extremely grave offense" in Esteves’s conduct, according to the note.

BTG appointed Persio Arida as interim CEO the same day Esteves was arrested. Still, shares of BTG tumbled 26 percent in Sao Paulo since Nov. 25. Clients took 4.2 billion reais ($1.1 billion) out of some of the bank’s most liquid fixed-income funds on Nov. 25 and Nov. 26, according to the latest data available on the securities regulator’s website. That represents about a third of the combined net assets of the 10 fixed-income funds listed on the bank’s website.

Folha de S.Paulo reported on Saturday that the partners were considering buying Esteves’s stake. Website G1 reported earlier on Sunday that Esteves’s arrest had been extended.

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