BTG to Get Central Bank Help With Lower Requirements

  • Authority scrapped reserve requirements on assistance lines
  • Measure affects credit line BTG got from deposit fund Dec. 4

Brazil’s central bank is throwing Grupo BTG Pactual a lifeline by scrapping reserve requirements for certain types of deposits, helping the bank as it sells assets to shore up cash after its billionaire founder was arrested last month.

Policy makers will no longer require banks to set aside reserves on money they receive from assistance liquidity lines, the central bank said Wednesday on its website. The change, which applies to all financial institutions, will benefit BTG in particular because it secured a 6 billion-real ($1.5 billion) credit line from the nation’s deposit guarantee fund on Dec. 4, according to an official with knowledge of the measure, who isn’t authorized to speak publicly.

The central bank press office declined to comment on the impact the measure will have on BTG. The Sao Paulo-based investment bank didn’t return a phone call requesting comment.

Investors started withdrawing money from BTG’s investment funds after then-Chief Executive Officer and Chairman Andre Esteves was arrested Nov. 25 for allegedly obstructing a corruption investigation involving state-owned oil producer Petroleo Brasileiro SA. Esteves has denied any wrongdoing through his lawyer.

Asset Sales

BTG has been selling assets to boost liquidity, including a 2.38 billion-real stake in hospital-chain Rede D’Or Sao Luiz SA and some of its loan portfolios. Itau Unibanco Holding SA has been acquiring loan books from BTG, Candido Bracher, CEO of the bank’s wholesale unit, Banco Itau BBA, told reporters in Sao Paulo Wednesday. Banco Bradesco SA bought a credit portfolio of about 1.2 billion reais from BTG earlier this month, CEO Luiz Carlos Trabuco Cappi said.

BTG shares have pared their losses since Esteves was jailed after the deposit guarantee fund, or FGC, came to its rescue. The shares, which fell as much as 61 percent, are down 53 percent since his arrest.

As part of the measures announced Wednesday, the central bank also boosted the amount deductible from reserve requirements on cash deposits to 70 million reais from 44 million reais, according to the statement on the bank’s website. The move seeks to reduce costs for smaller banks, the central bank said. The measure will increase liquidity by 390 million reais, according to the central bank press office.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE