Large banks will bear most of the Master’s loss in the FGC; understand

Itaú Unibanco, Caixa Econômica, Bradesco, Banco do Brasil and Santander will bear the largest costs to finance the restoration of the Credit Guarantee Fund (FGC), after the hole left by the Master case. Estimates from analysts consulted by Broadcast (Grupo Estado’s real-time news system) suggest that the country’s five largest banks may have to disburse, in aggregate, an amount of around R$30 billion in the coming months.

Master was liquidated by the Central Bank in November 2025, under suspicion of fraud. Around 800,000 investors who invested in bank securities were covered by FGC protection and are being reimbursed.

The FGC has assets of around R$125 billion. Of this total, Banco Master, Will Bank and Banco Pleno can consume at least R$52 billion, indicating the need to recapitalize the institution.

So far, among the five largest banks, only BB has publicly announced a disbursement estimate. Meanwhile, analysts and investors are making their own calculations.

The bill considers the immediate advance of the equivalent of five years of monthly contributions to the Fund, as part of the reconstruction plan agreed this month. As they are not public, the numbers represent an estimate to provide a dimension of the effects of the FGC reconstruction on the sector. Therefore, analysts’ calculations may be slightly higher than those of the banks themselves, which have access to the complete numbers.

In addition to this amount, there will also be an extraordinary additional contribution of 50% of the monthly contributions, which in the case of the four main publicly traded institutions presupposes an expenditure of R$2.6 billion per year, according to Citi calculations. The figure will have a material but manageable impact on banks’ main financial metrics, in analysts’ opinion.

Under current rules, member banks contribute 0.01% of their total guaranteed financial instruments monthly. In the case of Term Deposits with Special Guarantee (DPGE), the monthly rate is 0.02% for issues with disposal of receivables and 0.03% for stock without disposal.

In the case of Itaú, the formula translates into an initial disbursement of R$8.8 billion and a further R$882 million in the year to cover the extraordinary 50% increase in contributions, according to Citi estimates. The numbers may be slightly overestimated, because they consider deposits from the entire operation, including those outside Brazil. And the FGC only covers deposits in Brazil.

The president of Itaú, Milton Maluhy, has defended the implementation of “intelligent mechanisms” to recapitalize the FGC and convey the message that the Fund is well capitalized to meet the objective of investor protection. In his view, the process should minimize costs for the financial sector and society as much as possible. “Many international standards can serve as references”, he said when commenting on the bank’s results.

Bradesco should mobilize around R$7 billion in the first round and then another R$696 million in the year, according to Citi. For Santander Brasil, the cost will be R$3.4 billion in the first stage and, subsequently, R$336.7 million.

Banco do Brasil declared that it will take R$5 billion from its cash flow to meet the anticipation of ordinary contributions, plus another R$500 million in extraordinary contributions. From an accounting point of view, the impact will be gradual: to Broadcast, the public bank explained that the item will be constituted as an asset on the balance sheet. As a result, each month, the institution will deduct the value of R$83 million from its contribution assets, which will be recognized in the financial statements through the margin.

The amount adds up to a monthly expense of R$41.5 million to deliver the extraordinary disbursement. For the bank, analysts calculate a greater contribution, around R$6.8 billion, but with the exception that the number takes into account all BB deposits, which includes numbers outside Brazil.

For Caixa Econômica Federal, based on the most recent data available, the impact of the 60-month advance is estimated at around R$5.8 billion, according to an analyst who declined to be identified. With fewer eligible deposits, fintechs tend to face more limited repercussions: Nubank, for example, would bear R$251.2 million initially.

In the case of Santander, analysts’ calculations indicate the need to invest between R$3.6 billion and R$3.7 billion. When commenting on the bank’s results at the beginning of the month, CEO Mario Leão defended the continued evolution of the regulatory environment to avoid another event similar to the collapse of Banco Master and said that the recovery process and adjustments to the FGC rules will be “challenging”.

Compulsory

To mitigate these effects, the banks negotiate a proposal to redirect resources from the banking reserve requirement to rebuild the FGC. The solution requires authorization from the Central Bank, which has not yet commented on the matter. “As reserve requirements are already non-remunerative assets held at the Central Bank, redirecting them could reduce the opportunity cost for banks”, emphasize Citi analysts, led by Gustavo Schroden.

The release of compulsory deposits, especially unpaid ones, would be the best scenario for banks, in the view of an analyst at a foreign bank. In any case, for this analyst, the banks are well capitalized and this extra money that will be disbursed will not have any major impacts. Yes, there will be an opportunity cost if the reserve requirement is not used. In other words, this money that could earn interest for the bank or be used for another purpose will remain parked in the FGC. “Clearly something needs to be done at the FGC. The impact of the Master scandal was huge”, he comments.

As for banks’ profits, the banks’ contribution to the FGC should have a marginal impact. “We see limited impacts to our coverage, ranging from 0.4% of profits (Nubank) to around 1.9% (Banco do Brasil), estimates Schroden, from Citi in a recent report.

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