Brazil's BRB Bank Rescue Law Vetoed by Distrito Federal Governor

The Federal Credit Guarantee Fund (FGC) is set to provide a loan of up to R$ 6.6 billion to the Banco de Brasília (BRB) after the bank acquired distressed portfolios from Banco Master. Private banks – Itaú, Santander, Bradesco, BTG Pactual and XP – are pressing the state‑run Caixa Economica Federal and Banco do Brasil for guarantees, while the Distrito Federal (DF) government has prepared a law to use its participation funds (FPE and FPM) as contragaranties.

Governor Celina Leão of the DF vetoed 14 provisions in the rescue legislation. Among the vetoed items were clauses that would require BRB to reimburse public finances, allocate at least 52 % of BRB’s voting shares to the DF, compel the DF to disclose loan terms before signing, and restrict public‑service hiring. The agreement, endorsed by Supreme Court minister Luiz Fux, does not involve a federal contribution.

The dispute centers on how the guarantees will be structured and which public resources will back the loan, with the aim of keeping BRB operational while limiting fiscal exposure for the DF.