Brazil's BRB crisis may be resolved through loan from guarantee fund, minister says

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Brazil's Finance Minister Dario Durigan said on Tuesday that an agreement to resolve the financial crisis at state-run lender BRB BMFBOVESPA:BSLI3 may include a loan from the credit guarantee fund FGC to the Federal District, which controls the bank.Durigan told reporters after a hearing at the Supreme Court on the issue that the Federal District's cash flow would serve as collateral for the loan, while the federal government has committed to easing the Federal District's fiscal adjustment plan.The minutes of Tuesday's hearing between the government and the Federal District signaled a potential loan from FGC would be carried out without a federal government guarantee. A new meeting is scheduled for Thursday, the minister said.Brazil's Treasury had concluded in a recent analysis that the Federal District lacks adequate repayment capacity and, therefore, cannot take out loans guaranteed by the federal government.BRB is seeking funds to address losses tied to allegedly fraudulent credit portfolios bought from Banco Master, which was liquidated by Brazil's central bank in November amid severe liquidity challenges.

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