The Monetary Council (CMN) approved changes to the Credit Guarantor Fund (FGC) on Thursday (22) that allow the fund to intervene in struggling financial institutions before liquidation. The alterations come amid the Master group's crisis, whose collapse could cost the FGC up to R$ 50 billion. The goal is to reduce losses, avoid service disruptions, and prevent systemic risks in the financial sector.
The CMN, comprising Finance Minister Fernando Haddad, Planning and Budget Minister Simone Tebet, and Central Bank President Gabriel Galípolo, approved regulatory changes to the FGC to flexible assistance operations. Previously, the fund only acted after liquidation was decreed by the Central Bank. Now, the FGC can intervene when an institution faces financial difficulties recognized by the monetary authority, authorizing actions such as change of control or transfer of assets and liabilities, including portfolios and deposits, between institutions.
These measures aim to minimize the impacts of a potential liquidation, such as service interruptions for clients and increased costs for the FGC. They also seek to prevent contamination of the financial system, reducing systemic risks. The changes align with international standards and are part of modernizing the deposit protection framework, according to an FGC statement.
"The alterations aim at international alignment and are part of an ongoing process of modernizing the deposit protection framework," the FGC states. "The changes contribute to greater stability and solidity of the national financial system, maintaining convergence with internationally adopted reference standards, without affecting recent financial institution liquidations."
The context is the Master group's liquidation in November by the Central Bank, led by Daniel Vorcaro, which will leave an estimated R$ 50 billion hole in the FGC—the largest in the fund's history. Other updates include clearer rules for submitting and correcting information, greater transparency through disclosure of covered instrument balances per institution, and a maximum three-day deadline for starting guarantee payments after receiving data from liquidators.
"Such alterations allow the guarantee payment process to be faster, more predictable, and aligned with best international practices," the FGC highlights. The fund guarantees up to R$ 250,000 per CPF or CNPJ for deposits and credits per institution in case of bankruptcy. In August last year, the CMN had already tightened FGC rules.
