R$ 100 Billion Financial Conglomerate Emerges

The recent move towards the formation of a Financial Conglomerate in Brazil, involving the acquisition of Banco Master, represents a significant change in the national banking landscape.

With a total of R$ 100 billion in assets, this merger promises to change market dynamics, especially with the exclusion of R$ 51.2 billion in unwanted assets and liabilities.

In this article, we will explore the details of this transaction, the expected financial impacts and profit projections that accompany this new structure, as well as the lack of political power for the bank's current controllers.

Summary of the Transaction with Banco Master

BRB makes significant progress in the acquisition of Banco Master, resulting in a reduction very important of the business to R$ 24 billion, which paves the way for the creation of a conglomerate with approximately R$ 100 billion in assets, according to the Master's starting asset.

This strategic move excludes assets and liabilities worth R$ 51.2 billion, including high-cost court orders and CDBs, according to the party established by the BRB.

This acquisition allows BRB to pay 75% of adjusted net equity, without giving political power to the current controllers of Banco Master in the new structure.

The expectation is that it will be added R$ 1.5 billion to the result until 2029, with net profits projected at R$ 1.254 billion in 2025 and R$ 2.704 billion in 2029, highlighting the continuous growth of this operation.

• R$ 24 billion in business reduction
• Conglomerate of up to R$ 100 billion
• Projected net profit growth through 2029

Excluded Assets and Liabilities

High-cost court orders and CDBs represent a significant portion of the R$51.2 billion in assets and liabilities excluded in the transaction with Banco Master.

This strategic decision aims to strengthen financial health of the new conglomerate, allowing for a more robust and solid capital structure.

By excluding these items, BRB ensures greater stability and a focus on more profitable assets.

It is important to mention that such exclusions reassure investors and stakeholders, demonstrating solid strategic alignment with market and regulatory practices.

• Precatory orders: Public debt securities that, although they have a defined payment term, present uncertainties in their effectiveness and liquidity
• High-cost CDBs: Bank Certificates of Deposit with high yields, but which represent a high financial cost, removing the predictability of returns
• Uncertain liabilities: Excluded to ensure that total liabilities accurately reflect the conglomerate's actual liabilities

With these measures, BRB reinforces its position in the sector, preparing for sustainable growth and profit in the future.

New Control Structure

The acquisition of Banco Master by BRB involves the purchase of 58,04% of the total share capital.

This strategic step aims to strengthen BRB's presence in the financial market, taking advantage of the projection of adding R$1.5 billion to the result by 2029. To enable the transaction, the payment of 75% of adjusted equity, reflecting a significant value that ensures the financial health of the acquisition, as detailed by relevant sources such as, for example, BRB confirms business reduction.

A crucial aspect of the new structure is that the former controllers will not have political power, marking a break in the traditional dominance over the bank's guidelines and ensuring a new configuration of power in the institution's current and future administration.

This change is essential for strategic repositioning and reaching new levels of competitiveness in the Brazilian banking sector.

Financial Projections and Approvals

The conglomerate's financial projections indicate significant growth in net income over the next few years.

It is expected that in 2025 the net profit will reach R$ 1.254 billion, while in 2029, the value will rise to R$ 2.704 billion.

Thus, during this period, there will be a total increase of R$ 1.5 billion.

To better visualize these projections, see the following table:

Furthermore, it is relevant highlight that estimated growth of this magnitude is subject to a series of regulatory approvals and reviews.

As detailed in the procedures of the Central Bank of Brazil, all necessary financial and expansionary transformations must be formally approved.

To this end, institutions must strictly consider the instructions and standards available through operating authorization.

Completion is subject to Central Bank approval and confirmatory audit..

In short, the formation of the Financial Conglomerate represents a new era for Banco Master and the banking sector as a whole.

With expectations of robust growth through 2029, the consequences of this acquisition will be crucial for the institution's financial sustainability.