Without Buyer, Cruzeiro do Sul to be Liquidated

Banco Cruzeiro do Sul is to be liquidated, Brazil’s Central Bank says, after the Fundo Garantidor de Credito (FGC) failed to find a buyer for the mid-size lender. The decision puts an end to a process that began with fraud investigations and which the FGC tried to resolve through a 51% haircut on the bank’s dollar bonds and attempt to find a buyer among Brazil’s larger banks. The FGC offer to bondholders expiring last week got 88.7% acceptance, the FGC says, though the tender was contingent on the bank finding a buyer. It had been looking to offer holders cash for $1.58bn in bonds in a process led by Bank of America Merrill Lynch and HSBC. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items,” and the bank was under the temporary administration of the FGC during an investigation. The debt default is said to be the region’s biggest since 2002. Banco Prosper, which Cruzeiro agreed to buy last year, is also to be liquidated. About 35% of Banco Crizeiro do Sul’s deposits and 60% of Banco Prosper’s are guaranteed by the FGC.