The FIDC NP Alternative Assets 1 fund, managed by BTG, won the auction held by BNDES and the FGC (Credit Guarantee Fund) to buy Banco Econômico’s credits that were held by these institutions since 1995, when the Central Bank intervened in the bank. 

Three participants had registered to take part in the auction: NPL Brasil, FIDC NP Atlântico and Alternative Asset 1, but only BTG’s fund made a bid, winning by the minimum amount of R$937.750 million.

When contacted, BTG informed that “the operation is part of BTG Pactual’s proprietary strategy of buying portfolios of non-performing loans”.

According to the statement on the auction, BNDES and FGC aimed to recover credits that have been in their portfolios for 25 years and with no prospect of being received before 2028. As they are adjusted by the Reference Rate (TR), zeroed since September 2017, have no correction since August 2017.

Also according to the statement, the credits owed by Econômico amount to R$ 14.88 billion, of which R$ 12.02 billion are related to creditors entitled to receive before the BNDES and the FGC. The credits of the institutions are unsecured (without preference in case of bankruptcy or composition with creditors, being paid after all other creditors), and therefore have no preference in the order of payment.

At the time of the Econômico intervention, the bank had R$ 401 million in debts relating to transfers from the BNDES System and debts with the now extinct Deposit and Real Estate Letter Guarantee Fund (FGDLI), which was succeeded by the FGC when it was created. Subsequently, these credits were incorporated into the institution’s liquidation mass.

Of the credits granted in the auction, without co-obligation, 28.71% are from BNDES itself and 23.32% from the Special Agency for Industrial Financing (Finame). The other 47.97% are from the FGC.

Original Story: Valor Investe | Álvaro Campos 
Photo: BTG Pactual website
Edition & Translation: Prime Yield