UPDATE 6-Brazil deposit guarantee fund throws $1.6 bln lifeline to BTG Pactual

viernes 4 de diciembre de 2015 16:41 GYT

(Adds minister comments, loan sales, updates share performance)

By Guillermo Parra-Bernal and Tatiana Bautzer

SAO PAULO Dec 4 (Reuters) - Embattled investment bank Grupo BTG Pactual SA has secured a 6 billion-real ($1.6 billion) lifeline from a deposit guarantee fund backed by Brazil's top banks as it seeks to bolster cash and stem outflows following the arrest of founder André Esteves last week.

In a statement on Friday, BTG Pactual said it placed a pool of outstanding loans as collateral to back the credit facility from FGC, as the privately owned deposit guarantee fund is known in Brazil. The loan can be tapped immediately.

The announcement is a boost to BTG Pactual after clients pulled out and financing conditions deteriorated following the Nov. 25 arrest of Esteves, the bank's former controlling shareholder. The three major credit rating agencies have downgraded the bank's debt to junk status since his arrest.

Esteves faces indefinite detention after prosecutors accused him of working with Senator Delcídio do Amaral, head of the governing coalition in the Senate, to obstruct a bribery probe at state-run oil company Petroleo Brasileiro SA (Petrobras) . Esteves and Amaral have denied the allegations.

The head of Brazil's ruling Workers' Party, Rui Falcão, said on Friday Amaral had been suspended from the party for 60 days pending a decision on whether to expel him for allegedly obstructing the investigation.

The credit line from FGC, whose funding comes from a percentage of deposits held by banks, gives BTG Pactual some breathing space to meet 15 billion reais in borrowings due by year-end while proceeds from asset sales enter its coffers. BTG Pactual had 40 billion reais in cash as of end-September.

Still, shares tumbled while prices on the bank's most widely traded dollar bonds jumped, a sign that the lifeline is temporarily allaying concerns of bigger problems down the road.   Continuación...