How Banco Master, the institution behind London’s most expensive rents, went bust, according to the FT

Daniel Vorcarowho tried to catapult the Main bank for the elite of the Brazilian banking sector, it has seen a dizzying rise almost as spectacular as its fall, according to a report by Financial Times published this Monday. The text describes the dizzying trajectory of the businessman who, alongside the offensive of the financial sector, invested in companies such as a luxury hotel and a football club and describes the institution which, even without a significant international presence, rented the most expensive commercial office in London.

The FT says Vorcaro’s trail masked growing tensions within the bank, which was targeted for extrajudicial liquidation by the Central Bank in November. He reports that, arrested last month in São Paulo, as he was about to board a private jet to Dubai, as part of an investigation into an alleged 12.2 billion reais (US$2.3 billion) fraud involving Master and a state bank, BRB, the businessman is currently wearing an electronic bracelet on his ankle.

A few hours after the arrest, the BC ordered the liquidation of Master, recalls the FT, “less than a day after the announcement of a rescue agreement of 3 billion reais for the bank in difficulty by a consortium of investors”. Vorcaro denies any wrongdoing and is cooperating with authorities, according to his lawyers, who insist he was not trying to flee, the British newspaper said.

The report points out that Master grew up exploiting flaws in the Brazilian financial system and that the scandal reverberated not only in the financial sector, but also in Brasilia, “where the businessman was known for his relationships with influential politicians.”

“Although he was overshadowed by the giants Itaú Unibanco and Bradesco, Master sought to challenge the incumbent operators of Avenida Brigadeiro Faria Lima, the Wall Street of São Paulo. He had consultants like a former finance minister and a former president of the Central Bank (BC), in addition to hiring the office of the wife of a minister of the Federal Supreme Court (STF)”, explains the FT, recalling that the key to the increase was to offer CDBs to pay up to 130% of the CDI “reassuring individual investors that they would be covered up to R$250,000 by the Credit Guarantee Fund (FGC)”.

According to the report, Master needed to earn strong returns to pay investors and resorted to assets considered risky and illiquid, such as government agency debts and court rulings. Vorcaro also invested in turning around struggling companies, he points out, and his spending began to attract attention.

Other warning signs emerged before the crisis, such as when Warren Investimentos blocked Master products on its platform in 2023, alleging a lack of transparency on the bank’s part. The FT says it also had difficulty obtaining information from Master when preparing a report into the letting of the top floor of the 22 Bishopsgate building in the City of London. Sources told the newspaper at the time that Master had signed the most expensive lease in the British capital, but the report struggled to convince the bank to confirm the transaction, until the institution finally responded by saying it had no intention of occupying the space. “We have suspended plans to open an office in London,” the bank said, according to the FT.