In Brazil, major banks are currently negotiating regulatory changes aimed at enhancing the responsibility of smaller financial institutions, particularly in light of the recent Master bank crisis. This crisis resulted in the liquidation of three other institutions and a significant shortfall of at least R$ 51.8 billion in the Credit Guarantee Fund (FGC), which is crucial in protecting depositor funds during banking crises. The FGC and executives from larger banks have been urging the Central Bank of Brazil since 2024 to take action against the risky operations that were characteristic of Master, which ultimately contributed to its downfall.

The FGC is a private non-profit organization that plays a critical role within Brazil's financial system by ensuring that the resources deposited in banks are safeguarded in the event of financial difficulties faced by these institutions. The call for increased accountability for smaller banks follows the repercussions of the Master crisis, where bold and risky strategies employed by such institutions have led to significant failures within the banking sector. Regulators are now considering how to better monitor and manage the risks associated with high-risk banking operations.

Daniel Vorcaro, the owner of Master, has publicly dismissed the claims that his institution was overly aggressive, arguing that it was subjected to undue scrutiny as a result of its growth. His defense highlights the tensions between small and large banks in Brazil, as the latter seek to protect themselves from future financial fallout by pushing for stricter regulations. The ongoing discussions mark a critical juncture in Brazil's financial landscape, potentially reshaping the relationship between large and smaller banks and their regulatory environments.