A week after the arrest of Brazil’s billionaire Andre Esteves, the lack of guidance from Brazilian authorities on the future of his troubled investment bank BTG is exacerbating investors’ nervousness.
Since Esteves was detained on Nov. 25 the only official statement from the central bank the same day was that it is monitoring the situation and that the bank showed solid financial indicators and continued operating normally. President Dilma Rousseff on Monday said from Paris that while she expected some economic impact from the arrest, neither she nor anybody else “had the slightest idea” of its broader implications.
Markets are already unnerved by the deepest economic recession in a quarter of a century and uncertainty whether Rousseff will survive attempts to oust her. The real is the worst performing major currency with a 31 percent drop against the dollar, while the Bovespa stock exchange sank 10 percent this year. Now investors are worried that Banco BTG Pactual, which was downgraded to junk by Moody’s Investors Service on Tuesday, could drag down other banks and companies with which it had dealings.
The original article can be found at bloomberg.com