SAO PAULO (Reuters) -Brazilian state-run bank BRB said on Wednesday that its board decided to hire a specialized external audit firm to investigate the facts related to a police operation which targeted
mid-sized lender Banco Master.
The announcement came as the government of Brazil's Federal District, which controls BRB, said it would tap a new head for the bank after a court ordered the suspension of CEO Paulo Henrique Costa for 60 days as part of the investigation.
Brazil's federal police on Tuesday launched an operation against "the issuance of fraudulent credit securities by financial institutions," according to a statement.
The investigation, a source with direct knowledge told Reuters, involves the sale of assets of Master's loan portfolio to BRB since last year.
Master's controlling shareholder was arrested. Separately, Brazil's central bank effectively halted operations at the lender, which had been facing liquidity issues.
BRB planned to acquire Master, but the deal was blocked by the central bank in September.
Federal District Governor Ibaneis Rocha told Reuters that Nelson Souza, who previously served as head of state-run lender Caixa, would be appointed as BRB's CEO. He had initially announced Celso Eloi for the job, but later reversed course.
In a securities filing, the bank said: "BRB reaffirms its commitment to best practices in governance, transparency, and disclosure to the market."
(Reporting by Isabel Teles and Luciana Magalhaes, Editing by Louise Heavens and Chizu Nomiyama )
