Opinion – Marcia Dessen: Why the FGC didn’t save (all) Pedro’s skin

Last week, I told the story of Francisco, who did his homework correctly, studying all the rules of the FGC before embarking on an operation with credit risk. Pedro, full of self-confidence, took more risk than he imagined, counting on a protection he didn’t have. If he had researched the rules before investing, he could have avoided losses.

It’s all about the limit, the correct understanding of the warranty limit. Peter’s understanding of the limit was not wrong, but incomplete. He knew that the limit is up to R$ 250 thousand per CPF, per institution or financial conglomerate.

Trying to make the most of the profitability of a financial investment in CDB, he used a joint account with three holders, three different CPFs, to invest R$ 750 thousand.

Pedro exaggerated the value of the application. The guarantee limit of R$ 250 thousand is verified on the date of liquidation or intervention in a financial institution in which the investor holds a guaranteed value, explains Daniel Lima, executive director of the FGC. Therefore, the initial value of the application must be less than the limit, leaving room for the income to also be included in the protection.

Pedro’s fatal (or capital) mistake was not knowing that, in the case of a joint account, the R$250,000 guarantee will be divided equally among the account holders.

On the institution’s liquidation date, the investment amount plus the balance of the joint account was R$ 780 thousand. However, the guaranteed amount is equal to R$ 250 thousand divided by three, therefore, each account holder will receive R$ 83,333.33. Yes, in this case, the limit is per account, regardless of the number of holders or the family relationship between them.

What happens to the excess amount of R$ 530 thousand? Pedro enters the list of creditors of the institution in liquidation to try to recover at least part of this capital not covered by the FGC guarantee. The bad news is that some creditors have preference over Pedro — for example, labor and tax credits, which are first in the line of creditors. If these credits exhaust the amounts collected in liquidation, there will be nothing left for the other creditors.

The investor, who of his own free will lent money to the institution through the investment made, will feel the meaning of credit risk in his skin, and in his pocket. With luck, he will recover, years later, part of the invested capital that was not covered by the FGC guarantee.

Pedro is not at the end of the line of creditors, subordinates and shareholders are the last in line who dispute the assets of the bankrupt estate. In practice, it is very rare for Pedro’s class of creditors to be fully compensated.

The lesson learned is that we must know the rules of the game well before taking a risky move. Diversification could have avoided stress and capital loss.

In short: the FGC guarantees up to R$ 250 thousand per account, CPF or CNPJ. In case of joint account, the guarantee is limited to 250 thousand for the account. This guarantee includes both the investment made and the interest accrued until the date on which the Central Bank enacts a special regime (intervention or liquidation).

Another point of attention refers to assets that, despite being issued by member financial institutions, are not protected by the FGC, such as Letra Imobiliária (LI) and Letra Imobiliária Garantida (LIG).

And, speaking of non-guaranteed investments, it is worth remembering that public bonds issued by the National Treasury are also not protected by the FGC. Because? Because they do not need this guarantee, public bonds issued by the National Treasury are considered free of credit risk, the government is responsible for the payment.

The FGC does not guarantee investments in investment funds of any nature, whether traditional or pension funds. Because? Because the quotas of funds do not represent credit rights against financial institutions.

The question that does not want to be silent: does the FGC have a robust equity to guarantee deposits and investments covered by the fund’s guarantee? According to Daniel Lima, yes. He highlights that, according to the most recent balance sheet, published in June 2021, the FGC’s shareholders’ equity was BRL 88.3 billion, of which BRL 65.8 billion in cash or liquid assets; and that this reserve is appropriate to support the risks identified in the Brazilian banking system.