BTG Pactual shares plunged Monday after its embattled chief executive officer and controlling shareholder André Esteves resigned amid a corruption investigation.
Shares in Brazil’s largest independent investment bank were down 12.43 per cent at R$20.01 per share in early afternoon trading and have lost nearly a third of their value since last Wednesday, when federal police arrested the billionaire banker at his Rio de Janeiro home.
The real also weakened 1.45 per cent against the dollar to R$3.90, partly thanks to the investigation into allegations that Mr Esteves had conspired with a prominent senator, Delcídio Amaral, of the ruling Workers’ Party to interfere in investigations into state-owned oil company Petrobras.
The Brazilian real was “reacting to the news that the government’s leader at the Senate Delcídio do Amaral and . . . André Esteves were arrested as part of the investigation into corruption at Petrobras”, said Luciano Rostagno, chief strategist at Banco Mizuho do Brasil, in a note.
The detention of Mr Esteves and Mr Amaral, the first sitting congressman to be detained in Brazil’s democratic history, has intensified the investigation into claims that Petrobras executives plotted with construction bosses and politicians to extract R$6bn in bribes from the company.
Mr Esteves, who denies wrongdoing, built BTG into a multinational bank with operations throughout Latin America, Europe and other regions.
He was initially held on a temporary arrest warrant. But the Supreme Court extended it to preventive arrest, a status intended to prevent a suspect from interfering in an investigation.
BTG moved immediately to replace Mr Esteves, appointing two group veterans as co-CEOs, Roberto Sallouti, BTG`s present CEO of its asset management unit, and Marcelo Kalim, chief financial officer.
Some of those caught up in the Petrobras probe, including Marcelo Odebrecht, head of Brazil`s largest construction company, Odebrecht, have been under preventive arrest for months.
Brazil’s Globo television news programme, Jornal Nacional, described how Mr Esteves, who built BTG into a multinational financial company, was being held in one of Rio’s toughest prisons, Bangu, where his small prison cell only had a cold water shower.
BTG said it has also appointed Pérsio Arida, present interim CEO, as chairman and John Huw Jenkins, head of BTG`s international operations, as vice-chairman. The bank said last week it was taking measures to conserve liquidity including not extending new loans and would sell down liquid market positions “if necessary”.
Separately, BTG is also negotiating the sale of its 12 per cent stake in Brazil’s largest hospital chain Rede d’Or São Luiz, a person familiar with the talks said.
Mr Esteves was accused of conspiring with Mr Amaral and two others to persuade a state witness to drop testimony against him in the Petrobras case over an alleged corruption petrol station deal. Both men deny the allegations.
BTG also on Sunday denied a media report that prosecutors had uncovered indications it paid R$45m to Eduardo Cunha, head of the lower house of congress, to pass a measure favouring one of its businesses, a failed bank, Bamerindus.
“BTG vehemently denies any type of payment for a supposed benefit in reference to the measure,” the bank said.
Mr Cunha said on Twitter: “I`m revolted by this absurd disclosure.”