Brazil’s Central Bank chief Gabriel Galípolo said that banks “are fallible institutions”, addressing the liquidation of Banco Master and the fraud case linked to its owner.

He told an event hosted by the banking federation Febraban in São Paulo that failures also occur in “countries like the United States or Switzerland” and said: “The important thing is that we always learn and manage to innovate so as not to fall into the repetition of problems that occurred in the past”, Xinhua reported.

Banco Master was placed into liquidation last week after the arrest of its owner, Daniel Vorcaro, who is under investigation for alleged offences against the financial system.

Federal Police and oversight bodies, in an operation called Compliance Zero, say the bank sold fictitious payroll-loan portfolios to state-controlled BRB worth about BRL12.2bn ($2.27bn).

The collapse will trigger what the Credit Guarantee Fund expects to be a record payout of BRL41bn. Galípolo said the “regulatory perimeter” should be widened to reflect the full liquidity structure of the sector and argued that the Central Bank needs stronger financial capacity to invest in oversight.