Brazil’s Credit Guarantee Fund (FGC) extended for 30 days, at the turn of August to September, an emergency loan of about BRL4bn ($754mn) it had granted Banco Master in May, Valor has learned.

A further renewal is unlikely, leaving the bank controlled by Daniel Vorcaro until the end of this month to secure an alternative solution after the Central Bank blocked its deal with Banco de Brasília (BRB).

Without new funding or a viable transaction, regulatory intervention at Master becomes increasingly likely. The FGC’s liquidity line, though renewable indefinitely, has little backing from large banks, which are unwilling to indefinitely support Vorcaro.

Some market players argue letting Master fail would set a precedent against midsize banks that over-leverage through CDBs guaranteed by the fund.

Still, part of the market sees further extensions as a less disruptive alternative than an intervention, since Master holds BRL62.2bn in deposits eligible for FGC coverage.

Former President Michel Temer has been brought in by Vorcaro to help mediate solutions, including asset sales.

Failure to comply with compulsory reserves, reported by O Globo, could also trigger intervention even if Master continues honouring its debts.

Master, FGC, and the Central Bank declined to comment.