The chief executive of Brazil’s biggest independent investment bank and the leading senator in the governing coalition were arrested on Wednesday on suspicion of obstructing the country’s most sweeping corruption investigation ever.
The detention of such prominent power brokers on orders from the Supreme Court raised the stakes dramatically in a bribery scandal that started with state-run oil company Petrobras and now threatens the heights of Brazilian banking and politics.
The arrest of André Esteves, the billionaire CEO and controlling shareholder of BTG Pactual SA (BBTG11.SA) and Brazil’s most influential dealmaker, sent the bank’s listed shares into a dive that wiped out a fifth of its market value and raised red flags at the central bank.
Brazil’s Congress also ground to a halt with the arrest of ruling Workers’ Party Senator Delcídio do Amaral, a veteran lawmaker who has run the economic affairs committee and who has been key to President Dilma Rousseff’s unpopular austerity program.
Brazil’s currency fell as much as 2 percent as the scandal threatened both the country’s sixth-largest bank and the president’s sputtering efforts to pass a new budget and avoid another credit ratings downgrade to junk.
Brazil’s central bank said it was monitoring the arrest of Esteves to see whether it would impact operations at BTG Pactual and trigger regulatory action.
Banking analysts warned that BTG Pactual, the largest independent investment bank in Latin America, could struggle to navigate Brazil’s worst recession in a quarter century without its wunderkind founder at the helm.
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Brazil Energy Insight 
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