BTG Pactual plummets after Esteves arrest

Brazil’s biggest financial firm was on a steep and slippery slope on Thursday, as officials in the Latin American nation detained BTG Pactual’s chairman on suspicion of testimony interference.

The Brazilian Supreme Court had issued a warrant to detain Andre Esteves - widely held as the man responsible for transforming the company from a Brazilian afterthought into the largest bank on the continent - as part of the country’s wider corruption probe.

It was alleged Esteves attempted to interfere in evidential testimony related to a pay-to-play scheme at the state oil firm Petroleo Brasileiro. The government coalition’s senate leader Delcidio Amaral was also arrested on similar suspicions.

Amaral was accused in an official document of trying to convince Nestor Cervero - former director of Petrobras - not to mention him or Esteves in testimony to investigators. It said Esteves would pay BRL50,000 to Cervero’s family for each month under the plan, on top of a BRL4m payment to his lawyer.

BTG Pactual and Petroleo Brasileiro were partners in a troubled oil rig supplier, Bloomberg reported.

The arrests came as dire news for the country’s markets, which had managed to stabilise after spending much of 2015 in a downward spiral amid the probes. Brazil’s indices posted the worst drop among major markets on Wednesday, with BTG Pactual’s stock slipping 21% to BRL24.40 (£4.30).

More than 100 arrests had been made since the federal inquiry began, with at least three former executives at Petrobras, three executives at one of the country’s major construction companys and the former treasurer for the ruling Worker’s Party were sentenced.

The real (BRL) had been the worst performing major trading currency in 2015 as a result, and the ability of president Dilma Rousseff to hold on to power amid the crisis, and the prolonged recession, hung in the balance.