Every morning on my way to SET Advisory’s offices in London, I pass a nondescript shopfront bearing a logo I came to know well growing up in Brazil: a white dove within a heart, the emblem of the Igreja Universal do Reino de Deus. As a child in Brazil in the 1980s and 1990s, I watched the church spread from Rio de Janeiro to São Paulo, buying up shuttered cinemas and converting them into temples. It now operates in more than 150 countries.
How a church founded in a funeral parlour came to own a bank under federal investigation is a story about the conversion of religious scale into media reach, media reach into political power, and political power into financial licence. It is also, for anyone with exposure to Brazil, a case study in how little the formal indicators of soundness are worth.
Operação Miragem
On the morning of 23 June 2026, more than fifty Brazilian federal police agents fanned out across São Paulo to execute nine search warrants, and by the end of the morning they had been through the offices of Banco Digimais, the homes of several of its directors and the premises of the brokerage that administered its funds. The operation was called Miragem – Mirage, and the allegation behind it was that those under investigation had manipulated accounting statements and regulatory records in order to conceal the bank’s real financial position, to appear solvent to its supervisors, and to continue facilitating irregular transactions. A federal court lifted the banking and fiscal secrecy of the investigated parties and froze up to R$670mn (£98mn) of their assets.
Among the names covered by both the secrecy order and the freeze was Edir Macedo, the bishop who founded the Universal Church of the Kingdom of God in 1977, acquired Brazil’s second-largest television network twelve years later, and owns the bank through a chain of holding companies. He was not served with a warrant because he lives abroad, and his church maintains that he plays no part in the bank’s executive, financial or accounting management.
Three months on, the bank continues to trade and very little has been resolved. Digimais lost R$581.4mn (£85mn) in the first half of this year, against a profit of R$42.1mn (£6mn) in the same period of 2025, according to figures filed with the central bank and published on 18 September. Its Basel capital ratio stood at –4.62 per cent, down from 18.56 per cent a year earlier and well below the 10.5 per cent regulatory minimum.
The bank is only the most recent addition to an empire that has taken nearly five decades to assemble.
From Abolição
Edir Macedo was a thirty-two-year-old clerk at the state lottery when he opened his first church in a disused funeral parlour in Abolição, a working-class district of northern Rio, in 1977, with the lease guaranteed against his mother’s flat. Founding a church in Brazil requires no permission from anyone. The state licences no religion and certifies no clergy; a founder must simply register a civil association with a notary, adopt a set of statutes and obtain a tax number. Worship income is constitutionally exempt from tax, and no external body reviews what is preached or what is collected. Macedo had no seminary behind him and no denomination, which meant that from the first Sunday the church he had created answered only to him.
The church he created belonged to a movement then transforming religious life across Latin America. Pentecostalism is a Protestant tradition, roughly a century old, that emphasises speaking in tongues, faith healing, and prophecy over the liturgy and hierarchy of the established churches. It reached Brazil in 1910 and spread in two waves, the second arriving in the 1950s with mass evangelism and divine healing. The third wave, to which the Universal Church belongs, is known as the neopentecostal wave, and it plays down the ascetic prohibitions of the older Pentecostal churches, treating spiritual warfare against demonic forces as a central and highly theatrical part of worship, and preaching prosperity theology – which holds that the faithful give in tithes and offerings in return for health, employment and money from God – and generating a large and reliable flow of cash from the poorest parts of Brazilian society.
The expansion was rapid and methodical. Macedo bought radio airtime from the start, beginning in 1977 with a programme on Rádio Metropolitana, later acquiring a station outright and buying late-night television slots, drawing in listeners to the temple. The services themselves were built around public exorcism, in which pastors cast out the spirits of Afro-Brazilian religion by name — confrontational, compelling, and aimed squarely at the urban poor whom neither the Catholic church nor the state was reaching.
By 1985, Macedo’s church in Abolição had expanded to 195 temples across fifteen states, growing to 571 by 1989. It today claims roughly 10,000 temples and 14,000 pastors preaching in 102 languages across the world, with its headquarters in a full-scale replica of the Temple of Solomon in São Paulo. What set apart Macedo’s Universal Church from other large Brazilian religious movements was not merely its scale, but what Macedo did with the money.
Record and the Republicanos
Macedo bought TV Record in 1989, then a loss-making São Paulo TV broadcaster with a handful of affiliates and a fraction of the audience of Globo, the network that has dominated Brazilian television since the 1960s. Under his ownership it became the second-largest network in the country and the centre of a group spanning radio, print and digital media.
The purchase did more than give the church a pulpit reaching tens of millions of homes. Broadcast licences in Brazil are federal concessions, granted and renewed by elected governments, meaning Macedo now held an asset that depended on political goodwill. On the other hand, politicians in Brazil now dealt with a man who could give or withhold coverage on a national network. The dependence ran in both directions from the outset, and the church has been careful to keep it that way.
In 2005, the Universal Church founded its own political party, now known as the Republicanos. This is a common phenomenon in Brazil, a country that has more than thirty registered political parties, most of them organised around interests or personalities, rather than ideology. Coalitions are assembled after elections rather than before them, meaning mid-sized parties are granted disproportionate bargaining power over ministries, appointments and legislation. The Republicanos, with their disciplined bloc of votes, became a useful political asset to own.
Since Brazil’s first direct elections after the military dictatorship in 1989, the church has aligned in turn with sitting presidents of the left and of the right, on the straightforward calculation that incumbents control concessions, the regulation and the appointments it depends on. The Republicanos currently hold more than forty seats in the lower house and govern two states, one of which is São Paulo, Brazil’s economic centre.
Trouble Abroad
The Universal Church exported itself early. The first foreign temple opened in the United States in 1986, followed by Portugal and Argentina by the end of the decade, and the church has said it transferred a pastor abroad every fortnight through its years of fastest growth. It now claims a presence in more than 150 countries, with its largest overseas operations in Portuguese-speaking Africa, where shared language and a population largely unserved by the established churches made expansion straightforward. Angola alone, by the account of one of its own bishops there, once had 464 pastors in active service.
The model travelled intact: temples in converted commercial buildings, services built around the offering, and Brazilian pastors sent out to run operations rather than local clergy promoted into them. It did not, however, travel without trouble.
Zambia suspended the church’s operations twice, in 1998 and again in November 2005, the second time citing allegations of satanism and moving to deregister it and deport its two Brazilian pastors; the church denied the allegations and both bans were overturned by the Zambian courts. Madagascar banned it in 2005 on the basis that it had been licenced as a foreign society rather than a religious one. In South Africa, pastors told hearings of the CRL Rights Commission, a constitutional body, that the church had arranged vasectomies for them during their training without their consent; the commission asked the church to respond and, according to reporting of the hearings, received no answer. In Britain, where the Universal Church has been a registered charity for three decades, the Fundraising Regulator has ruled on two complaints in the past year, the more recent concerning a donation solicited from a woman whose mental health difficulties the complainant said were known to the church at the time.
Angola was the most serious. The Universal Church had operated there since 1992 and built one of its largest foreign operations, and in 2020 it lost control of it. A group of Angolan bishops and pastors, calling itself the reform commission, broke with the Brazilian leadership and took over the temples, claiming the support of 362 of the 464 pastors then active in the country. They alleged that money collected in Angolan temples was being taken out of the country, that the Brazilian leadership practised racism against local clergy, and that pastors had been required to undergo vasectomies. The church described them as having been separated from the institution for moral and in some cases criminal misconduct, and Macedo attributed the revolt to two former Brazilian bishops operating from abroad.
The Angolan state then intervened on a scale the church had not met anywhere else. Prosecutors ordered temples in Luanda closed in August 2020, the courts extended the closure to all its premises in the country, and in 2021 the state transferred ownership of the temples to the breakaway pastors. TV Record Africa was suspended in Angola in May 2021. Bolsonaro wrote to President João Lourenço on the church’s behalf, without success.
The criminal case largely failed. Four figures were charged with money laundering, criminal association, fraud and expatriation of capital, and in March 2022 the Luanda court acquitted all four. Bishop Honorilton Gonçalves, a former vice-president of TV Record in Brazil, was convicted on a single count of domestic violence, for requiring local clergy to undergo vasectomies, and received a suspended sentence. The church called the verdict vindication after two years of persecution. A government-mediated truce in 2023 required the institution to be renamed the Igreja do Reino de Deus em Angola, with an executive decree changing its name and symbols the following March.
Macedo’s empire’s latest trouble now, though, is at home.
The Bank
Grupo Record took a minority stake in Banco Renner, a small lender from the city of Porto Alegre historically tied to the Renner retail family, in 2009. Macedo acquired the remainder in 2020, renamed it Digimais, moved it to São Paulo, and repositioned it around vehicle finance and consumer credit for borrowers on low incomes, at some of the highest interest rates in the market.
Macedo himself does not hold any shares directly. B.A. Empreendimentos e Participações, the holding company of Grupo Record, controls Digimais Participações, which in turn owns the bank. A holding company exists not to trade but to own other companies, and a chain of them does two things. It places Macedo at a formal remove from the institution, holding economic control without appearing formally in its management, a distinction his representatives have been careful to make. It also means the bank is permanently surrounded by related companies with which it can transact – a feature that is essential to the mechanisms behind the case.
The difficulties for Digimais came early. A loss of roughly R$740mn (£108mn) in 2022 brought the institution under closer central bank supervision, and although the regulator approved a five-year turnaround plan in April 2024 intended to reduce delinquency and diversify income, it did not work. Prospective buyers came and went. Maurício Quadrado, formerly a partner of Daniel Vorcaro at Banco Master, agreed in January 2025 to acquire Digimais through his Bluebank holding, only for the central bank to block the transaction over the risks involved; two of Quadrado’s own brokerages, Trustee and Banvox, were themselves placed into forced liquidation on 3 September this year.
By June, Digimais held R$9.85bn (£1.44bn) in assets against R$9.52bn (£1.39bn) in liabilities, of which R$8.69bn (£1.27bn) were deposits covered by the guarantee fund. The loan book that was supposed to service all of it amounted to R$1.46bn (£213mn). Market participants put the real shortfall at around R$8.5bn (£1.24bn).
Where the Money Came From
Banks do not lend their own money. They borrow from savers and investors, lend that money on at a higher rate, and live off the difference. This is where Digimais’s problems began, through a funding model closely resembling the one at the heart of the Banco Master collapse, which SET Advisory examined earlier this year.
Digimais raised funds chiefly by issuing certificates of deposit — in Brazil, certificados de depósito bancário, or CDBs — which are simply loans from an investor to a bank, repaid with interest after a fixed term. These were sold to ordinary retail investors through the online investment platforms that have proliferated in Brazil over the past decade, an important part of the story, because those platforms made it possible for a small lender in São Paulo to raise billions from savers nationwide who had never heard of it.
The rates it offered were the first warning. Brazilian deposits are priced not as flat interest but as a percentage of the CDI, the interbank benchmark rate, which stood at roughly 15 per cent a year in this period. Digimais paid an average of 111.86 per cent of CDI, meaning about a tenth above the benchmark, or 16 to 17 per cent a year; once the platforms had taken their distribution fees, the bank’s true cost reached 115.70 per cent. A healthy Brazilian bank pays around 100 per cent of CDI, because it does not need to tempt lenders. By the end of 2025 Digimais had R$8.54bn (£1.25bn) of these deposits outstanding, the second-largest such book among the country’s smaller lenders, and in the first quarter of this year it lost R$108.7mn (£16mn) while spending R$340.2mn (£50mn) on funding alone.
The obvious question is why savers kept lending to a visibly deteriorating bank. The answer is the Fundo Garantidor de Créditos, or FGC, Brazil’s deposit guarantee fund, which is financed by the banking industry and reimburses depositors up to R$250,000 (£36,500) per person per institution when a bank fails. Few retail buyers were weighing Digimais’s balance sheet. They did not need to: the platforms that sold the deposits displayed the guarantee alongside the rate, which made the choice look like a free one. Professional allocators understood the arithmetic rather better, spreading money across multiple small issuers to stay within the cap at each. Either way the effect was the same — the guarantee removed the consequence of not looking, and a bank that should have struggled to raise money found it easy. Banco Master sold the same instrument at up to 130 per cent of CDI and attracted more than a million creditors before it failed.
The consequence for the bank is a trap. Money raised at 116 per cent of CDI must be lent at rates higher still merely to break even, and the only borrowers who accept such rates are those no one else will lend to. Digimais lent to indebted, lower-income customers whom the larger banks had already turned away, which is to say the borrowers most likely to default. The guarantee kept deposits arriving faster than the bank could safely put them to work, and the lending turned into losses.
Digimais then attempted to keep those losses out of regulatory sight.
Zé com Zé
Borrowing expensively is not in itself an offence. The case against Digimais concerns what it is alleged to have done with the resulting losses.
Brazilian bankers call the practice Zé com Zé, Joe with Joe, which is to say doing business with yourself. The vehicle involved is a receivables fund, in Brazil a fundo de investimento em direitos creditórios or FIDC, which buys portfolios of loans from a bank. Used properly this is a useful instrument: the bank sells its loans to an independent fund at a discount, receives cash immediately, and passes the risk that borrowers fail to repay on to the fund’s outside investors, who accept that risk in exchange for the discount. The bad debt genuinely leaves the bank, and the price is set by an arm’s-length negotiation between two parties with opposing interests.
Police allege that Digimais inverted this. It moved its worst loans into funds it controlled and invested in itself, so that it stood on both sides of the transaction as seller and buyer. The loans came off the balance sheet, but the risk had not been transferred to anyone — it had simply moved into another pocket of the same group. And because no independent party was setting a price, the stake the bank now held in those funds could be carried at whatever figure suited its accounts. On that basis Digimais reported a profit of R$31mn (£4.5mn) for 2025 while, investigators say, holding back R$480mn (£70mn) in overdue credit. Had the losses been recognised, the bank would have breached its capital requirements, triggered regulatory intervention and frightened away the depositors keeping it alive.
The clearest case is a fund called Hermon. The central bank examined it in 2023, found the holdings marked at R$741mn (£108mn) when they had cost R$71mn (£10mn), and ordered them written back down. Digimais asked instead to spread the impact over five years, and then sold the holdings to B.A. Empreendimentos, its own parent company, at the full inflated value. No cash entered the bank, payment was deferred to 2032, and the provisions the regulator had demanded were reversed. This is where the chain of holding companies earns its place in the story: self-dealing requires a counterparty under the same control, and the structure supplied one.
What the fund actually holds makes the valuation harder still to defend. Its principal asset is a claim on compensation owed to the heirs of a company expropriated by the Vargas government in 1940, during the creation of the mining group that became Vale — an eighty-six-year-old claim against the Brazilian state, unlikely to realise anything for years.
The auditors had been saying as much for some time. Grant Thornton flagged about R$855mn (£125mn) of fund holdings it could not verify in 2023, and in the 2025 accounts CLA Brazil said it was unable to confirm roughly R$3.1bn (£453mn) of the bank’s fund investments, singling out the Hermon transaction by name. Three consecutive years of qualified opinions on the same class of assets is, in effect, a warning light.
The Rescue that was Stopped
BTG Pactual, one of Latin America’s largest investment banks, told the market in April that it had signed binding documents to acquire control of Digimais. The transaction depends on a loan from the guarantee fund and on a stalking-horse auction, in which BTG’s offer sets a floor price that rival bidders may exceed.
The fund’s involvement turns on cost. A liquidation would oblige it to reimburse R$8.69bn of guaranteed deposits and then pursue recoveries from a bankrupt estate over several years. A sale transfers those deposits to the buyer and limits the fund’s outlay to the contribution needed to bridge the gap between what Digimais owes and what its assets are worth. The FGC was built to compensate depositors after a failure; in this case it would be paying to prevent one.
For BTG the appeal lies in what remains once that gap is closed. Digimais has a vehicle finance book, a payroll lending arm and a customer base, and would come at a discount, with the fund absorbing part of the losses and lending against the purchase. André Esteves, who controls BTG, has bought distressed institutions before, among them Banco Pan.
Nothing has moved since the raid. People close to the process say the talks are blocked and the auction is nowhere near starting. Required by the securities regulator to clarify its position, BTG neither confirmed nor denied that it was withdrawing, saying it was monitoring events and would decide whether to participate if a competitive process were launched. The fund is under no pressure to move: a bank repaying its obligations without raising new deposits sees its liabilities fall on their own.
Aldemir Bendine has run the bank since December 2025. The former chief executive of Banco do Brasil and of Petrobras was brought in by Macedo to restructure the institution and sell it. He was convicted in the Lava Jato investigation and later had the conviction annulled by the Supreme Court.
Grupo Record injected roughly R$2bn (£292mn) in late June, partly through certificates of deposit issued by the controller. Gabriel Galípolo, the central bank governor, has said that liquidation is not a sanction but a technical measure taken when a bank can no longer meet its obligations to depositors. The injection deferred that point without closing the deficit. A second R$2bn tranche, reported by CartaCapital as a condition of the BTG deal, fell due in mid-September. No liquidation has been ordered and the injection has not been publicly confirmed. Valor Econômico reports that the bank is not short of cash and that Macedo could inject more, but is pursuing a sale.
The guarantee fund sits behind all of it. Banco Master’s failure alone cost the fund an estimated R$41bn (£6bn), the largest payout in its history, and with Will Bank and Pleno added the episode has consumed close to half its equity, obliging it to call some R$32bn (£4.7bn) from member banks in March. A Digimais failure would therefore land on what remains of the fund in yet another blow to the already stressed FGC.
What it Means for Anyone Exposed to Brazil
Digimais followed Master by months and used the same method: retail deposits raised on a public guarantee, lent at rates that presumed default, and the losses moved into assets the bank valued itself. The rating, the audited accounts, the banking licence and the reported profit were all in place throughout.
Regulation has tightened. Under CMN Resolution 5.295/2026, in force since 1 June, banks running higher leverage pay double the additional contribution to the guarantee fund, and the ceiling on guaranteed funding has fallen from 75 to 60 per cent of adjusted net worth. From November, institutions must report in more detail on who holds their guaranteed deposits. Smaller lenders and the platforms that distribute for them will bear most of the cost.
Diligence standards have moved with them. Digimais held roughly R$600mn (£88mn) of credit portfolios originated by Master, an exposure a balance-sheet review would not have found. Institutions lending to, acquiring or clearing for Brazilian counterparties should expect to be asked for work on beneficial ownership, fund administrators, receivables structures and related-party transactions, on names that would until recently have cleared on the formal indicators alone.
Public money was also exposed. Cedae, Rio de Janeiro’s state water utility, held up to R$91.2mn (£13mn) in Digimais paper and retained it as the bank deteriorated; the state audit court has opened an inspection. Comparable placements have already produced arrests, with Cláudio Castro, the former governor of Rio, and former officials of the state pension fund detained in May over investments in Master.
Three questions will decide the outcome of this case: whether Macedo produces the capital the central bank has demanded, whether BTG returns to a transaction it has neither abandoned nor confirmed, and whether the guarantee fund is prepared to commit further resources after Banco Master. The bank continues to trade while they remain open.
Figures converted at approximately R$6.85 to the pound. Brazilian financial data as reported to the central bank for the period ending 30 June 2026.
SET Advisory advises financial institutions, investors, law firms and corporates on these exposures across Latin America and beyond, from integrity due diligence and beneficial-ownership mapping to political-risk assessment and asset tracing. To discuss how the questions raised here bear on your own counterparties or markets, contact the team.
This piece was authored by Edward Semple, SET Avisory’s Founder and Managing Director in collaboration with Luciano Sáenz Vidal, an Analyst at SET Advisory.