BTG's six billion-real lifeline: a silver bullet or a Band-Aid?

Rio de Janeiro

GRUPO BTG Pactual SA, the Brazilian bank whose CEO was arrested as part of a sweeping corruption scandal, got a lifeline after the country's privately backed deposit-guarantee fund gave it a six billion-real (S$2.2 billion) credit line. Investors are left wondering if it's a silver bullet or a Band-Aid.

BTG shares tumbled, but prices on the bank's battered US dollar bonds surged from record lows. As the troubled bank races to unload assets and raise cash, concern has been mounting that it may not be enough to shore up its balance sheet and that policy makers will also have to play a bigger role in propping up the firm. That may be easier said than done.