Brazil has seen three iterations of Banco do Brasil go under in the 19th century — through fraud (1829), mismanagement (1853) and the speculative frenzy of the Encilhamento (1893). The current bank, recreated in 1906, is the fourth. A repeat collapse is unlikely, but the recent turmoil in its agricultural loan book shows that even a flagship program like the Plano Safra can wobble. Chief executive Tarciana Medeiros has already called 2025 “one of the most challenging years in BB’s history.”
The farm portfolio more than doubled in three years, to R$400 billion, riding the commodity boom. Defaults, once negligible, spiked in 2025. The bank suspended earnings guidance, bolstered provisions and, for the first time, saw farmers turn to court-supervised restructuring.
Management conceded in New York on Wednesday that its risk models had failed. They leaned too heavily on stable historical series and ignored combined shocks. Even the most pessimistic scenarios had not come close to what materialized.
Five blows explain the damage. Farmers were overleveraged. Margins were crushed by falling crop prices and soaring input costs after the war in Ukraine. Droughts and floods wrecked yields. The central bank hiked rates above expectations, catching producers locked into single-disbursement loans. And the novelty of court protection, clustered around April maturities, created a feedback loop of defaults. The rural risk ratio jumped from 3% to nearly 5%.
Brasília tried to douse the fire with an emergency measure, releasing R$12 billion for debt renegotiations. It offered tactical relief, not a structural cure.
The bank tightened collections, shifted collateral from mortgages to fiduciary liens, deployed an AI-based resilience matrix and became far more selective in lending. Medeiros insists the crisis is localised, not systemic.
Still, the dent is real. BB’s image as “the farmers’ bank” has been bruised, and investor confidence shaken. Crises like this do not topple Banco do Brasil, but they corrode its status as a safe haven. A bank that has already lived three lives cannot afford to gamble with its fourth.