text: Brazil likely to turn Banespa federal bank - paper . SAO PAULO 1996-08-27 Brazil is likely to turn Sao Paulo state bank Banespa into a federal bank in a prior step to privatization , according to unnamed government sources , O Globo daily said . The newspaper said the Central Bank special administration of Banespa ends in December 30 and after that the bank has to be liquidated or turned into a federal bank since there are no conditions to return Banespa to Sao Paulo state government . A Central Bank spokesman said he could not confirm or deny the report . Banespa has been under central bank special temporary administration since December 1994 . The central bank management could be lifted if Sao Paulo state decided to take part in the recent federal government 's plan to restructure state banks . Under the plan , the federal government would provide 100 percent of the financing needed to restructure debt of state banks being privatized , liquidated or turned into development banks . It also offers to refinance up to 50 percent of the debt held by state banks whose governments decide to keep control of their banks . Although the plan was designed under terms proposed by Sao Paulo state governor Mario Covas , he has showed no interest in taking part in the plan because Sao Paulo 's debt with Banespa has increased sharply , O Globo said . Sao Paulo state 's debt is now estimated at 19 billion reais . O Globo also said another delicate case to be solved involves private bank Bamerindus . The newspaper said Bamerindus has sent to the Central Bank a proposal for restructuring combined with a request for a 90-day credit line , paying four percent a year plus the Basic Interest Rate of the Central Bank ( TBC ) . O Globo also said the loan would give Bamerindus time to sell assets . Bamerindus , Brazil 's fourth-largest private bank , has been facing liquidity troubles . Bamerindus declined to comment on negotiations being held with the Central Bank . -- Fatima Cristina , Sao Paulo newsroom , 55-11-2324411