SAO PAULO (AP) -- Brazil's government on Tuesday shut down Banco Master, a bank worth up to $16 billion in assets, following a sprawling federal police fraud investigation.

Central Bank executive Fabio Carlos Ferreira said in a statement that all assets belonging to Banco Master and its current and former administrators have been seized. The bank, which has faced liquidity problems for months, is now under the control of a government-appointed administrator.

Clients and creditors will seek to recover their money from a private entity sponsored by other banks, a standard procedure in previous Brazilian bank crises.

Hours earlier, the director-general of Brazil's federal police, Andrei Rodrigues, told lawmakers that the force had uncovered a 12-billion Brazilian reais ($2 billion) fraud within the country's banking system. He did not publicly confirm the case involved Banco Master or the state-run bank BRB, which had sought to acquire Banco Master months ago but was denied by authorities.

Brazil's federal police said Tuesday's raid focused on financial institutions suspected of fraudulent and reckless management and involvement in a criminal organization, among other crimes. The force confirmed the arrest of six people, the freezing of billions of Brazilian reais, and the seizure of luxury cars, artworks and watches.

The force also said the case involves one bank issuing bonds with interest rates much above the market average and another bank buying those despite liquidity risks.

Local media reported that several executives, including a key shareholder, were arrested. Brazil's federal police did not respond to a request from The Associated Press to confirm the names of the banks involved in Tuesday's raid and of the executives and former executives arrested so far.

Shortly before Banco Master was shut down, Brazilian investment group Fictor said they had agreed to buy it. The operation was called off.

Brazil's Finance Minister Fernando Haddad expressed confidence in the central bank's decision, saying the shutdown was ordered after a thorough investigation.

"The central bank is the regulatory authority of the financial system, and I'm certain that, to have reached this point, the process must have been very robust," Haddad said.

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