BRASILIA, Aug 19 (Reuters) - Banco do Brasil

said on Tuesday it is prepared to deal with "complex, sensitive"

issues involving global regulations after a top court justice

ruled foreign laws cannot be automatically applied in Brazil.

The statement followed a Reuters query about the U.S. Magnitsky

Act, which President Donald Trump used last month to sanction

Supreme Court Justice Alexandre de Moraes, accusing him of

authorizing arbitrary arrests and curbing freedom of speech.

Moraes oversees the case of far-right former President Jair

Bolsonaro, a Trump ally, who is charged with plotting a coup

after losing the 2022 election to leftist President Luiz Inacio

Lula da Silva.

Justice Flavio Dino, ruling in a separate case on Monday

without mentioning the sanctions on Moraes, suspended local

enforcement of foreign judicial decisions, laws, and executive

orders that lack approval from Brazil's sovereign bodies.

The ruling sparked intense debate among Brazilian banks already

grappling with how to comply with the Magnitsky Act, which

freezes assets under its jurisdiction and bars American firms

from dealing with sanctioned individuals.

Given the global reach of the U.S. financial system, foreign

banks often restrict a wider range of transactions to avoid

secondary sanctions.

The dilemma between following a Brazilian Supreme Court

order or U.S. sanctions weighed on shares of top Brazilian

lenders, all of which fell on Tuesday.

State-controlled Banco do Brasil led the losses, trading

down 4% by midday, while private lenders Bradesco,

Itau, Santander Brasil and BTG Pactual

all dropped more than 3%.

Banco do Brasil said in its statement it operates "in full

compliance with Brazilian law, the regulations of more than 20

countries where it is present, and international standards

governing the financial system."

"The bank always closely monitors such matters and relies on

specialized legal advice to ensure its practices align with the

highest standards of governance, integrity and financial

security," it added.