BRASILIA, April 3 (Reuters) - Brazilian lender Banco

Master is advancing in talks with investment bank BTG Pactual

to sell assets left over after a deal in which

state-controlled bank BRB acquired most of its capital,

according to two people familiar with the matter.

The assets under negotiation include court-ordered payments

and private equity holdings valued between 15 billion reais and

23 billion reais ($2.7 billion to $4.1 billion).

One of the sources, who requested anonymity because talks

were confidential, said regardless of that outcome, Master is

pursuing parallel discussions to secure international funding

for its operations.

Master declined to comment. BTG Pactual said earlier this

week that it is constantly analyzing consolidation opportunities

that can bring value to the bank's shareholders and that have

support from regulators.

The deal announced on Friday with BRB, which is controlled by

the government of Brazil's Federal District, marked a dramatic

new chapter in Master's trajectory, after years of rapid growth

driven by a funding model reliant on issuing high-yield debt

securities, distributed through investment platforms.

The transaction, still subject to regulatory approval,

excluded many assets now on BTG's radar. A proposal from BTG

could involve all remaining assets or only some of them, one of

the sources added.

The divestitures come amid mounting scrutiny of Banco

Master's funding strategy. The bank has said it operates within

Brazil's banking regulations and that its critics are unsettled

by its growth in the highly concentrated banking sector of Latin

America's largest economy.

One of the sources said Master began lowering yields on its

new debt securities, known as CDBs, on Wednesday as part of a

gradual strategy to bring them closer to the market average

following its sale to BRB.

($1 = 5.62 reais)