The agreement follows a joint announcement last year of a $500 million project to expand sustainable finance and enhance the private sector's ability to access carbon credit markets.

"This $400 million agreement is Banco do Brasil's second collaboration with the World Bank and will provide resources for sustainable agriculture, the restoration of degraded areas and the bioeconomy," said Francisco Lassalvia, Chief Wholesale Officer at Banco do Brasil.

The World Bank, in a separate statement that did not mention the value of the proposed credit line, said both institutions have agreed to cooperate in identifying sustainable solutions for Brazil's bioeconomy, forest and land restoration.

They would also examine sustainable, low-carbon agriculture, especially in the Amazon and Cerrado biomes, it said.

"These efforts aim to support, among others, Brazil's national plan to combat deforestation in the Amazon," said the World Bank.

Under the leadership of President Luiz Inacio Lula da Silva, Brazil aims to position itself as a leader in green development, attracting investments with a broad ecological transformation plan including a regulated carbon credit market and the issuance of its first sustainable sovereign bonds.

Brazil is also expected to announce revised climate targets this week, building on Lula's efforts to restore the country's environmental stewardship after soaring deforestation of the Amazon rainforest under former President Jair Bolsonaro.

(Reporting by Marcela Ayres; Editing by Jan Harvey)