According to Market Realist’s Emerging Market’s Analyst:
In a previous article we reviewed the main Brazilian Retail banks to give investors in EWZ some background on MSCI Brazil Index’s 25% exposure to the Brazilian financial sector. This article will focus on the domestic investment banks.
Santander and HSBC occupy the #6 and #7 spots in the Top 10 Brazilian Banks by assets, with shares of 8% and 3% respectively. Other major foreign banks such as Citi, J.P. Morgan, Credit Suisse and Deustche Bank are small market players in the retail banking arena, each with shares between 0.5% and 1% of the total banking assets.
While most of these banks are not leaders in the Brazilian retail banking landscape, all these foreign banks are part of the top 10 banks by investment banks by fees for Latin America (consisting mainly of Brazil and Mexico). This classification includes fees for M&A (merger and acquisitions advisory), loans (credit lending), DCM (debt capital markets, i.e., bonds) and ECM (Equity Capital Markets, i.e. stock issuance).
The local Brazilian investment banks
The only local banks within the top 10 investment banks are BTG Pactual (leading the table), Itau BBA, and Santander BBI. The table below shows the league table rankings as of Aug 2012:
BTG Pactual has an interesting story and has been referred to by some as the Goldman Sachs of Latin American or its “tropical version”. The bank was sold by Brazilian investment banker Andre Esteves to UBS in 2006 for US$3.1bn when he was just 37 years old. Three years later he bought it back for USD2.5bn when UBS hit a rough patch during the financial crisis. Pactual currently has a joint venture with Caixa Economica Federal that jointly owns Banco PanAmericano. This is BTG Pactual’s first acquisition of a retail bank.
Itau BBA, the investment bank arm of Itau Unibanco Holding, was created in 2002 when Itau acquired Banco BBA-Creditanstalt in 2002. In 2011 it achieved third place in the Top 10 Brazilian Investment Banks table; as of August it was placing fourth for 2012. Earlier this year it received the Best Investment Bank for Brazil 2012 Award by Euromoney.
Bradesco BBI was #7 in the Top 10 table for 2011 and so far this year its holding the #8 spot, followed closely by foreign banks Santander and HSBC. Earlier this year it also received the Best Investment Bank – Brazil 2012 Award, this one was awarded by Global Finance.
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