Swiss Banks Fight for Talent Amid ‘Tsunami’ of Brazil’s Rich

(Bloomberg) -- It’s a good time to be a banker serving rich Brazilians.

UBS Group AG and Credit Suisse Group AG both increased their Brazil wealth management staffs by more than 10% over the past year and are looking to hire more, while Julius Baer Group Ltd. and Pictet Group, the two-century-old Swiss money manager, also beefed up their Brazil ranks.

“It’s a real tsunami,” Sylvia Coutinho, head of Latin America private banking for Zurich-based UBS, said in an interview. “You see many investors leaving the comfort zone of short-term, fixed income and going into equities, hedge funds -- in Brazil and globally.”

Interest in serving wealthy Brazilians was already surging before last week’s approval of pension reforms that advocates say will help balance the budget. Record-low interest rates have spurred many investors to switch out of traditional Treasury bonds and savings accounts in favor of more exotic offerings.

Brazil’s fund industry had net inflows of 205.7 billion reais ($52 billion) this year through September, almost three times the amount for the same period in 2018, according to Anbima, the capital markets association.

To meet the growing demand, Swiss banks are raiding each other’s ranks. Among the new hires at Pictet in Zurich was Julius Baer’s former Brazil chief, Marc Braendlin. Jorge Torea, who was in charge of Brazil international clients in Credit Suisse’s international wealth management division, will take Braendlin’s old job at Julius Baer starting Nov. 1, bringing along his team. Alexandre Sampedro, who worked closely with Torea at Credit Suisse, took his former job on Oct. 1.

UBS and Credit Suisse both said they’re hunting for more additions as demand surges for financial advice and new types of investments in the South American nation. Mergers and initial public offerings are forecast to accelerate in Brazil in coming months, adding to wealth creation. Pictet hired 10 people to cover Latin America from Zurich, including executives from Julius Baer, which in turn poached five bankers from Credit Suisse.

“To add growth, go to Brazil,” said Cynthia Tobiano, deputy chief executive officer at Edmond de Rothschild SA. “It makes sense given the size of the country, the political and macro background, the depth of the market and the wealth,” she said, adding that it’s logical for firms to first recruit bankers in Switzerland and after that set up an office in Brazil.

“Clients today want proximity, so having a local presence is very important,” said UBS’s Coutinho, who’s also the firm’s CEO for Brazil.

Latam Acquisitions

UBS in 2017 acquired Brazil’s biggest independent multifamily office, Consenso Investimentos Ltda., which has 60 employees. At the time, the combined operation had about 30 billion reais in wealth under management locally. The bank declined to give a current figure.

Last year, UBS combined its two Latin America wealth management businesses into a single unit under Coutinho, with employees in locations including Switzerland, Uruguay, Mexico, Chile, Colombia, Panama and the U.S. cities of Houston, San Diego, New York and Miami.

Credit Suisse revamped its international wealth management division in August 2018, creating seven divisions, including one for Latin America and one focused solely on Brazil. The bank expects the number of millionaires in Brazil to increase 23% by 2024, to 319,000.

Coutinho attributed some of the surging demand to tax-amnesty programs in Latin America.

About $200 billion of wealth was brought into play in the past decade after governments in Argentina, Brazil, Colombia, Mexico and Chile allowed citizens to report undeclared assets held outside their home countries, imposing only minimal fines and adding new tax incentives. Most of the wealth declared -- about $120 billion -- was from Argentines, followed by Brazilians, at roughly $50 billion.

Unlike the Argentines, rich Brazilians tend to invest most of their liquid assets locally. The private banking business in Brazil accounts for about 1.2 trillion reais in assets, an 11% increase since the end of 2018, according to Anbima.

Credit Suisse says it’s the biggest foreign lender serving Brazilian private banking clients, including both local and international assets, after acquiring the wealth and asset manager Hedging-Griffo in 2006. It now has about 180 billion reais in wealth under management, according to the bank. Credit Suisse is also considering a return to U.S. wealth management after a four-year absence, with talks focused on adding $15 billion of assets at a new base in Miami that would cater mostly to wealthy Latin Americans, people familiar with the matter have said.

Julius Baer

Julius Baer, Switzerland’s third-largest wealth manager, has also been expanding in Brazil through acquisitions. After taking control of GPS Investimentos Financeiros & Participacoes SA in March 2014, it purchased Sao Paulo-based Reliance Group in January 2018. Now the bank has 200 employees in Brazil and about 50 billion reais in assets under management locally.

In May, Julius Baer bought a minority stake in the Sao Paulo-based digital asset manager Magnetis Gestora de Recursos Ltda. Beatriz Sanchez, head of Latin America and an executive board member at Julius Baer, said the acquisition was part of a strategy “to connect with the growing market of upcoming younger, tech-conscious investors in Brazil.”

Sanchez said the firm wants to be “a leading player domestically and internationally” in Brazil.

Other Swiss banks are getting in on the action as well. In January, Mirabaud Asset Management, a unit of Geneva-based Mirabaud Group, acquired Galloway Gestora De Recursos Ltda, a Sao Paulo-based firm specializing in emerging-market debt. Banque Lombard Odier & Cie SA, also based in Geneva, is considering opening a wealth management office in Brazil, according to people familiar with the matter. Discussions are at an early stage and no decision has been made, the people said. A bank spokesman declined to comment.

Demand for wealth management services is increasing even though Brazil’s economy continues to grow at a sluggish pace. Gross domestic product is expected to expand just 0.9% this year, according to estimates compiled by Bloomberg, less than the 1.1% rate in 2018.

“There are many positive factors, such as the approval of social security reform and economic growth, with less interference from the state and the private sector taking more initiative,” Coutinho said.

To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net;Marion Halftermeyer in Zurich at mhalftermeye@bloomberg.net;Patrick Winters in Zurich at pwinters3@bloomberg.net;Felipe Marques in Sao Paulo at fmarques10@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Daniel Taub

©2019 Bloomberg L.P.