Recently, one of the most talked about businessmen in Brazil, Luiz Carlos Trabuco Cappi, has attempted to distance himself from the narrative that the bank of which he is CEO, Grupo Bradesco, is focused on becoming the undisputed overlord of the Brazilian banking industry. Bradesco has stated numerous times that the true focus of his bank is solely on customer service and delivering a high value to the customer. While there is no doubt truth in this statement, industry observers point out that Trabuco Cappi is a player to be reckoned with and that he is one who always plays to win.
No one wants to say the m-word
Although Trabuco Cappi has been coy about his aims, there is little doubt among industry experts that Bradesco is in a much stronger position now that it has acquired HSBC Brazil. The deal, worth $5.2 billion, was the largest in Brazilian history and instantly grew Bradesco by more than 28,000 employees and added over 2,000 branches. The firm is currently the largest bank in Brazil when measured by total account holders, total client assets under management and dollar amount of loans outstanding. It has slightly fewer assets than rival Itau Unibanco but could easily overtake its nemesis within a few months. As it stands, Bradesco is poised to become the undisputed king of the Brazilian financial markets.
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Although Luiz Carlos Trabuco Cappi insists that he is only focused on providing excellent service and creating value for his customers, there is little doubt that the potentially enormous prizes for whoever creates a Brazilian banking monopoly are at the forefront of his mind. After all, Trabuco Cappi spent nearly his entire career aggressively growing all of the departments he headed. In fact, if his career could be described in one phrase, it may well be exponential growth. Trabuco Cappi knows well the kinds of benefits that can accrue to businesses capable of cornering the market in a relatively closed system like that of Brazil. For Bradesco, it could mean the future ability to charge monopoly rents across virtually all of its business lines. This is a pattern seen again and again throughout Latin America. And it is no different in Brazil.
Trabuco Cappi knows well what monopolists like Carlos Slim have been able to accomplish in their markets. Could he be trying consciously to do the same with banking in Brazil? So far, his apparent willingness to pursue growth at nearly any cost seems to bolster this theory. And it makes perfect sense. It’s easily possible to pay a premium now on acquiring underperforming assets, like those of HSBC Brazil, if doing so promises to allow for charging whatever the market will bear. But if Trabuco Cappi’s plan is to create a virtual banking monopoly, he still has a long ways to go.
While the purchase of HSBC Brazil put Bradesco on top in many categories, since 2009, the company’s stock price has stagnated. The bank has not experienced real organic growth during the entire tenure of Trabuco Cappi, whereas with his predecessor, Mario Cypriano, the bank grew explosively over ten years. Cypriano was able to take the company from $5 in assets to well over $100 billion in less than a decade. Over the same period, he managed to increase the stock price by a whopping 200 percent. Next to such towering achievements, Trabuco Cappi’s reign is certainly lackluster.
However, many industry experts are not ready to call Trabuco Cappi’s strategy of artificially growing Bradesco as large as possible a failure just yet. Even though he has been unable to increase the stock price or grow the firm’s profits over the last 8 years, experts point to the fact that he has an almost super-human track record of growing every business unit he’s ever touched. That, combined with Bradesco’s currently favorable position, may herald in the age of the one-bank Brazilian economy.
For more information about Luiz Carlos Trabuco Cappi: http://www.tostoadv.com/bradesco-quer-mudar-regra-para-trabuco-ficar-no-cargo/