Bradesco eyes JPMorgan’s R$20 billion onshore Brazil portfolio
Brazilian bank set to take in US firm’s domestic bankers and clients.
JPMorgan reached an agreement with Bradesco at the start of September to refer its onshore private banking business to the Brazilian bank.
The referral agreement is the final piece in the withdrawal of JPMorgan’s ambitions for an onshore private banking business in Brazil and should see Bradesco add about R$20 billion ($3.78 billion) to its domestic AUM.
Augusto Miranda, head of Bradesco’s private bank since February 2019, says he expects JPMorgan’s local Brazilian private banking team to join the bank – 14 private bankers in total.
“The [JPMorgan] team has a high profile with high and ultra-high net worth clients and they will strengthen our focus on the ultra-high segment. We have invited them to join us and we are doing this transition in the next few weeks,” he says.
New bankers are oxygenating our team and culture
The bankers will join Bradesco as new hires, not as a part of any official agreement between the banks. As such there will be no payment made between the two banks, nor approval needed from Brazil’s central bank.
The vast majority of JPMorgan’s private bank business revenues and assets has traditionally been within its offshore business, and it will continue to serve Brazilian clients managing offshore wealth.
The focus on managing Brazilian clients’ international assets is behind the move: “Bradesco is less of a threat in terms of taking international AUM from JPMorgan than other large players in the market,” says one private banker who competes locally with Bradesco.
However, Miranda dismisses such suggestions and points to the bank’s build-up of its international business. Since the beginning of 2019, when Alexandre Gartner took over managing Bradesco’s European operations, it has “doubled the number of bankers” in its Luxembourg office, though it won’t disclose the total head count.
Miranda also says the bank expects final approval for its acquisition of BAC Florida to come through in the next few weeks or months.
As well as growing its international business, Bradesco has been in recruitment mode locally. Miranda has hired 40 private bankers so far this year – and all but two were recruited externally. “The new bankers are oxygenating our team and our culture – I have brought in bankers from international banks, from boutiques, all to give Bradesco Private Bank a new soul.”
The bank’s Brazilian private banking team now consists of 122 bankers. Miranda says the larger team is, in part, a reflection of the rapidly changing investment market – with clients becoming more demanding in terms of managing their portfolios as plunging interest rates require them to explore new risk instruments and classes.
“Bankers have to dedicate more time to helping clients understand new asset classes, new products, because the CDI [a simple base-rate linked instrument] is dead,” he says.
The JPMorgan agreement is the latest part of a revamp for Bradesco private bank. When CEO Octavio de Lazari, took command in 2018 he identified the private bank as an area that needed improvement. He took the business out of the retail division and placed it within the wholesale banking area to improve the connections between investment banking, corporate banking and asset management.
He has been supportive … in changing the culture and repositioning the strategy
He also replaced the senior leadership: Marcelo Noronha came in to run the entire wholesale division and Renato Ejnisman – an investment banker by background – was put in charge of the asset management business (BRAM) and corporate and private banking business.
As well as the external hires and the build-up of the bank’s international presence, the main pillars of the new strategy have been improving the products and services – adding areas such as philanthropy for example – and working with BRAM to enhance the private banking investment platform.
The bank is also about to launch its new app for this segment – Miranda says it’s full service with open architecture that enables clients to monitor and transact across the full range of private banking services. The bank has also either refurbished or moved its offices to better reflect clients’ aesthetic expectations.
“Renato has been supportive in terms of what we are doing in changing the culture and repositioning the strategy,” says Miranda, who has created a small internal team within the private bank that identifies investment banking opportunities for clients, and another that is focused on offering credit to clients who might be interested in using the low interest environment to leverage positions they hold within their portfolio.
So far it seems to be working: the bank’s AUM have climbed from R$262 billion in January 2020 to R$310 billion today (before the potential JPMorgan additions) and the bank has increased its market share over the same time period by two percentage points to 21%.
It continues to evolve its proposition. In 2021 Bradesco will roll out a new segmentation that it will use to approach the market. As well as retaining its traditional segmentation by wealth (‘Private One’ is for clients with net assets of between R$5 million and R$15 million; ‘High’ is for clients with between R$15 million and R$50 million; and ‘Ultra High’ is for clients with more than R$50 million), the bank will also segment its client base in terms of ‘persona’.
“We have clients who are rentistas (living off returns of large capital positions) and some who are business owners or senior executives and their demands and expectations are very different,” says Miranda. “If we approach the C-Levels in the same way and about the same issues as the rentistas then we aren’t meeting their needs and expectations.”
He says the close crossover of some private banking clients with corporate banking services – such as D&O insurance – means that broad segmentation by total wealth isn’t targeted enough in client communication.
“If a banker calls up a C-Level client they will tell them to go away,” he says. “They want everything done via corporate WhatsApp.
“And we are positioning our bankers in the same way – we are putting our more tech-focused bankers who have more connection to corporate and investment banking on some of these accounts. I’ve been testing the approach this year and the feedback has been extremely positive.”