The tough route to quality

When South American inflation was raging the best bank was the one that pulled in the most deposits and invested them in high-yielding government paper. Efficient processing was the key to getting the money working quickly and to boosting float revenues. In Brazil, the private-sector bank that did this most effectively was Banco Bradesco. With 2,543 branches compared with Itau's 1,873 and Unibanco's 1,195 (the second and third largest players), Bradesco would still be well placed if inflation returned.

But times change and when the Real Plan was introduced in 1994, bringing inflation down to moderate levels, different skills were needed. The bank that most effectively seized the new opportunities was Banco Itau. It was among the first Brazilian banks to introduce service charges to...