Joseph Safra, Owner, Banco Safra, Brazil

Joseph Safra

Joseph has been the captain of the family bank in Brazil and ultimately of every other big business the family has been involved in in that country. His other brother Moise, who is four years older than him, has never played an active role in management, although he is said to own the same large stake as Joseph in Banco Safra, of about 49.5%. He usually attends only the board meetings of the bank. In the past, Moise was responsible for a fabric factory they owned together near Sao Paulo. But the factory shut its doors in 1998 due to heavy competition in the sector.

Joseph's personal fortune is estimated at $2 billion, not substantially less than Edmond's $3 billion, the biggest part of which was left to philanthropic institutions, with the rest being inherited by his wife Lily Monteverde.

Besides Banco Safra, Joseph also controls an operation in New York, Safra National Bank of New York, the 15th largest bank in the state, and also has Safra Luxembourg, in Europe, which is focused on private banking. He is also a large stockholder in the First International Bank of Israel, the biggest privately-owned bank in the country. Joseph Safra has established a base in the Cayman Islands and intends to open a bank in Geneva.

Outside banking, Joseph has significantly expanded the family presence in the telecoms sector, becoming partners with Bell South. The Safras are involved in the cellular phone system in Sao Paulo, the most attractive market in Brazil, and in the poorer but promising northeast region. They have a joint investment in the cellular business in Israel too.

The Safras also have 11.7% of Aracruz, the Brazilian pulp producer, a company with a market value of about $450 million, and minor interests in two cattle farms in the western region. "Despite what everybody says, the genius of the family is Joseph [not Edmond]," says Roberto Moritz, an ex-director of Banco Safra, now a partner in Sao Paulo-based asset manager Banco Matrix. "He is a banker for whom I have the greatest respect," says Lazaro de Mello Brandao, chairman of Bradesco, the biggest privately-owned bank in Brazil.

The Safra family history is a fascinating one. Along with the Rothschilds, the Safras are among a handful of international banking families who still own and run their institutions. Joseph, Edmond and Moise were born in Beirut where their father Jacob had been sent to look after the Lebanese branch of the family bank, Safra Frères. The bank had been founded two generations before in Aleppo, in Ottoman Syria, where it prospered, financing camel caravans and dealing in gold. In Beirut, Jacob decided to found his own bank, the Jacob Safra Maison de Banque, which still exists and belongs to the family under the name Banque de Crédit Nationale.

After the creation of Israel in 1948 and the difficulties for Jews in other parts of the Middle East, Jacob moved the family to Brazil where he founded in 1957 a consumer credit operation that later became Banco Safra. Joseph and his brother Moise took over Banco Safra while Edmond left Brazil to take care of the overseas business. Later the brothers, who talk to each other in Arabic, had an agreement whereby they didn't compete on each other's territory.

Now with Edmond's death Joseph intends to take on a more international role. With the sale of Edmond's Republic National Bank of New York to HSBC last April, he hopes that the family's remaining banks will attract many of Edmond's former clients. Joseph also wants to make Safra National the biggest American bank for Latin American corporations and plans to open branches in Argentina and Chile. There is also a project to increase the group's capital markets operations, coordinating issues of Latin American corporate bonds in the local and international markets, and distributing them to private banking clients and institutional investors.

But even with all those powerful credentials, Joseph may face difficult choices if he intends to keep the family banks abreast of developments such as globalization and new technology. For now, Joseph's presence outside Brazil is still small compared with the one Edmond had. Joseph doesn't own a major bank in the US like Edmond's Republic. Today, about 90% of his financial investments are still in Brazil. The Safra National, with assets of about $250 million, is far from being a full American bank. Its operations are done mostly for Brazilian clients. Its headquarters, not by chance, are located on the corner of 47th Street and 5th Avenue, close to New York's Little Brazil district.

Critics say that private banking has changed and that the Safras have failed to adapt. Rather than just preserving capital for the wealthy, today's younger clients want a sophisticated service that will give high returns using modern financial techniques. "Joseph has constructed his empire all by himself with great competence. But what has been valid in the past may not be in the future," says a consultant who has worked for the family.

Some believe that with his flair for making other investments outside finance, Joseph may be even more entrepreneurial than Edmond. But whether staying independent in an era of consolidation is feasible remains to be seen.

Joseph denies the rumours of the sale of Banco Safra to international groups. His view is that banks which get taken over are ones that did not pay attention to costs. In Brazil, Banco Safra is focused on medium-sized corporates and Joseph believes there will always be a role for an independent bank in this niche. "We have a long tradition in banking and, with God's blessing, I'll be able to keep it," said Joseph, in a rare interview, just after Edmond sold his bank to HSBC months before his death. "All the family would like to keep that for the years to come. Time will tell if that will be possible. But it is our objective to do so."

Indeed, Banco Safra is considered one of the most creative Brazilian banks in its market and was the first to allow corporate clients to cash post-dated checks (widely prevalent during the period of high inflation) in advance. Joseph has also developed a payment system that automates supermarkets' cashflow. And following Edmond's initiative in issuing a 1,000-year CD in the US market, Joseph adapted the concept to the Brazilian environment and issued a 1,000-day CD, the longest maturity since the 1970s.

The Safra salesforce is one of the most aggressive in the market with strict profit targets. The bank's controls are highly developed with all information centralized and available directly to the executive committee. "In Safra, if an office-boy goes to the restroom, Joseph knows about it," says a former executive of the bank.

Joseph runs his banks in a patriarchal way. What he says goes and his mood-swings are deeply felt by his staff. He alternates moments of kindness with bursts of aggression. One day he tells an executive he is dumb, the next day he apologizes. "I say what I think. I may be right or wrong. The day after, I turn the page over. People know I don't beat to hurt," says Joseph.

Joseph is a hard taskmaster and a noted workaholic. He frequently calls his closest executives in the middle of the night and at weekends. He speaks with them on the phone for hours not caring what he is interrupting. He may ask them to go overseas at a moment's notice and doesn't take no for an answer.

Joseph doesn't leave work behind even on family skiing vacations in the Alps. While his family goes skiing, he stays at the hotel making phone calls to his executives in Brazil and all around the world. "It's not possible to stay out of the world," says Joseph. "People need to take responsibility."

The bonus policy of the bank relies practically on Joseph's will and he doesn't like executives to discuss their bonuses with each other. He is usually generous, however, with those who have served him well. "It's a family decision. It may be considered somewhat old-fashioned, but it has been like this from the beginning and will continue to be so," says Joseph.

Not everyone can stand the culture at Banco Safra. Some senior employees have quit because they couldn't cope with Joseph's temperament and the bank is short of younger executives to help Joseph's oldest son Jacob carry on the business in the future. Recognizing the problem, Joseph says: "We always have a place for talented people."

Some people might ask why Edmond, who did not have children, preferred to sell his banks and leave the money for good causes rather than pass them to his brothers. Edmond himself once declared in an interview that his banks would be left for his brother in Brazil. Somewhere along the way relations between the brothers appear to have cooled. In Brazil, there are rumours that Moise has sold his stake in Banco Safra to Joseph. According to the Safras, however, what the brothers have done is split their personal assets which used to be managed together.

The succession in the family banks has apparently become more difficult with the sale of Edmond's banks. The old theory was that Moise's two sons, Ezra and Jacob, would take a leading role in Republic leaving Joseph's son Jacob, to succeed him in Banco Safra. With Edmond's decision to sell his banks, this can no longer happen.

For the time being, the bank in Brazil will continue to be ruled by Joseph himself. His son Jacob, a Wharton graduate, is likely to assume the command of Safra National in New York where he now works. "Although the Safra National has grown significantly in the last few years, it's still a small bank," said Joseph. "There, he can be in a position to have a broader view of the business and learn in an easier way how things work."

Although Joseph has an extraordinary capacity for work, his health is a concern. He has had heart surgery twice, and now tries to swim 500 meters every morning in one of the two swimming pools he has in his mansion in the Morumbi district, in the southern region of Sao Paulo. Prior to his death, Edmond suffered from Parkinson's disease for 10 years.

Whatever happens, the world will be a less interesting place if families such as the Safras retreat from banking.