Retail banking: RBS exits Brazil
Luiz Trabuco, president of Banco Bradesco, believes that HSBC would be making a serious strategic mistake were it to sell its retail banking business in Brazil to Itaú. Speaking exclusively to Euromoney [Trabuco pushes Bradesco’s equal opportunities, Euromoney November 2011], Trabuco was reacting to strong rumours in Brazil that HSBC would follow the sale of its retail business in Chile to Itaú with the disposal of its Brazilian consumer bank.
"HSBC is the largest bank in the world and Brazil should be a core market. They shouldn’t sell their operations in Brazil to other banks because Brazil will shortly be the fifth-largest economy in the world," says Trabuco.
The Brazilian magazine Veja first reported that HSBC and Itaú were in negotiations about the sale of HSBC’s Brazilian retail business and neither bank would comment.
Itaú paid $20 million for HSBC’s retail business in Chile. Following the sale, HSBC chief executive Stuart Gulliver gave an interview to Brazilian financial newspaper Valor Economico, saying that HSBC’s priority areas were China, India, Brazil, Mexico, France and the UK.
Bradesco is the second-largest bank in Brazil, behind Itaú, and has ambitions to catch up with its rival in the coming years. A purchase of HSBC’s retail business would frustrate Bradesco’s attempts to haul in its competitor but Trabuco insists his comments are purely focused on HSBC strategy. "Brazil should be a core business for HSBC," he says.
Meanwhile, in a sharp reversal of strategy, RBS has confirmed that it is closing its Brazilian office. The bank said in a statement that it would continue to service Brazil in an offshore capacity but that "after careful consideration [has] concluded that it is not prudent to commit the necessary investment that would be required to successfully build an onshore presence in Brazil."
It is believed that up to 30 jobs will be lost, including that of Carlos Braga, who was hired at the end of last year to head the Brazilian investment banking operations.
Despite recent successes with debt mandates for Telemar and Banco Votarantim, RBS’s withdrawal no doubt comes from the growing success that the large Brazilian banks are having in the investment banking market, as well as possibly reflecting RBS’s domestic priorities.