The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Surveys

Private banking survey 2013: Brazil’s wealthy say goodbye to risk-free investment

The collapse in interest rates means that rich Brazilians will have to grapple with riskier investments offering less liquidity if they are to maintain investment returns. Private bankers are up for the challenge of providing them.

João Albino Winkelmann, the head of Bradesco Private Bank, frames the challenge presented to Brazil’s private banking market by the demise of high interest rates. "What we did before wasn’t consultative private banking," he says. "It was so easy; we would just leave the money in a CD [certificate of deposit] – a liquid asset with no risk and which paid 12.5%. Was that a consulting service? Suddenly you have a 525 basis point interest rate cut and now it’s a completely different game..."

Since the middle of 2011, the Brazilian central bank has cut the country’s base rate, the Selic, from 12.5% to 7.25%. Although in the past few years a new, lower interest rate environment had looked likely, it has been put in place in the past 12 months. For the first time in memory, real interest rates have fallen below 2%, as inflation pushes 6%. Many bankers argue that private banking clients are facing negative real interest rates for the first time because as a segment they are more exposed to service-sector inflation, which is pushing into double digits. The days when private bankers and clients met briefly to confirm the continuation of the almost total domination of government bonds – high-paying, highly liquid, virtually risk-free investments – are over.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree