Santander Brasil’s IB fees show it’s more than a retail growth story
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Santander Brasil’s IB fees show it’s more than a retail growth story

Bank’s IB division up to third in rankings in first half of 2017; IB head Leao says there is “still a lot more to come”.

Santander Brasil’s investment banking unit has confirmed that it has the momentum of its retail bank with the publication of Dealogic data for the first half of 2017.

According to that data, Santander Brasil is now ranked third by fees in the Brazilian investment banking market, with a 10.2% market share (from revenues of $34.4 million). That’s up from fifth position for full-year 2016 (when it had a market share of 7.5% on revenues of $37.9 million). The bank wasn’t even in the top 10 in 2015.

Brazil investment banking revenues: 2017 YTD 
Rank Bank Revenue ($m) % share
Itau BBA 54.6 16.3
2 Bradesco BBI 49.5 14.8
3 Santander 34.3 10.2
4 JPMorgan 28.4 8.5
5 Morgan Stanley 20.4 6.1
Source: Dealogic 

That Santander Brasil is close to earning the same as it generated in all of last year in the first six months of 2017 is due to more than a recovery in the market. 

The improvement reflects the change in management both at group level and in the investment bank itself. 

Across the market, total fees are up by 11.3% on an annualised basis.

Skills gap

Mario Leao was appointed head of the bank’s investment banking division at the end of 2015 after 10 years at Morgan Stanley and Goldman Sachs. His progress has been swift and he has built a strong team through selective external hires “to fill specific skill-gaps”, he says, but the emphasis has been on finding candidates internally to maintain cultural cohesion and the morale of the existing team.

mario leao 160x186
Mario Leao, 
Santander Brasil 

Leao says that when he joined the team he first identified what was necessary to build a broader franchise: “When I arrived, we were already a serious debt capital markets franchise and were respected and leading, or close to the top positions, in the international space. “While continuing to invest in the international franchise, the real effort went into the domestic front, where we were a less serious player. We finished 2016 in fourth position, and now we are neck-and-neck for number one.”

Getting better

Leao points to some sole-led local deals for local blue-chip companies, such as Lojas Americanas, as evidence that its reputation in the local market is changing. 

During his initial audit when he first arrived, Leao says he identified capabilities with M&A “and ancillary products”, but the main change was introducing a “corporate coverage mind set – adding a little bit to the strategic side in addition to the transactional” that he had become familiar with during his decade at the Wall Street firms. 

“The transactional pays the bills – so we have to focus on it and keep pushing that 24/7, but I think in the past 18 months, we have had a sense of coordination and better coverage on the strategic products. That has led us to a better job in M&A, which has been reflected in the league tables.”

The M&A results are indeed strong. From being outside the top 10 in 2015, Santander Brasil claimed fourth place by market share (volumes) with 32.2% and 14 deals. So far this year, Santander is in fifth place in the M&A league table.


The bank’s performance in equity capital markets is even more impressive: while Santander didn’t come from nowhere like it did in M&A (it was ranked sixth in 2015 with a market share of 5.3%), the improvement since Leao’s arrival has nonetheless been radical. In 2016, the bank won a 13.3% market share in Brazilian ECM, taking it to fourth. 

This year, the bank has won eight mandates in a relatively quiet market, equal to a 15% market share and taking it to second position in the rankings (behind Bank of America Merrill Lynch, which has a market share just 0.7 percentage points higher). Leao adds that his equities pipeline is also very strong.

Leao has clearly added an effective strategic-client coverage approach at Santander. He also readily admits that he has been enjoying the benefits that come to an investment banking franchise because it is part of a wider retail and corporate bank.

“As part of a universal bank, we are talking to clients on a daily basis – sometimes more frequently than that,” he says. “They depend on us much more than they depend on investment banks, where typically it’s a one-off type of relationship. However, that regular contact doesn’t necessarily lead to mandates – and it’s not just about using balance sheet. We have to have the right team and do a better job every day.” 

Ultimately, for Leao, the rapid improvement in Santander Brasil’s investment banking performance is down to better leadership: “We now have the right leadership in the right teams – and with that a lot of coordination.” 

He also enjoys strong support from the bank’s CEO, Sergio Rial, who assumed his role at the same time as Leao and who personally gets involved in pitching investment banking mandates.

“This emphasis and energy are starting to show in our results,” says Leao. “I think that there is still a lot to come, but we have already delivered a repositioning in the market and our competitors and clients feel that. There is still a lot more [market share] to capture and we are all very excited about that.”

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