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What’s behind UBS’s joint venture with Banco do Brasil?

UBS’s country head refuses to comment on whether Banco do Brasil has been given a ‘call option on the bank’s Brazilian IB business’.


Banco do Brasil CEO Rubem Novaes talks with Sylvia Coutinho, country head of UBS Brazil, before a news conference in São Paulo on Thursday

The logic behind the announcement of an investment banking joint venture (JV) between Banco do Brasil and UBS has been questioned by competitors in São Paulo.

The new organization will join together Banco do Brasil’s investment banking group with UBS’s investment banking platform in Brazil and Argentina, and UBS’s institutional brokerage business in Brazil.

Speaking on condition of anonymity, many heads of investment banks in Brazil – both of Brazilian and international banks operating in the country – question the strategy adopted by the Swiss bank.

One of the bankers who had been approached by Rothschild – the merchant bank mandated by Banco do Brasil to find it an international banking partner – said there had been a few “deal-breakers” in the initial proposal.

“We didn’t like the fact that Banco do Brasil, being state-owned, could be subject to political interference, especially in Brazil, when the government can change from left to right every four years,” he says.

“We thought that the change in guidance coming from different governments would present a governance headache.”

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