Throughout the 2000s, Bradesco, now the second largest banking conglomerate in Brazil, experienced phenomenal growth. This was largely due to organic growth of the banking market itself, with many economically productive Brazilians rising in economic status, driving demand for banking services. But it was also due to the strong leadership of Bradesco’s president, Mario Cypriano, who had made a number of important acquisitions, further driving growth. The sum total of all of this was that between 2003 and 2009, Bradesco’s stock price rose by more than 200 percent.
In 2009, Luiz Carlos Trabuco Cappi took over the helm of the banking giant, by this time, the number-two financial services firm in the country. The problem for Trabuco Cappi was that the days of easy organic growth were largely behind the firm. With the Brazilian economy stagnating and most of the organic growth that had taken place as a result of spiking demand for banking services coming to an end, it was clear that Trabuco Cappi would not be able to repeat the phenomenally successful strategies of his forerunner. Still, as soon as Trabuco Cappi took office as president, he made it clear that the overarching goal of his tenure would be to grow Bradesco into the largest bank in Brazil.
Read more on Bloomberg.com
But in 2009, another problem that Trabuco Cappi faced was that nearly all of the viable acquisition opportunities for such a large bank had largely been gobbled up already by Bradesco and its chief competitor, Itau Unibanco. The latter, in particular, had proven to have a voracious appetite for eating up smaller banks. In fact, it had grown into the largest bank in Brazil over the preceding decades almost entirely through acquiring smaller firms. This left slim pickings for Bradesco to choose from.
Nevertheless, Trabuco Cappi pressed on with his mission to find the right acquisition targets to allow Bradesco to grow enough to overtake Itau Unibanco as Brazil’s number-one financial institution. After patiently waiting for six years to find the right deal, rumors started swirling that HSBC was looking to divest its Brazilian assets. This was music to Trabuco Cappi’s ears. HSBC was one of the largest banks in Brazil and its acquisition would instantly put Bradesco on top in a number of different areas, including branches and cash on deposit. The acquisition of HSBC would be a coup for Bradesco and its shareholders. In early 2015, Trabuco Cappi sprang into action, feeling out the HSBC higher-ups to see if a sale might be on the table. He was soon pleased with what he was hearing.
Throughout the first half of 2015, it became clear that HSBC was indeed looking to dump its Brazilian operation. In the incredibly competitive and stagnant Brazilian banking market, HSBC had been losing money multiple years in a row. It was also necessary for the bank to allocate some of its top talent to the management of its increasingly loss-prone Brazilian assets. It wanted out.
Trabuco Cappi seized on the opportunity. As a result of the massive growth it had experienced the decade before, Bradesco’s cash position was strong. After much negotiating and due diligence, Trabuco Cappi made an offer of $5.2 billion, all cash, for the outright purchase of all of HSBC Brazil’s assets. It didn’t take long for HSBC to accept the offer, instantly transforming Bradesco into arguably the most important banking institution in Brazil.
The deal won Trabuco Cappi the Isto E Dinheiro Entrepreneur of the Year award for 2015. But it has also positioned Bradesco, a bank that only 30 years ago was nothing more than a minor regional player, into the undisputed leader in many areas of Brazilian banking. The question will be whether Trabuco Cappi can capitalize on his newfound strategic advantage. But if the past is any guide, Itau Unibanco had better watch out. Trabuco Cappi has a long track record of turning unprofitable business lines into gold mines. Bradesco’s future looks better than ever.
For more information about Luiz Carlos Trabuco cappi, just click here.