Latin Finance - March/April 2012 - 46

Brazil wealth management

to what it wants to do, to buying its products and following its 2.8% in annual fees, up from 1% to 1.5% in other emerging or interests,” he argues. “With us, they don’t have to worry about developed markets, Pieri reveals. any of this. We give them a much wider array of wealth-creation “Banks are just starting to offer these services, and choices.” Brazilians are willing to pay high prices for sophisticated Of course, family offices must deposit their clients’ money investment products,” he says. However, he points out that when somewhere, so they are working with private banks to do this, competition increases in two to three years, bank fees will likely Mifano adds. In turn, private banks are offering more services to fall to approach developed-market levels.  According to Pieri, four banks control 50% of Brazil’s private family offices, even acquiring them. Observers expect these alliances, as well as M&A activity, to banking market, including Banco do Brasil, Itaú, Bradesco and increase as private banks struggle to keep family offices on their Santander, in order of market share. Citibank and Goldman side or work to eliminate competitors. Sachs are also competing fiercely in the market, looking to win Nevertheless, bankers says multi-family and family wealth customers interested in offshore investing.  boutiques are poised for strong growth and could account for In the super-rich segment, where individuals can have 20% of Brazil and Latin America’s wealth management sector by fortunes ranging from $20 million-$30 million, JP Morgan, 2015, up from 10% now, Lloyds Bank and Credit say observers. Suisse rule the market, Evolution of Brazilian Private Banking Assets ($bn) industry observers say. AUM on the rise Sticking Close to Home However, they point out For now, wealth managers that the super-rich segment 250 in Brazil are still investing is only growing 5% a year. in local assets as opposed Despite this, Flavio Souza, to seeking alternatives CEO of Banco Itaú Europa, 200 abroad, with one banker says Brazilian banks will noting that Brazil’s local likely dominate the market market can comfortably in a few years. 150 absorb the $500 billion in He claims projected AUM growth. several European banks “Brazil is generating have exited the market 100 tremendous wealth,” the in recent months, banker says. “It’s true that generating exciting growth most onshore investments opportunities for domestic 50 are in fixed income but a institutions. “Local players lot of money is also going are growing a lot as they 0 into the stock market move to take the space Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Sep-11 where investors are left by international making money.” competitors,” Souza says, Source: Anbima Apart from a home adding that some banks, buying frenzy, people are including Itaú, are also also investing in REIT vehicles and diversified hedge funds called looking to become regional private banks.  Itaú recently acquired HSBC’s premiere banking operations in multimercados, which are managed by banks like Credit Suisse Chile, and it is looking to purchase other European bank assets in and BTG Pactual, he says.  “The wealthy are looking at Brazil in the following way: ‘If the region, Souza says. Itaú is also moving to bulk up in Mexico, you look outside, why exchange the opportunities you have in Chile, Colombia and Peru. In Latin America, the Brazilian bank Brazil? The outside world is full of uncertainty. Why get out when already commands some 25% of the private banking market, everyone is trying to get in?’” according to Souza.  According to Mifano, 75% of Brazilian wealth is invested in government and corporate bonds, 15% in hedge funds and the Family Offices rest in the stock market. He also says real-estate investments and Multi-family and family offices are also keen to grow in Brazil’s REIT funds are becoming popular investment instruments.  wealth management sector and are posing a formidable Even though many large Brazilian corporates have been challenge to private banks. raising US dollar bonds recently, Mifano notes Brazilians are Claudio Mifano, executive director at Brazilian multi-family generally not interested in this paper. office Claritas Wealth Management, says many wealthy families “Brazilian bonds pay much more than other BRIC bonds,” in Latin America are frustrated with private bank managers’ he says. “In absolute terms, Brazilians’ participation in foreign need to satisfy their institutions’ “sell side” requirements, which bonds may be increasing because total wealth is booming, but in aren’t always in line with theirs. relative terms, I don’t think there is much growth.” LF “Clients have realized that with a bank, they are more tied

46 LatinFinance

March/April 2012
Latin Finance - March/April 2012

Table of Contents for the Digital Edition of Latin Finance - March/April 2012
