Latin Finance - September/October 2009 - 15

investment banking survey and around $600 million last year. That accounts for more than two thirds of the $1.5-$2.0 billion 2009 LatAm fee pool estimated by the same group, and an enormous opportunity for new entrants as the region’s investment banking hierarchy is reshuffled by the developed world’s slump. Proving Commitment Brazil has seen its share of wobbly commitments by banks that have talked a big game but cut and run when the going got rough. Morgan Stanley and Goldman have been accused of this in the past, and UBS’s sale of Pactual earlier this year seriously undermines its platform. As far as Brazil is concerned, JPMorgan, Credit Suisse and Itaú BBA offer distinct approaches that have worked out well, making them the three to beat. The first two lead our broader survey of investment banking in LatAm, offering what clients and competitors consider a smart, efficient approach to serving corporates and investors. Newly merged institutions like Bank of America Merrill Lynch (BofA Merrill) and Barclays enter the fray with what are regarded as credible threats to the region’s incumbents, as well as Citi, Goldman Sachs and Morgan Stanley. BofA Merrill wants to emulate the universal investment bank model of Citi, while Barclays, which acquired Lehman’s regional franchise, leans toward the pureplay model of Goldman. Banks entering must convince clients that in addition to a superior banking toolkit, they have the same long-term commitment to Brazil as local heavyweight Itaú Unibanco. The two domestic giants fused in 2008 to become Brazil’s largest private sector bank, giving the already dominant Itaú BBA investment banking unit a huge balance sheet leg up. An Itaú executive estimates his bank has a loan portfolio of over 100 billion reais in Brazil. Itaú BBA, a pure-play investment bank that feeds off its parent’s extensive corporate banking network, has proved more effective than domestic competitor Bradesco. The latter’s investment banking unit BBI will continue to chip away at the fee pool thanks to trusted bonds it has formed with some of Brazil’s major names. But it runs the risk of falling farther behind in the race for talent and market share if it cannot extricate itself from the stodgy commercial banking culture of its parent. At the other end of the local spectrum sits BTG, a widely feared, early-stage bid by André Esteves to rebuild Pactual, the banking and asset management partnership he ran between 1999 and 2006. The shop’s eclectic mix of business since inception – which appears to blur The Top LatAm Investment Banks Credit Suisse in front Credit Suisse JPMorgan Citi Itaú Barclays HSBC Santander Goldman Morgan Stanley UBS BofA-Merrill Deutsche Bank Source: LatinFinance * See page 20 for more detail Rank 1 2 3 4 5 6 7 8 9 10 11 12 Points* 66 63 62 46 45 44 43 40 34 33 32 30 the lines between banking, private equity, trading and advisory – suggests BTG will act as an opportunistic and agile deal ferreter, as well as an aggressive asset management platform. “Esteves is going to build a bank à la Goldman Sachs,” says Brazilian entrepreneur Eike Batista of the initiative, referencing Goldman’s global brand. The comment echoes similar remarks by highranking officials at would be competitors, who expect BTG to be a strong local competitor in markets like equity, but question its ability to operate without worldwide reach. Price Control While legally based in Zurich and culturally bred in New York, Credit Suisse’s Brazil platform is considered by many to be local. Having an early foothold in local investment banking was critical to the success of both UBS and Credit Suisse, especially for the latter which entered Brazil in 1998 through its purchase of Garantia. “We are probably the only Wall Street global bank in Brazil that is Brazilian like all the local banks,” says Pedro Chomnalez, head of LatAm investment banking at Credit Suisse, noting the recent sale of the Pactual Brazil unit by UBS. In Brazil, the well-staffed São Paulo office is said to maintain a degree of autonomy from New York, though the two are seen working in close concert on a regular basis, especially for M&A, a product that has been one of the keys to Credit Suisse’s overall success and profitability in Brazil and LatAm. “We like the ease with which [Credit Suisse] works well as a team, as well as with other banks [on M&A deals,]” says Paulo Gouvea, head of corporate finance at EBX, Eike Batista’s holding company. He notes the shop has been working closely with Batista’s companies since MMX’s IPO in 2006. Giving it an advantage in local equity, Credit Suisse claims to be among the largest traders on the Bovespa, with close to 10% market share. It adds extra trading firepower through its HedgingGriffo vehicle. “How do we differentiate ourselves? With our quality of execution, with our distribution, with our clout with investors and with our ability to control the process, at the end of the day,” says José Olympio, Brazil investment banking head at Credit Suisse. “We continue to be able to fight the follow-on tug-of-war in a very effective way for our clients, making sure that during that process the stock doesn’t suffer and we price it at a very tight discount to the last trade,” says Olympio. He adds that research adds an extra edge, though the bank rejects claims from competitors that this is being abused. “The Chinese wall in equities in Brazil is as tough as the US,” says Chomnalez. “There are a lot of inter-links at the level of product and at the level of industries, and at the level of global relationships in Europe and the US that feed the machine,” says Chomnalez. “Not having that doesn’t work. Being Goldman September/October 2009 LatinFinance 15

Latin Finance - September/October 2009

Table of Contents for the Digital Edition of Latin Finance - September/October 2009

Latin Finance - September/October 2009
Contents
Investment Banking Survey
Who Said That?
OTPP Investment Strategy
Central Bank Scorecards
Brazil Liability Management
Real Estate Equity Resurrected
Structured Finance Forecasts
Grim Outlook. Reform Required
Banorte Seeks to Grow
Peru Spending Hits a Block
BCP Sees Better Days
Caribbean Investment Report
Sustainable Banking
Legal Services Survey
Parting Shot
Latin Finance - September/October 2009 - Latin Finance - September/October 2009
Latin Finance - September/October 2009 - Cover2
Latin Finance - September/October 2009 - Contents
Latin Finance - September/October 2009 - 2
Latin Finance - September/October 2009 - 3
Latin Finance - September/October 2009 - 4
Latin Finance - September/October 2009 - 5
Latin Finance - September/October 2009 - 6
Latin Finance - September/October 2009 - 7
Latin Finance - September/October 2009 - 8
Latin Finance - September/October 2009 - 9
Latin Finance - September/October 2009 - 10
Latin Finance - September/October 2009 - 11
Latin Finance - September/October 2009 - 12
Latin Finance - September/October 2009 - 13
Latin Finance - September/October 2009 - Investment Banking Survey
Latin Finance - September/October 2009 - Who Said That?
Latin Finance - September/October 2009 - 16
Latin Finance - September/October 2009 - 17
Latin Finance - September/October 2009 - 18
Latin Finance - September/October 2009 - 19
Latin Finance - September/October 2009 - 20
Latin Finance - September/October 2009 - 21
Latin Finance - September/October 2009 - 22
Latin Finance - September/October 2009 - OTPP Investment Strategy
Latin Finance - September/October 2009 - 24
Latin Finance - September/October 2009 - 25
Latin Finance - September/October 2009 - Central Bank Scorecards
Latin Finance - September/October 2009 - 27
Latin Finance - September/October 2009 - 28
Latin Finance - September/October 2009 - Brazil Liability Management
Latin Finance - September/October 2009 - Real Estate Equity Resurrected
Latin Finance - September/October 2009 - 31
Latin Finance - September/October 2009 - 32
Latin Finance - September/October 2009 - 33
Latin Finance - September/October 2009 - 34
Latin Finance - September/October 2009 - 35
Latin Finance - September/October 2009 - 36
Latin Finance - September/October 2009 - Structured Finance Forecasts
Latin Finance - September/October 2009 - 38
Latin Finance - September/October 2009 - Grim Outlook. Reform Required
Latin Finance - September/October 2009 - 40
Latin Finance - September/October 2009 - 41
Latin Finance - September/October 2009 - 42
Latin Finance - September/October 2009 - 43
Latin Finance - September/October 2009 - 44
Latin Finance - September/October 2009 - Banorte Seeks to Grow
Latin Finance - September/October 2009 - Peru Spending Hits a Block
Latin Finance - September/October 2009 - 47
Latin Finance - September/October 2009 - 48
Latin Finance - September/October 2009 - 49
Latin Finance - September/October 2009 - BCP Sees Better Days
Latin Finance - September/October 2009 - 51
Latin Finance - September/October 2009 - 52
Latin Finance - September/October 2009 - 53
Latin Finance - September/October 2009 - 54
Latin Finance - September/October 2009 - Caribbean Investment Report
Latin Finance - September/October 2009 - 56
Latin Finance - September/October 2009 - 57
Latin Finance - September/October 2009 - 58
Latin Finance - September/October 2009 - 59
Latin Finance - September/October 2009 - 60
Latin Finance - September/October 2009 - 61
Latin Finance - September/October 2009 - 62
Latin Finance - September/October 2009 - 63
Latin Finance - September/October 2009 - 64
Latin Finance - September/October 2009 - 65
Latin Finance - September/October 2009 - 66
Latin Finance - September/October 2009 - Sustainable Banking
Latin Finance - September/October 2009 - 68
Latin Finance - September/October 2009 - Legal Services Survey
Latin Finance - September/October 2009 - 70
Latin Finance - September/October 2009 - 71
Latin Finance - September/October 2009 - 72
Latin Finance - September/October 2009 - 73
Latin Finance - September/October 2009 - 74
Latin Finance - September/October 2009 - 75
Latin Finance - September/October 2009 - 76
Latin Finance - September/October 2009 - 77
Latin Finance - September/October 2009 - 78
Latin Finance - September/October 2009 - Parting Shot
Latin Finance - September/October 2009 - 80
Latin Finance - September/October 2009 - Cover3
Latin Finance - September/October 2009 - Cover4
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