Latin Finance - November/December 2010 - 36

A Giant Awakes
by Ben Miller he credit crisis was less cruel to LatAm banks than to many global peers. For government-controlled banks, it may turn out to have been a boon. Banco do Brasil (BdB), Latin America’s largest bank by assets, was among the many government channels for countercyclical policy during the credit crisis. Meanwhile, private sector competitors played conservative during the period. With growth returning to Brazil and the region in the past year, BdB has shown no sign of relinquishing the role, or the market share it has gained. BdB is the 37th largest bank in the world by market cap, according to the FT, lagging Itaú (11th), Bradesco (25th) and Santander Brasil (34th). BdB steadily climbed up from 39th place in 2009, and 64th in 2006. BdB had $83.4 billion market cap, as of mid-September, compared to $157 billion for Itaú Unibanco, $107.7 billion for Bradesco, and $84.3 billion at Santander Brasil, according to the Bovespa. BdB boasts 755.7 billion reais of assets as of June, making it the region’s largest. This is still a ways o from entering the leagues of the largest banks in the world. As of August, Credit Suisse was 25th with $997 billion in consolidated assets, according to the Banker’s Almanac. Through organic growth and by acquisition, BdB continues to address product deﬁciencies versus Brazil’s large private banks and pursue tentative overseas expansion. Long criticized for relying on its government status and size advantage rather than innovating, BdB is beeﬁng up investment banking and corporate lending. Newfound prosperity in Brazil and LatAm means no shortage of borrowers to compete for. BdB’s share of the lending

Brazil’s government-controlled lender is using a natural size advantage to pursue niches it does not already dominate. Careful international expansion is next for Banco do Brasil.
$6.76 billion from two large deals, Visanet and Brasil Foods, in the same period in 2009. Recent DCM deals include the 1.1 billion real bond for the Rota dos Best Bank – Banco do Brasil Bandeirantes road concession and a role in CSN’s $1 billion 2020 bond. On the equity side it has beneﬁtted from its own market stood at 20.1% as of mid-year, 9.76 billion real follow-on, and that of compared to 16.9% two years earlier fellow state-controlled issuer Petrobras before the crisis, according to the bank. (120 billion reais). Following 2009 acquisitions of Nossa “We are gaining position in DCM Caixa and 50% of Banco Votorantim, BdB and ECM, but in M&A we don’t have the is using an even stronger base to boost position we’d like to have,” Toledo says. market share in all types of lending, as The bank is focused on hiring and well as compete for the unbanked in less training in this area, with a goal to see it developed parts of the countries like the reach the position it has in the DCM and north and northeast. ECM markets. Toledo says BdB expects to begin to see better M&A results within a Staying to Help “When the 2009 crisis hit, we were already year. Insurance and investment banking are areas where local competitors like Itaú a very important bank for Brazilian companies, and we became an even more and Bradesco beat BdB, despite the latter’s important bank,” says Allan Toledo, BdB’s size advantage. The bank has said it is vice president of international operations. evaluating the purchase of a brokerage in Brazil to help with its capital markets “We didn’t leave the scene, and stayed to activity. help.” This, he says, has helped the bank’s Towering Deposits standing with corporate clients, boosting Infrastructure spending, whether from its league table position. The bank had Petrobras’ $224 billion 2010-2014 booked $7.96 billion in DCM volume investment plan, the government’s PAC through October 1, including $6.10 infrastructure initiative or spending billion in cross-border deals, according associated with the World Cup and to Dealogic. This is a hefty increase from Olympics, should also give the bank ample $1.12 billion total during the ﬁrst nine opportunity for big ticket lending. months of 2009. ECM volume was $1.19 The bank’s boasts 755.7 billion reais of billion, excluding its own 9.0 billion real assets as of June, up from 598.8 billion a follow-on and a $70 billion Petrobras year earlier and 416.1 billion reais in June transaction. The bank saw volume of

The Bank of the Year Brazil

36 LATINFINANCE

November/December 2010

Latin Finance - November/December 2010

Table of Contents for the Digital Edition of Latin Finance - November/December 2010