Luiz Carlos Trabuco has come a long ways. From a starry-eyed kid looking for his first job in the banking world to one of the most powerful CEOs in Latin America, Trabuco has risen from the corporate world’s basement to its executive suite.
This remarkable career was given a fitting capstone in 2015, when Trabuco won the Isto E Dinheiro Entrepreneur of the Year Award, recognizing his achievement in completing the acquisition of HSBC Brazil.
But despite his many accomplishments, Trabuco’s reign as head of the largest bank in Brazil has not been without detractors. Between 2009 and 2015, Bradesco, the bank that Trabuco had been with for over 40 years, had seen a nearly halving of its market cap. Trabuco, at first, had little success in carrying out his goals of creating organic growth within the firm. By 2013, many shareholders were calling for his resignation amid a rapidly falling stock price, shrinking market share and the perceived mistake of allowing chief rival Unibanco to merge with Itau, knocking Bradesco back to a distant second-place in the rankings of Brazilian banks.
However, Trabuco was determined not to give up. He kept his head down and continued looking for growth opportunities. After six years of brutally underwhelming performance, both in the firm’s stock price and in its businesses, Trabuco finally saw his golden opportunity. In early 2015, he got wind that HSBC was looking to get rid of its Brazilian assets. The global banking behemoth had been struggling in the super-competitive Brazilian market, and it was leaking cash as it continually had to support these money-losing operations with manpower, operating capital and the valuable time of its executive staff. HSBC wanted out of Brazil.
Trabuco Bradesco quickly moved to draft an acquisition agreement. He found that HSBC was a seriously motivated seller, and the negotiations proceeded quickly and with little friction. By mid-summer of 2015, Trabuco had ironed out an agreement, whereby Bradesco would acquire all of HSBC Brazil’s assets for $5.2 billion in cash. By the fall, the deal had closed, marking the largest transaction in the history of Brazil.
This deal would turn out to be a tremendous coup for Bradesco and Trabuco personally. In one stroke of the pen, he had instantly propelled Bradesco back to the number-one spot among Brazilian banks. This had a number of important strategic implications. Bradesco could now use its huge economies of scale in the retail banking sector to undercut its chief rival, Itau Unibanco, potentially driving them out of many of Bradesco’s markets or significantly stealing business away from them.
The deal also boosted Bradesco’s assets to more than $400 billion, allowing them far more options in both lending and making future acquisitions. Bradesco quickly capitalized on its newfound position of strength, running aggressive marketing campaigns and slashing prices and fees on a number of its banking products. The strategy, so far, is paying off handsomely. Since 2015, the company’s stock price has more than doubled. The bank has also started picking up its pace of true, organic growth for the first time in nearly a decade. Things are looking very much up for Trabuco and his financial empire.
In fact, some industry observers speculate that Trabuco’s real goal is to turn Bradesco into a hard monopoly on Brazilian banking. Everything he has done so far seems to indicate this may be his intention, from pursuing massive growth to very deliberately competing on cost alone across a number of products, using his bank’s sheer size to undercut rivals.
There’s no question that Trabuco and Bradesco will be a story to watch closely, for some time into the future.
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