Goldman Loses Top Brazil Executives as Growth Plan Halted

Goldman Sachs Group Inc. (GS), the U.S. bank that announced plans in April to hire 50 people in Brazil, has reversed course after the economy expanded less than analysts estimated and top executives left the company.

“The outlook for the economy and equity and merger-and-acquisition deal volumes are worse than we expected,” Michael DuVally, a spokesman for the New York-based bank, said in an interview on Aug. 2.

Brazil’s benchmark Ibovespa index has lost 13 percent since the start of April and more than 20 percent this year. Foreign banks from Zurich-based UBS AG to London-based Barclays Plc have been reducing staff in Brazil as the investment-banking business shrinks and competition from local lenders intensifies. Merger volume fell to a six-year low this year through July.

About a quarter of Goldman Sachs’s roughly 45-person Brazil investment-banking division have left, people familiar with the matter said, asking not to be identified because the bank hasn’t announced the departures. Five managing directors, four from the eight-person executive committee, are no longer at the firm, the people said. All of the executive-committee members have been replaced, one of the people said.

Photographer: Dado Galdieri/Bloomberg

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Photographer: Dado Galdieri/Bloomberg

The Christ the Redeemer statue stands on top of Corcovado Mountain of Rio de Janeiro, Brazil, on July 4, 2013.

DuVally, who said he couldn’t comment on individuals who have left the firm, said Goldman Sachs reduced its workforce in Brazil by about 2 percent by not replacing some employees who departed. The bank is also subleasing one of the four floors of a Sao Paulo office building it moved into in April, he said.

Changing Markets

“It would be irresponsible not to take account of changing market conditions in assessing appropriate staffing levels,” DuVally said in an e-mailed statement.

Goldman Sachs President Gary Cohn said in an interview on April 3 that the bank would hire 50 people this year in Brazil, boosting the workforce that totaled more than 300 at the time. Cohn said the bank would also increase investment-banking coverage of companies there to 300 from 200.

“While overall headcount will remain modestly down from the beginning of the year, we continue to work with executive search firms to identify top talent in Brazil for key seats across the business,” DuVally said.

Executive committee members who left were Adriano Piccinin, managing director and head of fixed income; Roberto Belchior, managing director and head of the legal department; and Gabriella Antici, managing director, chief investment officer and head of international asset management, the people said. Belchior is now legal director for BM&FBovespa SA. (BVMF3)

Wainstein’s Departure

Goldman Sachs, which doesn’t disclose Brazil revenue or profit, said in March that Fabio Bicudo and Antonio Pereira would become co-heads of investment banking for the country after Daniel Wainstein, one of only two Goldman Sachs partners who are Brazilian, had left. Wainstein was also on the executive committee.

Cassius Leal, managing director and head of equity derivatives trading, also departed as did his team, the people said. Santiago Rubin, a managing director in investment banking, was transfered to New York, two of the people said.

None of the people immediately returned e-mails seeking comment on their departures.

Cohn, 52, also said in April that Goldman Sachs would aggressively hire employees for the Brazil private-wealth business. The bank said in October it would double capital in Brazil to 800 million reais ($348 million) while closing its local asset-management business in the country.

Goldman Sachs ranks seventh among M&A advisers this year in Brazil and 13th among equity underwriters, according to data compiled by Bloomberg.

Brazil Strategy

Goldman Sachs completed its strategy to become a full-service bank in Brazil in 2009, after two failed attempts to buy local firms. In 1998, Goldman Sachs tried to buy Banco de Investimentos Garantia SA, which was acquired by Credit Suisse Group AG.

Seven years later it sought to purchase Banco Pactual SA, an investment bank eventually acquired by UBS AG. Pactual was sold back to BTG Partners in 2009 and is now Banco BTG Pactual SA. (BPAC3) BTG went public last year in a $1.94 billion initial offering that Goldman Sachs helped underwrite.

UBS, the biggest Swiss bank, fired as many as 60 employees in Brazil, three people with direct knowledge of the matter said in April. Barclays, Britain’s second-largest bank, closed its Brazil equity-research unit and cut staff there, two people familiar with the matter said in January.

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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