UBS AG (UBS), the biggest Swiss bank, is considering buying a wealth-management firm in Brazil as it seeks to expand that business sevenfold by 2020, said Sylvia Coutinho, chief executive officer of the lender’s Brazil unit.
“We are looking for acquisition opportunities in the Brazilian market,” Coutinho said July 31 in her first interview since taking the job last year.
UBS plans to hire more people for its wealth business and open offices in Rio de Janeiro and Belo Horizonte to serve high-net-worth clients even if it can’t find a firm to buy, she said. The focus will be on those with assets of 5 million reais ($2.2 million) or more to invest, said Coutinho, formerly head of retail banking and wealth management for Latin America at HSBC Holdings Plc.
UBS is expanding wealth management in emerging markets and Asia as it scales back in investment banking and exits most debt-trading businesses amid stricter capital requirements. The Zurich-based firm ranked as the world’s biggest wealth manager for a second straight year as assets under management rose 15 percent to $1.97 trillion, according to a report last month by Scorpio Partnership, a London-based consultant.
Credit Suisse Group AG also has expanded its wealth-management operations in Brazil, opening offices in Belo Horizonte and Porto Alegre, while reaching partnership deals with local fund managers, said Jose Olympio Pereira, the bank’s Brazil CEO. In March, Zurich-based Julius Baer Group Ltd. (BAER) increased its stake in GPS Investimentos Financeiros & Participacoes SA, a Brazilian financial firm, to 80 percent from 30 percent to gain more clients.
Brazil’s wealth-management industry had 591.4 billion reais in assets under management as of March, a 3 percent increase from October, according to Anbima, the country’s capital markets association. UBS has 6 billion reais under management, compared with 65 billion reais for Credit Suisse, the banks said.
UBS was a major player in wealth management in Brazil before buying Banco Pactual SA from billionaire Andre Esteves in 2006 for $3.5 billion to expand in investment banking. Three years later, UBS sold Pactual back to Esteves, including the wealth-management business, for $2.5 billion.
UBS tried to buy BNP Paribas SA’s Brazil wealth-management unit in October 2012, a person with direct knowledge of the matter said at the time. The deal fell through.
Wealth-management fees now comprise a minor part of the bank’s Brazilian revenue, Coutinho said, declining to provide figures. The goal is to increase that share to 50 percent by 2020, while expanding assets under management to 42 billion reais, she said.
The firm’s brokerage business is the biggest revenue contributor, Coutinho said, without providing numbers. UBS’s bet on high-frequency trading helped it overtake Swiss rival Credit Suisse (CSGN) in Brazil’s equity markets for the first time this year.
UBS traded 221 billion reais in equity and equity options on the BM&FBovespa through June, according to data compiled by the exchange, boosting its market share to 13.8 percent from 11.4 percent for all of 2013. Credit Suisse, which had a 12.1 percent stake and 193 billion reais in the first six months, dominated trading before UBS bought Sao Paulo-based Link Investimentos last year, giving it the fastest-growing brokerage in the country. The bank renamed it UBS Brasil.
“Since the integration with Link, the brokerage revenue grew 20 percent,” Coutinho said.
UBS, with 370 employees in Brazil and 650 million reais in assets, is also hiring for its investment bank, she said. Marcos Grodetzky, a former executive at payments processor Cielo SA and pulp-manufacturer Fibria Celulose SA, joined last month as a senior adviser.
“We are planning to double our revenue for the investment-banking business this year even with the weak equity markets,” she said.
The volume of mergers and acquisitions in Brazil increased 38 percent this year through Aug. 1 to $30.3 billion from a year earlier, according to data compiled by Bloomberg. UBS was involved in $6.5 billion of deals during the period, ranking ninth among Brazilian financial advisers, the data show.
To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at email@example.com
To contact the editors responsible for this story: David Scheer at firstname.lastname@example.org Steven Crabill