Andre Esteves Returns to Bank That's a Shadow of Former Empire

  • Freed from house arrest, former CEO may work as top adviser
  • `There's still a lot of uncertainty about the bank's future'

Hours after Brazil’s Supreme Court freed him from house arrest, a smiling Andre Esteves addressed employees in an auditorium at Grupo BTG Pactual’s headquarters to deliver an important message: he’s back.

While the billionaire didn’t say what he’ll be doing in his impromptu Monday night gathering, the bank confirmed in a statement on Wednesday that he’ll be a senior partner, advising on strategy and the development of activities and operations. The company he returns to is far different from the one he left after his Nov. 25 arrest.

Andre Esteves

Photographer: Jin Lee/Bloomberg

BTG has since then sold more than $3.5 billion in assets to shore up cash, fired hundreds of workers and restructured its ownership to exclude Esteves as a controlling shareholder. The stock has lost more than 35 percent of its value. Management scratched ambitions for the bank to become a global powerhouse, with, among other things, a wealth-management business on several continents. Chairman Persio Arida has said BTG is focusing on “core” businesses.

“The committee running BTG was very quick and agile to adjust,” said Max Bohm, an analyst at Empiricus Independent Research. “But even with Esteves back, there’s still a lot of uncertainty about the bank’s future.”

No change in BTG’s corporate governance or shareholder structure is planned with his return, according to the bank’s e-mailed statement.

Esteves, who remains the biggest shareholder, spoke for a few minutes to about 200 employees at the Sao Paulo headquarters, said people with knowledge of the gathering, who asked not to be identified. They said he was upbeat, thanking everyone for the good work keeping BTG going in his absence, and left it open in what capacity he’ll be serving.

‘Completely Free’

In his remarks, Esteves denied wrongdoing, as he has in the past; he’s accused in the sweeping pay-to-play corruption probe called Operation Carwash. The 47-year-old spent three weeks in Rio de Janeiro’s infamous Bangu prison on allegations he tried to tamper with the testimony of a former Petroleo Brasileiro SA executive in the investigation that has engulfed the state-run oil giant. He was released from Bangu in December and ordered to be held instead under house arrest.

Brazil’s high court lifted that order Monday, and Esteves’s lawyer, Antonio Carlos de Almeida Castro, said by text message that the billionaire is “completely free” and can return to the office.

BTG shares rose 1.6 percent to 19.97 reais as of 4:38 p.m. in Sao Paulo trading on Wednesday. It followed a 6.2 percent rally on Tuesday.

It was 10 years ago that Esteves made a splash -- and became Brazil’s youngest self-made billionaire -- by selling Pactual to UBS for $2.6 billion. He and several partners bought it back three years later and set off on an expansion, snapping up businesses including the Swiss private-banking unit of Assicurazioni Generali SpA. BTG went public in 2012.

Nine days after Esteves’s arrest, facing a surge in redemptions, the bank obtained a rescue of 6 billion reais ($1.7 billion) from Brazil’s privately owned deposit-insurance fund. In the following months, BTG unloaded assets and cut jobs in offices around Latin America and in London and New York, reducing its Brazil payroll by almost 20 percent in January. The hedge-fund unit in Hong Kong was closed in February after assets dropped to about $250 million from more than $4 billion in November, a person familiar with the matter said at the time. Executive bonuses were reduced, according to people familiar with the matter.

The plan is for BTG to keep key businesses that are among its most profitable, Arida, the chairman, said in January at the World Economic Forum in Davos. That includes commodities, asset and wealth management, investment banking, sales and trading, and brokerage operations.

Castro, Esteves’s lawyer, didn’t shed light on the specifics of his client’s future at BTG but said he was ready to get back to work. “Esteves was swallowed by Car Wash,” he said. “It was a monumental mistake, and now all he wants is his life back -- family, friends and professional life.”

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