Brokerage XP to Start Bank in Brazil, Open Office in Geneva

  • Plan is to make loans using client investments as collateral
  • Talks to buy Citigroup retail unit ‘aren’t evolving,’ CEO says

XP Investimentos CCTVM SA, the brokerage backed by General Atlantic, is applying for a bank license in Brazil and opening an office in Geneva, expanding services for its Latin American clients while some competitors retreat.

A bank license would allow the Rio de Janeiro-based firm to offer low-interest loans to individuals and institutional investors using client investments held at XP as collateral, Chief Executive Officer Guilherme Benchimol said in an interview. The firm hired nine people for the Geneva office, which will open this month to serve Latin American clients who prefer to use a European account for offshore money, he said.

“We already can offer clients all types of funds -- equity, fixed income, hedge funds -- and we want to also provide the convenience of having an account with us," Benchimol said. XP might also look into offering credit cards at some point, he said.

XP is trying to capitalize on the void left as some international firms pull out of Brazil. Citigroup Inc. said it plans to sell its retail-banking business there, as well as in Argentina and Colombia, and hold on to the operations that serve institutional and corporate clients. Deutsche Bank AG is exiting Latin American countries including Argentina and Mexico and cutting about half its employees in Brazil as it moves trading elsewhere. HSBC Holdings Plc agreed to sell its unit in Brazil to Banco Bradesco SA in August for $5.2 billion.

Citigroup Negotiations

XP “had some talks” to buy Citigroup’s retail operation in Brazil and is still interested in the assets, but the negotiations “aren’t evolving," Benchimol said, declining to provide more details.

The plan is to start the bank as soon as XP obtains the license, which Benchimol expects by no later than next year. The bank will have initial capital of about 100 million reais ($28 million), he said.

Besides Geneva, XP’s London and Miami offices are also expanding to provide services to wealthy individuals, according to Benchimol.

XP has about $600 million in assets under management from Latin Americans, and its goal is to boost that to $1 billion by the end of this year, he said.

In New York, XP started a non-deliverable-forward business in January, entering the interdealer over-the-counter derivatives market outside Brazil. The firm just moved to a bigger office in Manhattan to accommodate its expansion plans and about 40 employees, double the number it had at the end of last year.

XP opened its broker-dealer in New York in 2011 serving U.S. funds that invested in Brazilian markets. It now also caters to Latin American clients that invest abroad.

“A big focus will be on our international expansion," Benchimol said.

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