Bank of America Gains Market Share in Brazil as Rivals Retreat

  • Revenue from the nation jumps 15% as cash management expands
  • U.S. bank is No. 2 in Brazil by fees, its highest rank ever

Bank of America Corp. is emerging as a winner in the fight for corporate clients and investment-banking fees in Brazil as some of its competitors retreat.

The U.S. firm turned in its best showing ever last year in the South American nation, raking in more fees from merger-and-acquisition advising and debt and equity underwriting than any company except Banco Itau BBA SA, according to Dealogic, the London-based research company. That second-place ranking was up from fourth in 2015, the data show.

The gains came as the Charlotte, North Carolina-based bank also signed up new clients for its global transaction-services business, which includes cash management, payment and treasury services, according to Rodrigo Xavier, chief executive officer for Brazil. After a record year in derivatives and hedging in 2015, the business grew more than 40 percent in 2016, Xavier said in an interview at the company’s Sao Paulo offices.

“We had the best year in our history in Brazil,” Xavier said. “Other banks became much more cautious, while we didn’t cut our team, didn’t stop lending, didn’t reduce or sell any business, and only slightly reduced our balance sheet.”

Total revenue expanded 15 percent and profits jumped threefold, with Brazil consolidating its position among the four most important nations for the bank’s global revenue, along with the U.S., U.K. and China, according to Xavier, who declined to give dollar amounts.

HSBC, Citigroup

HSBC Holdings Plc and Citigroup Inc. sold businesses in Brazil in the past year, while Deutsche Bank AG eliminated half its employees there as part of a global strategy to improve capital levels and profitability. Credit Suisse Group AG cut nine executives from its fixed-income and structured-products business after Marcelo Kayath, head of equities and fixed income for Latin America, left in March. Zurich-based Credit Suisse had been among the top four investment banks by revenue in Brazil since at least 2007, the Dealogic data show. Last year it dropped to No. 9.

“When I came to BofA in 2008, we were 10th on the investment-banking league table and we grew year by year,” Hans Lin, Bank of America’s head of investment banking for Brazil, said in the joint interview with Xavier. “Now our goal is to maintain our position among the top three.”

Lin speaks mandarin and advised State Grid Corp. of China on its roughly $6.6 billion acquisition of CPFL Energia SA. The transaction helped Bank of America climb to No. 3 among merger advisers in Brazil, data compiled by Bloomberg show.

The bank was the biggest international bond underwriter for Brazilian issuers, according to data compiled by Bloomberg, unseating Deutsche Bank. It was No. 2 in equity underwriting, the data show.

Brazil’s Recession

Local lenders have become more cautious and pulled back on credit and derivatives transactions with Brazilian corporations as two years of economic contraction increased delinquency rates.

Grupo BTG Pactual was forced to eliminate employees, sell assets and reduce lending after the arrest of founder and former CEO Andre Esteves in 2015 for allegedly interfering with testimony in a corruption probe. Esteves was released and denies any wrongdoing. BTG, the top investment bank in Brazil in 2015 by fees, fell to fourth last year, according to Dealogic.

Industrywide revenue increased 2 percent to $492 million in 2016, Dealogic said. In Latin America, total fees reached $1.29 billion, a 4 percent increase from 2015. Bank of America ranked first for the region.

“Our office in Brazil is very profitable, and we’ve grabbed a bit of market share from some of the local banks as well,” Augusto Urmeneta, head of investment banking for Bank of America in Latin America, said.

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