The tenure of Luiz Carlos Trabuco as CEO of Bradesco, Brazil’s largest bank, has been a bit of a rocky ride for investors and the CEO himself. After taking over amid a tough macroeconomic climate in 2009, the inveterate banker struggled to maintain his firm’s market share and ranking among Brazil’s major financial institutions. As the market capitalization of the firm began a serious decline, many wondered if Trabuco would be able to hang onto his post. Some even wondered if the bank would remain a viable company into the long-term.
Trabuco takes the helm amid stormy seas
The South American economy has long been as tumultuous as the South Atlantic waters that surround it. First reliant on a slave-based plantation economy, South America was far slower to develop into a first-world, advanced region than its counterpart countries in North America. It wasn’t really until the late 1800s, when mass migration from Europe picked up, that the region was anything more than a primitive agricultural society with vast expanses of jungles, plains and deserts.
But even as economic expansion and industrialization began to take hold of the region, the economic tumult, including frequent revolutions and brutal dictatorships, that often enveloped the region was far more pronounced than it was in North America. For Brazil, the economic highs scraped the sky, but the economic lows frequently plunged the country into abject misery.
These vicious cycles of towering booms followed by cataclysmic busts continued right up until 2009, when Luiz Carlos Trabuco was appointed as CEO of Bradesco. Unfortunately, the full effect of the global financial crisis, spawned by the collapse in the U.S. housing market, was just beginning its destructive run through the Brazilian economy.
Making matters worse, the chief rival to Bradesco, Itau Unibanco, had recently completed one of the largest mergers in Brazilian history. This instantly shoved Bradesco back to a distant second place in the ranks of the Brazilian banking industry. As a result, Bradesco would have a decidedly uphill battle, fighting a competitor at every turn that was intent on undercutting the bank in all of its primary markets.
This dismal situation played out between 2009 and 2015. Bradesco slowly lost both market share and investor confidence, year in, year out. By 2015, the stock price was trading at lows that it had not seen in nearly 20 years, having lost nearly 80 percent of its value since the time that Luiz Carlos Trabuco took office.
But then, the inveterate banker pulled off what no one thought was possible. In early 2015, HSBC began circulating rumors on the street that it was looking to dump all of its Brazilian assets.
The second largest bank in the world had decided that the increasingly cutthroat Brazilian banking industry was too much to bear. HSBC had been losing money every year for nearly a decade. It was looking to throw in the towel.
Trabuco immediately pounced on the opportunity. He acted quickly, drawing up a letter of intent and an purchase agreement that would give Bradesco exclusivity on the deal, providing that certain benchmarks were met. By mid-2015, Trabuco announced that the deal would be closing soon. Bradesco would be acquiring HSBC Brazil, in full, for $5.2 million in cash.
Not only did this represent the largest such transaction in Brazilian history, it also rocketed Bradesco back to the undisputed number-one spot in the banking sector of that country. The stock price immediately began a rally that has not abated to the present.
Trabuco, for his part, won the 2015 Isto E Dinheiro Entrepreneur of the Year Award, being widely recognized as having pulled off one of the greatest coups in Brazilian banking history.
Search more about Luiz Carlos Trabuco: https://economia.estadao.com.br/noticias/geral,prisao-dos-irmaos-batista-nao-impactam-risco-da-jbs,70001996105