Luiz Carlos Trabuco is one of Brazil’s most powerful and celebrated businessmen. For over 45 years, he has worked at one company, the Brazilian banking giant Bradesco. Today, he sits as CEO of the firm, having rose through the ranks all the way from the lowest position in the company to, ultimately, its highest.
Although Trabuco’s reign at the top has been uneven, marked by periods of stagnation and serious decline in the stock price, in 2015, he was able to pull off a bona fide coup in the Brazilian banking sector. His firm, Grupo Bradesco, had slid into a distant second-place in the country’s banking sector, after rival banks Itau and Unibanco merged in 2009. This left Bradesco highly vulnerable in an uber-competitive environment. The constant consolidation of the Brazilian banking market meant that there were really only two major players left, and Bradesco suddenly found itself at a serious disadvantage. Trabuco and many industry insiders rightfully thought that Itau Unibanco would use its size to crush Bradesco into oblivion, a Rockefelleresque move that would have left Itau Unibanco with a hard monopoly over all of Brazilian retail banking and a large part of its financial sector as a whole.
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Trabuco Turns The Tables
Then, in 2015, after years of slow decline and the stock price at a decade-long low, Trabuco as president and CEO pulled off what many considered to be impossible. In the early part of that year, HSBC Brazil, a subsidiary of the global banking giant, started putting out feelers on a possible sale of all of its assets. The company had struggled to turn a profit in the ultra-competitive Brazilian banking market and, after almost a decade of failure, was ready to throw in the towel.
This was music to Trabuco’s ears. He quickly put together a deal that would see Bradesco acquire all of HSBC Brazil’s assets outright for an all-cash deal valued at $5.2 billion. By mid-summer, it was apparent to everyone that the deal was in motion. By the fall, the transaction had closed, marking the largest single purchase in Brazilian history and rocketing Bradesco back to the number-one spot in many different categories.
The deal shocked many, especially those at Itau Unibanco, who didn’t believe that Trabuco would be able to pull it off. Suddenly, the bank that was the huge underdog and virtually guaranteed to continue losing market share and declining was now back in the driver’s seat. Now it was Itau Unibanco who had a great deal to worry about.
The power move immediately sent Bradesco’s stock soaring. With Trabuco being widely hailed in the business press as having finally lived up to his formidable reputation, the celebratory air was topped off with the Isto E Dinheiro Entrepreneur of the year Award, a coveted Brazilian prize that is given to the most influential and daring businessmen in the country.
But the real fun has yet to begin for Bradesco. The firm is now in a position of dominance across many different categories in the Brazilian banking sector. With over 5,000 branches, it is the largest retail bank in the country. The firm also has the most loans outstanding, the most assets under active management and the most employees of any bank. This is a remarkable and sudden transformation from their prior position.
Many industry experts familiar with Trabuco have asserted that he will definitely use this positional advantage to his bank’s favor. Trabuco has a reputation for being a highly astute strategist and even somewhat ruthless. In the near-term future, some analysts believe that he will take major shots at Itau Unibanco, engaging in price wars, stealing market share and using Bradesco’s many economies of scale to seriously damage the bank’s largest competitor.
If Trabuco can smash Itau Unibanco into submission and force it out of Bradesco’s territory, Trabuco stands a good chance to oversee the creation of the first hard monopoly on Brazilian banking, an outcome that could net shareholders no small fortune.
Learn more about Luiz Carlos Trabuco: http://www.camar.sp.gov.br/images/imagesnoticias/851/principal.html