A new capital injection is expected to be one of the first management initiatives of the Chinese bank Haitong in Brazil. The Bank has not yet revealed any details, but this should be one in a series of strategic actions envisaged by the Chinese group to boost growth in the Brazilian subsidiary, even amidst a recession context that has led several investment banks to rethink the continuation of their operations in the country.
"We don't have an opportunistic approach to our business. We don't go to Brazil when things go well only to leave the country when things start going worse", says José Maria Ricciardi, Chairman of Haitong Group. In Brazil the Bank was also renamed Haitong.
Ricciardi has been with BESI since 1992, being appointed Chairman in 2003. Member of one of the branches of the Espírito Santo family, which formerly controlled the Bank, he is a cousin of Ricardo Salgado, the former Chairman of BES. When leading the Group, the two were continuously at loggerheads, namely over issues involving Salgado's succession and lately in the various episodes that ultimately led to the downfall of the Espírito Santo Group. Ricciardi is one of the few members of the Espírito Santo family who were not disqualified for running financial institutions in Portugal.
Today, he leads Haitong's operations in the Americas and in Europe. From Portugal, José Maria Ricciardi spoke to Valor by teleconference held in the headquarters of the Chinese bank in São Paulo.
He said that, under the control of Haitong, the Brazilian subsidiary has an increased capacity to grow, due to the greater financial strength of its shareholder. To this end, besides increasing its capital, the Bank is expected to hire local professionals for areas where there is still potential to expand and generate new businesses.
These hiring plans also envisage the replacement of the Brazilian subsidiary's current chairman, Rafael Valverde, who, during this transition, non-ordinary, period also heads Haitong's subsidiaries in the United States and in Portugal. The idea is to find a Brazilian Chairman who will initially report to Valverde before fully assuming his functions.
Other new hires should target specific activity guidelines. "We will invest more in areas where our activity is still incipient, such as private banking, wealth management and asset management". In private banking the Bank actually admits the possibility of making acquisitions.
In order to grow in Brazil amidst a contracting economic scenario, the Bank's strategy is to fill gaps and address the needs faced by companies due to the crisis. In Ricciardi's view, when the markets are not faring well, there arise opportunities that can be seized by banks. "Companies have to sell subsidiaries, some of them have to pay off debts, extend maturities, others need to capitalise", he refers, to give an example.
Beyond the Brazilian borders, the Bank wants to take advance of its structure in China, where it is the second largest investment bank, to further the dialogue between the two countries. Questioned about whether the slowdown of economic growth in China could not hamper these plans, Ricciardi said no.
For him, in contrast to the market's view, China's various investments abroad will be pursued on account of the large growth of the Chinese middle classes, which have leaped from 100 million to 300 million people. "The Chinese middle classes are projected to reach 800 million people in 2030. This expansion will boost domestic demand and make up for a possible downturn in exports", he reckons.
Besides, he predicts that the Chinese investors, who have been accumulating capital over the last years, will look to diversity their investments and thus focus on Latin America, the United States and Europe. Haitong expects to intermediate such transactions.
"The Chinese will start to internationalise their assets and invest in pension funds and investment funds, not only in infrastructure", adds the Portuguese officer. The approximation between the two countries will also allow the bank to act as a bridge between Brazilian publicly traded companies looking to trade their shares in the Shanghai Stock Exchange and Chinese companies that want to trade their securities in the Brazilian Stock Exchange.
These are ambitious plans, in line with Haitong's aspiration of ranking among the most important players in Brazil. On top of the existing advantage of being part of the second largest Chinese conglomerate, the Bank will launch a marketing campaign to reinforce its brand in the Brazilian market. The first phase of this campaign, which should last three months, started in September last.
The proposition is to use a bridge as the symbol of the campaign to illustrate the link between one of the largest economies in the world and the leading country in Latin America.
BESI was purchased in December by Haitong International Holdings, which acquired an 80% control stake of the institution in Brazil. The other 20% remain in the possession of Bradesco and there are no plans to undo this partnership. Haitong acquired control of BESI from Novo Banco, which was set up with the healthy assets of Banco Espírito Santo (BES) following its demise and the intervention by the Bank of Portugal.
In Valor Económico
by Fabiana Lopes and Chrystiane Silva