LatinFinance - January/February 2015 - 12
COVER
STORY
André Esteves takes pride in BTG Pactual being an old-style merchant
bank that offers equity as well as debt to clients. The model has worked
well. But as Brazil and the global economy flounders, the bank is rebalancing its capital deployment strategy. By Dominic O'Neill
Esteves'
neo-classical
model
R
enaissance Italy and modern-day Brazil might not seem to have much in
common beyond sharing a majority religion. Are they also linked in the approach of their
most famous financiers?
André Esteves is proud of being chairman and chief executive of an "investment bank that
invests", as he often describes BTG Pactual. He is keen to emulate famous figures from the
history of finance, who, he says - like BTG - invested their own capital to back up advice to
clients. He compares BTG to prominent financiers not just from Renaissance Italy, but also
from Napoleonic Europe and the early industrial era of the US.
"Our business should be providing corporate clients with good advice, with credit lines,
and with permanent capital when it is appropriate and required. If you go back in history,
that's what the Morgans did 100 years ago, what the Rothschilds did 200 years ago, and what
the Medicis did more than 500 years ago," he tells LatinFinance.
"We like the combination. The secret of our business is the combination of the different
business units."
The institution has come a long way since 2008, when Esteves quit his job as head of
global fixed income at UBS to set up the boutique - then just BTG - with some old colleagues
and former Brazilian central bank governor Persio Arida. BTG bought Pactual from UBS the
following year, for slightly less than the Swiss bank had paid for the Brazilian unit in 2006, to
form BTG Pactual.
Now, after BTG Pactual's years of rapid growth since its 2012 IPO, and as Brazil's economy
continues to struggle, rivals in São Paulo privately ask whether the firm's readiness to deploy
12 L ATINFINA NCE.COM - January/February 2015
capital is sustainable. They wonder -
perhaps wishfully - whether BTG Pactual
will be forced to shift to a lower-risk, lowerreturn business model that might bring
down its investment banking market share.
"They're getting a lot of criticism for
being very bold, especially when they mix
risk and investment banking," says one
banker.
Tough environment
Despite a gloomy economic background in
the bank's home country, Esteves says BTG
can continue to post return on equity above
20%. He anticipates such heady results
even in 2015, when most economists expect
Brazil to face a year of negligible or even
negative growth as long-overdue fiscal and
monetary adjustments kick in.
In November, Esteves says BTG Pactual
was already heading to a return-on-
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LatinFinance - January/February 2015
Table of Contents for the Digital Edition of LatinFinance - January/February 2015
Contents
LatinFinance - January/February 2015 - Cover1
LatinFinance - January/February 2015 - Cover2
LatinFinance - January/February 2015 - Contents
LatinFinance - January/February 2015 - 2
LatinFinance - January/February 2015 - 3
LatinFinance - January/February 2015 - 4
LatinFinance - January/February 2015 - 5
LatinFinance - January/February 2015 - 6
LatinFinance - January/February 2015 - 7
LatinFinance - January/February 2015 - 8
LatinFinance - January/February 2015 - 9
LatinFinance - January/February 2015 - 10
LatinFinance - January/February 2015 - 11
LatinFinance - January/February 2015 - 12
LatinFinance - January/February 2015 - 13
LatinFinance - January/February 2015 - 14
LatinFinance - January/February 2015 - 15
LatinFinance - January/February 2015 - 16
LatinFinance - January/February 2015 - 17
LatinFinance - January/February 2015 - 18
LatinFinance - January/February 2015 - 19
LatinFinance - January/February 2015 - 20
LatinFinance - January/February 2015 - 21
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LatinFinance - January/February 2015 - Cover3
LatinFinance - January/February 2015 - Cover4
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