Billionaires Vie for the Future of Brazilian Finance
Bloomberg Markets|October - November 2021
An escalating battle between two billionaires is upending the financial community in São Paulo, Latin America’s wealthiest city.
By Felipe Marques and Cristiane Lucchesi

In one corner is André Esteves, the 53-year-old founder and biggest shareholder of Banco BTG Pactual SA, a regional investment banking powerhouse whose name is jokingly said to stand for “Better Than Goldman.” In the other is Guilherme Benchimol, the 45-year-old founder of XP Inc., Brazil’s biggest brokerage and an unabashed copycat of U.S. giant Charles Schwab Corp.

Esteves and Benchimol, both Rio de Janeiro natives, are competing for the 10 trillion reais ($1.9 trillion) in savings that Brazilians are increasingly willing to invest in high-risk assets. By offering individuals technology and products once available only to the very rich, BTG and XP are winning customers from the nation’s five biggest banks, weakening their hold on Brazilians’ savings.

“The days of only five banks in Brazil are probably over,” says Tito Labarta, an equity-research analyst at Goldman Sachs Group Inc.

In a continent-size nation of roughly 211 million people, a huge network of brick-and-mortar branches staffed with thousands of managers used to be the only way to sell investment products to individuals. Decades of sky-high interest rates also meant Brazilians parked their money in savings accounts or overnight Treasury funds offered by the big banks.

Now that rates are lower, investors are seeking better returns, and both BTG and XP are seizing the opportunity. The Covid-19 pandemic has also pushed Brazilians to adopt digital banking, and a raft of startups are entering the market. Meanwhile, the big banks are pivoting to build their own digital offerings.

Investment funds posted record net inflows of 350.4 billion reais in the first eight months of 2021, according to the local capital-markets association, Anbima. That pushed the total to 6.7 trillion reais under management, with new asset management and wealth management firms being created at breakneck pace.

The gains have come even amid the misery of the pandemic, which has struck Brazil particularly hard. The country’s death toll has been second only to the U.S., and unemployment has risen to a record. About 19 million people were battling hunger over the past year, almost twice as many as in 2018, according to a study by a local network of researchers. An estimated 19.3 million Brazilians now live on less than $1.90 per day, another study shows.

In a bid to revive the economy, policymakers provided almost $60 billion to the poorest Brazilians through digital channels. As a result, banking transactions surged 20% in 2020, and more than two-thirds of those were via mobile or internet services, according to the Brazilian Federation of Banks, known as Febraban. The use of mobile platforms to invest increased 63% in 2020, Febraban data show.

IT WAS BENCHIMOL’S XP that first proved money could be made in challenging big banks for retail investors in Brazil. Founded in 2001, the company started a network of third-party independent investment advisers, growing into a financial supermarket that offers bonds, stocks, derivatives, and funds from a growing number of asset managers and banks.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BLOOMBERG MARKETSView All

Billionaires Vie for the Future of Brazilian Finance

An escalating battle between two billionaires is upending the financial community in São Paulo, Latin America’s wealthiest city.

8 mins read
Bloomberg Markets
October - November 2021

Ford Foundation's Darren Walker: ‘We Have to Get Uncomfortable'

DARREN WALKER, 62, disrupted his Wall Street life more than 25 years ago when he left what is now UBS Group AG to volunteer at a school and eventually pursue a career in community development and philanthropy. Since 2013 he’s been at the pinnacle of the philanthropic world as president of the Ford Foundation, created by the family of automaker Henry Ford during the Great Depression to advance human welfare.

8 mins read
Bloomberg Markets
October - November 2021

Fueling the Ener Transition

I MAY BE BIASED, but some of the most important research and data on the Bloomberg terminal lies in one of its lesser-known functions: {BNEF }

1 min read
Bloomberg Markets
October - November 2021

Dig Into Analysts' Estimates for Disruptive Companies

THE PANDEMIC ERA generated a whole wave of disruptive companies as it accelerated the introduction of new products and services in areas including artificial intelligence, digitization, electronic payments, online meeting platforms, and virtual currencies.

4 mins read
Bloomberg Markets
October - November 2021

Climate Risks Come for Sovereign Credit

FOR YEARS climate scientists have warned about the ferocious wildfires and hurricanes that are now overwhelming many communities. Today alarms are ringing about a related financial danger: risks lurking within government bonds, the biggest part of the global debt market.

7 mins read
Bloomberg Markets
October - November 2021

Responsible-Investing Pioneer Lydenberg Says ESG Needs An Upgrade

STEVE LYDENBERG’S passion for social change was inspired by anti-Vietnam War demonstrations, consumer boycotts, and the movement to divest from apartheid South Africa. But he didn’t take to the streets. Instead, Lydenberg turned to the world of finance to help catalyze societal change.

8 mins read
Bloomberg Markets
October - November 2021

Engine No. 1's Grancio: ‘People Will Appreciate an Economic Argument'

ENGINE NO. 1 sent shock waves across corporate America in May when the fledgling investment firm won a boardroom battle with Exxon Mobil Corp., securing three seats on the oil and gas giant’s board after purchasing only about $40 million of its stock.

6 mins read
Bloomberg Markets
October - November 2021

Find Out Which Companies May Ramp Up Payouts After Covid

AS THE PANDEMIC DISRUPTED business last year, many companies cut or suspended dividends. Which will boost their payouts when economies pick up again?

2 mins read
Bloomberg Markets
October - November 2021

Get Into the Minds of Central Bankers as They Navigate Shocks

HAVE YOU EVER WONDERED how central bankers forecast the impact of shocks on the economy?

4 mins read
Bloomberg Markets
October - November 2021

See Which Countries Are Falling Behind On Climate Change

UNDER THE PARIS AGREEMENT, 190 countries and the European Union pledged to take steps to hold the global temperature rise to less than 2C (3.6F) from preindustrial levels—and preferably 1.5C.

3 mins read
Bloomberg Markets
October - November 2021