UBS Cements Commitment To Brazil Market

Harriet Davies

26 February 2013

UBS has cemented its commitment to the Brazilian market, completing the acquisition of one of the country’s largest brokerage firms.

The Swiss organization has its eyes set firmly on becoming a leader player in both wealth management and onshore investment banking in Brazil, the country with the largest population of high net worth individuals in Latin America (source: Wealth Insight).

In investment banking, it will offer equity derivatives, equities, options, exchange-traded fixed income, currencies and commodities in both local and international markets. According to the BM&FBovespa rankings the broker-dealer was the top ranked in Brazil in 2012 for the number of derivatives contracts negotiated. It ranked second for stock volume negotiated.

As part of the changes, Link Investimentos has been renamed UBS Brasil Corretora, but will continue to be headed by Daniel Mendonça de Barros as chief executive. In a related move, UBS recently opened new headquarters for UBS Brasil in São Paulo's financial district.

A tough market to crack into

While the Brazilian HNW market is worth some $951 billion, according to Wealth Insight, it can prove a tough one to crack into for international firms, a report released this year by Datamonitor Financial said.

International players face stiff competition from domestic players, and there has been little activity in the sector in terms of M&A over the last 18 months. The industry is also highly concentrated in São Paulo and Rio de Janeiro, the report said.

In an M&A deal going in the other direction, Brazil-based banking group Safra kicked off 2013 by completing its purchase of a controlling stake in Switzerland’s Sarasin. It now owns almost all the latter bank, producing a new entity, Bank J Safra Sarasin.

In both the Safra and UBS deals, both firms cited the importance of providing a wide range of international products and services.

“I am quite confident that our clients will benefit greatly from UBS's global product offering and client-focused advice and services," said Mendonça de Barros.

“Bringing UBS and Link Investimentos together further strengthens our regional presence and adds deeper local knowledge and market expertise," said Robert McCann, UBS Americas CEO.

Meanwhile, yesterday it emerged that JP Morgan also views having a foothold in Brazil as key to its LatAm strategy, when it named Jose Berenguer as senior country officer there. He took up this role after having been CEO of structured credit at Gavea Investimentos, an investment manager, in which JP Morgan Asset Management purchased a majority interest in 2010.